Types of Business Organization
There are millions of successful businesses around the world. They range from local fruit stands to huge multi-national businesses worth billions of dollars. One common trait all these businesses share is that they have some sort of organization. Without organization a business is doomed to fail because it will be inefficient and that inefficiency will eventually cause its downfall. Most entities use one of four basic organizational designs to try to ensure smooth sailing. These four basic designs are Functional, Divisional, Conglomerate, and Matrix. Also, some companies use some type of mix of these four; they are said to use Hybrid Design. Anyone of these organizational choices cannot be said to be superior to another because companies are successful using each. Each of these designs of corporate organization has their strengths and their weaknesses when compared to the others, and in the coming pages I plan to explore both the set up of each of designs as well as their strengths and weaknesses. The functional design is based on the concept of functional departmentalization. This means that the entity is broken down into parts by the different functions these parts would perform. This
Another example of an entity that uses divisional organization is the Limited clothing company. The recent trend tends to be away from these huge conglomerate designs of corporate organization, not only because of lack of profitability but also because in today?s ever changing economic environment the entities of this kind just do not have enough flexibility to survive. The second would be an instance when a large amount of information would need to be processed. They also would each have their own supervisors as well as their own workforce. A successful entity pays more attention to the changes in the environment than its does to what organization category it falls into. The matrix design also allows for quick and radical change by just changing the project groups this is a great benefit in today?s fast paced business world. Making the decision of what design to follow must be done on a case to case basis. A benefit of this design is that it allows experts in their field to be assigned to department which allows greater efficiency and progress in each of the departments. Some disadvantages of the divisional design of organization include that it often times causes duplicate positions that make for a higher cost of everyday business and also that it often leads to a ?not my job? mentality (http://policycenter. This design of corporate organization is said to have reciprocal interdependence which means the department depends greatly on the other departments and cannot survive without the others (Griffin 367).
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