Lecture 6

Function and Structures

within an Organization
 Contents

1. Functions within business organization

2. Organizational structure
 1. Functions within
business organization
 Functional management

• Most organizational structures reflect a degree of

functional specialization.

• Management of functions: key factor in the success of the

enterprise and respond to external demands for change
 Interrelationship of
functions

• These functions formed as departments, units or sections

titled: Production, Finance, Marketing, Personnel,
Research and Development,….

• 1 function = 1 department, 1 function >= 2 departments, or

may be 1 department = 2 functions
depends on legal structure, size, and scope of the company
 Interrelationship of
functions

• Functions interrelationship with each others

• To serve for the objectives/ goals of companies

 Examples

ACB: Customer Service Department and Application Operations Department

Customer Service Application Operations
department: department:
Receive feedback on transaction Support Find and fix errors in
errors on the application. the system.

Respond to customer Support Develop a payment service on digital

payment services. banking platforms that is user-friendly and
convenient for customers.

To serve for Objectives of ACB

Key functions of company
 Functions

Human Resources
Management (HRM)
 HRM

• People are the key organizational resource; without them

organizations would not exist or function

• All businesses need to plan for and manage the people they

employ if they are to use this resource effectively and

efficiently in pursuit of their objectives.

 HRM

HRM involves a wide variety of activities related to the formulation

and implementation of appropriate organizational policies, the

provision of opportunities for monitoring, evaluation and change,

and the application of resources to the fulfilment of organizational

ends.
 HRM

Key aspects of “people management” include:

1. Recruitment and selection;

2. Working conditions;
 HRM

Key aspects of “people management” include:

3. Training and career development;

4. Job evaluation;
 HRM

Key aspects of “people management” include:

5. Employee relations;

6. Human resource planning;

7. Legal aspects of employment

 HRM

• Specialized HRM department or personnel department

depends on size of company

• HRM is influenced by external factors

E.g. Job description changes due to labor market’s payment, labor

turnover, technology, need for new skills…
 Functions

Marketing
 Marketing
• Marketing is concerned with the needs of the consumer in a
way that is profitable to the enterprise.

• Strategic marketing management is normally characterized as

the process of ensuring a good fit between the opportunities
afforded by the marketplace and the abilities and resources of
an organization operating in it.
 Marketing
• Customer is prime importance

Marketing

Identify the
• Abilities + resources
needs and
• Profitability of company
wants of
customers
 Activities of Marketing
✓ Identifying the needs of consumers (e.g. through market research);

✓ Designing different ‘offerings’ to meet the needs of different types of

customers (e.g. through market segmentation and positioning);

✓ Choosing products, prices, promotional techniques and distribution

channels that are appropriate to a particular market (i.e. designing a

‘marketing mix’ strategy);

 Activities of Marketing

✓ Undertaking market and product planning;

✓ Deciding on brand names, types of packages and methods

of communicating the product to the customer;

✓ Creating a marketing information system.

 Marketing

• Marketing is influenced by external factors

E.g. Price of 4P is influenced by price of competitor, prices of input

of supplier, anticipated reactions of customer to the price charged for
product.
2. Organizational
structure
 Popular organizational
structures

1. Functional organization structure

2. Divisional organization structure;

3. Project-based organization structure

4. Matrix organization structure

 Organizational structure

• Business organisations are characterized by a division of labor which

allows employees to specialize in particular roles and to occupy

designated positions in pursuit of the organization's objectives

• The structure is important because it reflects the needs of the

organization within its existing context and taking into account of its

future requirement.
 Purpose of organizational
structure
Through its structure an organization should be able to:

• Achieve efficiency in the utilization of resources;

• Provide opportunities for monitoring organizational performance;

• Ensure the accountability of individuals;

• Guarantee co-ordination between the different parts of the

enterprise;
 Purpose of organizational
structure

Through its structure an organization should be able to:

• Provide an efficient and effective means of organizational

communication;

• Create job satisfaction, including opportunities for progression; and

• Adapt to changing circumstances brought about by internal or external

developments.
 Organizational structure
chart

• Organizational chart designates the formal pattern of role

relationships and the interactions between roles and the
people occupying them.
 Organizational structure

Functional organization
structure
Functional structure chart
Source: Deep Fried Brain , n.d. [Online] Available at: https://www.deepfriedbrainproject.com/functional-organizational-structure [Accessed 13 6 2021].
 Functional structure

• In this type of structure, activities are clustered together by

common purpose or function

• Most organization structures reflect a degree of functional

specialization, with individuals occupying roles in departments:
Finance, Marketing, Production, R&D etc.
 Advantages of Functional
structure

It is most relevant to small or start up organizations.

Main advantages:

• Chief executive in touch with all operations

• Reduces/simplifies control mechanisms

• Clear definition of responsibilities

• Specialists at senior and middle management levels

 Disadvantages of
Functional structure
Disadvantages:

• Senior managers overburdened with routine matters

• Senior managers neglect strategic issues

• Difficult to cope with diversity

• Coordination between functions difficult

• Failure to adapt
 Organizational structure

Divisional organization
structure
 Divisional structure

• A divisional structure is built up of separate divisions on the

basis of products, services or geographical areas.

• Each divisions operates as a profit center.

• Divisionalization often comes about as an attempt to overcome the

problems that functional structures have in dealing with the
diversity mentioned above.
Divisional structure chart
Divisional
structure
chart

Source: Smartdraw, n.d. [Online] Available at: https://www.smartdraw.com/organizational-chart/organizational-chart-types.htm [Accessed 13 6 2021].

 Advantages of Divisional
structure

Advantages

• Flexible (add or divest divisions)

• Control by performance

• Ownership of strategy

• Specialization of competences

• Training in strategic views

 Disadvantages of
Divisional structure

Disadvantages:

• Duplication of central and divisional functions

• Fragmentation and non co-operation

• Danger of loss of central control

 Organizational structure

Project-based structure
 Project based structures

• A project-based structure is one where teams are created, undertake a

specific project and are then dissolved.

• A lot of firms rely heavily on project teams with a finite life span

• This type of structure is most common in organizations that delivers

expensive goods or services and those delivering time-limited events

E.g. civil engineering, information system, film, event planning, sports,

consulting, etc,…
Project-based structure chart
 Advantages of Project based
structures

Advantages

• Highly flexible

• Good control of each project

• Integrate knowledge
 Disadvantages of Project based
structures

Disadvantages

• May get out of control

• Constant breaking up → hinder the accumulation of

knowledge
 Organizational structure

Matrix organization
structure
 Matrix structure

• A matrix structure combines different structural dimensions

simultaneously, for example product divisions and geographical
territories or product divisions and functional specialisms

• Staff typically report to two managers rather than one

Matrix structure
chart

Source: Nevron office , n.d. [Online] Available at: https://www.nevronoffice.com/products-draw-templates-organizational-chart-matrix-organization-chart.aspx [Accessed 13 6 2021].
 Advantages of Matrix
structure
Advantages:

• Integrate knowledge

• Flexible

• Allow dual dimensions

 Disadvantages of Matrix
structure
Disadvantages:

• Length of time to take decision

• Unclear job and task responsibilities

• Unclear cost and profit responsibilities

• High degree of conflict

THE END