Company Structure

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COMPANY STRUCTURE

Organizing structure is considered by many to be “the anatomy of the organization”, providing a foundation within which the organization functions”. There can be different kinds of organization structure, and firms can change their organization structure by becoming more or less centralized. Most organization have a hierarchical or pyramidal structure, with one person or a group of people at the top, and increasing number of people below them at each successive level. All the people in the organization know what decision they are able to make, who their superior (or boss) is (to whom they report), and who their immediate subordinates are (to whom they can give instructions). This structure is one of the simplest and it’s also called a line structure. Yet the activities of most companies are too complicated to be organized in a single hierarchy. Shortly before the First World War, the French industrialist Henry Fayol organized his coal-mining business according to the functions that it had to carry out. He is generally credited with inventing functional organization, including (among others) production, finance, marketing, sales, and personnel or staff departments. The functional type of organization structure reflects an arrangement based on the nature of the activities that must be performed. Related activities are grouped together in the functional areas with which they are most clearly identified. The chief executive of each area occupies a position on the second level of the organization and generally has the title Vice-President. This means, for example, that the production and marketing departments cannot take financial decisions without consulting the finance department. The functional structure is efficient, but there are two standard criticisms. Firstly, people are usually more concerned with the success of their department than that of the company, so there are permanent battles between, for example, finance and marketing, or...
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