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Organisation Structure. Hierarchy type Organisational Structure. Flat type Organisational Structure. Pros and Cons of Different Structures. This depends on the business type, size and structure used Let’s look at a functional structure:. Chief Executive. Board of Directors. Production.

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Hierarchy type Organisational Structure

Flat type Organisational Structure

pros and cons of different structures
Pros and Cons of Different Structures
  • This depends on the business type, size and structure used
  • Let’s look at a functional structure:

Chief Executive

Board of Directors






functional structure


Functional Structure
  • Specialisation – each department focuses on its own work
  • Accountability – someone is responsible for the section
  • Clarity – know your and others’ roles
  • Closed communication could lead to lack of focus
  • Departments can become resistant to change
  • Coordination may take too long
  • Gap between top and bottom
an example of organisation by product activity
An Example of Organisation by Product/Activity

Hewlett Packard

Imaging and

Printing Group


Systems Group


Systems Group

HP Services

HP Financial


organisation by product activity


Organisation by Product/Activity
  • Clear focus on market segment helps meet customers’ needs
  • Positive competition between divisions
  • Better control as each division can act as separate profit centre
  • Duplication of functions (eg different sales force for each division)
  • Negative effects of competition
  • Lack of central control over each separate division
organisation by area

Organisation by Area

Hewlett Packard

Hewlett-Packard’s Headquarters Worldwide


Houston, Texas

Europe, Middle East, Africa

Geneva, Switzerland

Asia Pacific

Hong Kong

organisation by area1


Organisation by Area
  • Serve local needs better
  • Positive competition
  • More effective communication between firm and local customers
  • Conflict between local and central management
  • Duplication of resources and functions
illustrating structures 1
Illustrating Structures 1

The Pyramid

Traditional view of organisations

Decisions pass down formal channels from managers to staff

Information flows up formal channels from staff to management

illustrating structures 2
Illustrating Structures 2


Key worker

Key worker

Quick to act but pressure on decision makers

One or two people make decisions

Most small businesses have this structure

Decision maker

Great reliance on key workers supporting decision makers

Key worker

Key worker

illustrating structures 3
Illustrating Structures 3





Project A

Project teams created

Staff with specialist skills

Project B

illustrating structures 4
Illustrating Structures 4


Not suited to most businesses due to lack of control

Dr A

Dr B

Support systems to professionals such as doctors

Dr C

Dr D

more on business structure


More on Business Structure
  • Managers keep control
  • Decisions are made in the interests of the whole business
  • Costs can be cut by standardising purchasing and so on
  • Strong leadership
  • Empowering and motivating
  • Freeing up senior managers’ time
  • Better knowledge of those closer to customers
  • Good staff development