1. Specialization and Coordination
Functional Structure
Divisional Structure
Matrix Structure
Network Structure

2. Functional Structure the bedrock of horizontal differentiation
often an organization’s first structure
Research and
Development
Sales and
Marketing
Manufacturing
Materials Management
Finance
CEO

3. Functional Structure STRENGTHS
Allows economies of scale with functional departments
Enables in-depth skill development
Enables organizations to accomplish functional goals
Is best when only one or a few products
WEAKNESSES
Has slow response time to environmental changes
May cause decisions to pile on top, create hierarchy overload
Leads to poor horizontal coordination among departments
Results in less innovation
Restricts view of organizational goals

4. Divisional Structure adopted to solve the control
problems of functional structures
(many kinds of products,
many different locations,
many types of clients)

5. Product (Divisional) Structure
STRENGTHS
Suited to fast change in unstable environment
Product responsibility and contact points are clear
High coordination across functions
Allows adaptation to differences in regions, clients
Decentralizes decision making
WEAKNESSES
Eliminates economies of scale in functional departments
Inhibits coordination across product lines
Eliminates in-depth technical specialization
Integration or standardization across product lines is difficult

6. Product Team Structure
divisional structure in which specialists from the support functions are combined into product development teams
used in technologically complex or rapidly changing environments

7. Product Team Structure.
FIGURE 4.9
Product Team Structure.
Product
Division
CEO
Functions
Development
Teams V
ice President
Research and
Sales and
Marketing
Manufacturing
Finance
Functional specialist
Materials
Management
PTM
Product Team Manager
4-29
Copyright 2001 Prentice Hall

8. Matrix Structure
a rectangular grid that shows a vertical flow of functional responsibility and a horizontal flow of product responsibility
two-boss employees report to product manager and functional manager

9. FIGURE 4.12 Matrix Structure 4-36 Copyright 2001 Prentice Hall CEO V
ice President
Engineering
Finance
Purchasing
Sales and
Marketing
Research and
Development
Product A
Manager
Product B
Product C
Product D
Product Team
Two-boss employee
4-36
Copyright 2001 Prentice Hall

10. Matrix Structure STRENGTHS Cross-functional teams
Increase communication across functions
Skilled professionals move from product to product as needed
Promote concern for both functional and product issues.
WEAKNESSES
Role ambiguity
Lack of defined authority

11. Network Structures
A cluster of different organizations whose actions are coordinated by contracts and agreements rather than through a formal hierarchy
STRENGTHS
Reduce production costs
Reduce bureaucratic costs associated with complex structures
Flexibility
WEAKNESSES
May limit internal learning processes
Assumes that other organizations can be trusted with proprietary information.