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Background Information
The classic view of company structure is as a chart showing the arrangement of divisions, units, departments and other components of an organisation and the hierarchy of the key positions. What is being described is the division of work and labour and this is but one view of the structure. The systems view of company structure is that all parts are interconnected so as to form a coherent and functioning whole and that it exists to fulfil a particular purpose. In the case of an organisation structure, it exists to fulfil the mission. Organization structure reveals vertical operational responsibilities, and horizontal linkages. It allows the expressed allocation of responsibilities for different functions and processes to different entities.The complexity of an organization’s structure is often proportional to its size and its geographic dispersal. The traditional organization structure for many businesses in the 20th century was the bureaucracy, originally defined by Max Weber. More recent forms include the flat, network, matrix, and virtual organizations. These forms became more prevalent during the last decades of the 20th century as a result of the trend toward restructuring and downsizing and developments in telecommunications technology. According to Harold J. Leavitt, organization structure is inextricably linked to the technology and people who perform the tasks. Charles Handy has shown that it is also directly linked to corporate culture.


Company Structure
Most organizations have hierarchical or pyramidal structure, with one person or a group of people at the top, and an increasing number of people below them at each successive level. There is a clear line or chain of command running down the pyramid. All the people in the organization know what decisions they are able to make, who their superior( or boss )is( to whom they report),
Some people in an organization have collegues who help them.-for example, there might be an Assistant to the Marketing Manager. This is known as a staff position, its holder has no line authority, and is not integrated into the chain of command, unlike, for example, the Assistant Marketing Manager, who is number two in the marketing department.
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. Today, most large manufacturing organizations have a functional structure, including (among others) production, finance, marketing, sales, and personnel or human resources departments. This means, for example, that the production and marketing departments cannot take financial decisions without consulting the finance department.
Functional organization 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 marketing and production, which have incompatible goals. Secondly, separating functions is unlikely to encourage innovation.
Yet for a large organization manufacturing a range of products, having a single production department is genereally inefficient. Consequently, most large companies are decentralized, following the model of Alfred Sloan, who divided General Motors into separate operating dicisions in 1920. Each division had its own engineering, production and sales departments, made a different category of car (but with some overlap, to encourgae internal competition), and was expected to make a profit.
Business that cannot be divided into autonomous divisions with their own markets can stimulate decentralization, setting up divisions that deal with each other using internally determined transfer prices. Many banks, for example, have established commercial, coporate, private banking, international and investment divisions.
An inherent problem of hierarchies is that people at lower levels are unable to make important decisions, but have to pass on responsibility to their boss. One solution to this is matrix management, in which people report to more than one superior. For example, a product manager with an idea might be able to deal directly with managers responsible for a certain market segment and for a geographical region, as well as the managers responsible for the traditional functions of finance, sales and production. This is one way of keeping authority at lower levels, but it is not necessarily a very efficient one. Thomas Peters and Robert Waterman, in their well-known book In Search of Excellence, insist on the ncessity of pushing authority and autonomy down the line, but they argue that one element--probably the product--must have priority: four-dimensional matrices are far too complex.
A further possibility is to have wholly autonomous, temporary groups or teams that are responsible for an entire project, and are split up as soon as it is successfully completed. Teams are often not very good for decision-making, and they run the risk of relational problems, unless they are small and have a lot of self-discipline. In fact they still require a definite leader, on whom their success probably depends.
Exercises Decentralization is the separation of the organization into competing ______ divisions.