Different Types of Organisational Structure
- Businesses typically structure their organisation in one of three ways
- Tall organisational structure
- Flat organisational structure
- Organisational structure based on product, function or region
1. Tall organisational structures
- Tall or vertical structures have multiple levels of management, a more centralised decision making process and a long chain of command
- Spans of control are usually narrow and managers exert significant control
- Tall structures are common in large organisations with complex operations e.g. government agencies and universities
2. Flat organisational structures
- Flat or horizontal structures have fewer levels of management, a decentralised decision-making process and a short chain of command
- Spans of control are often wide and employees have some level of autonomy
- Flat structures are common in small organisations or start-ups
A Comparison of tall and flat Organisational Structures
Tall Organisational Structure |
Flat Organisational Structure |
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3. Organisation by product
- This type of structure is usually built around specific products or projects (matrix structure)
- E.g. KitKat has its own team within Nestlé
- E.g. KitKat has its own team within Nestlé
- It combines the functional areas of a business (HR, finance, marketing, sales) with a specialist team that operates inside the business
An example of a product or project-based structure
Evaluating a Matrix Structure
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4. Organisation by function
- This is the most common form of organisational structure
- Employees are arranged into different functions that complete specific functions such as finance, human resources or marketing
- Employees are arranged according to their expertise, bringing appropriate skills, experience and qualifications to a particular area of the business
- There is a danger that functional areas focus only on their own area of responsibility and lose touch with the objectives of the business as a whole
Organisation by function
5. Organisation by region
- This structure is commonly found in businesses that are located in several different geographical locations
- Regional management and structures allow a business to respond effectively to the needs of customers in diverse locations
- Regional management and structures allow a business to respond effectively to the needs of customers in diverse locations
Organisation by region
Exam Tip
There is no one 'right' or 'wrong' organisational structure
You should consider whether the structure adopted by a business is appropriate for it to carry out its main functions - and be prepared to suggest amendments to structures to make them more appropriate