Types of Business Organization

Length: 10 Pages 2571 Words

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 Continue...


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These companies are said to use a hybrid design of organization. It also lends to employees learning more than one skill because of the cooperation amongst departments (Griffin 372). Works Cited: Chapter 13 study guide. design is also known as the U-form, or unitary form, because the company is broken down into its separate units. An example of this if there is a high amount of competition the marketing department may need to push a campaign, but they also may need to inform the production department to change the product slightly. 02 December 2003 http:policycenter. Each division had control over its product unless General Motors as a whole was against it. All of these departments would have their own Vice President who is in charge of everything that goes on in his or her department. Making the decision of what design to follow must be done on a case to case basis. For example a project group that is working on employee efficiency may be composed of two members from marketing , two members from production, two members from finance, and two members from engineering.

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