Question

There are a number of methods by which a corporate can go about structuring their organisation. The text lists the relative advantages and disadvantages of each method. Given your understanding of this, justify which organisational structure you would recommend for the following situations:

a.   a government owned telecommunications company with a monopoly in its market

b.   a private entrepreneurial organisation that develops new hand held entertainment devices in Japan

c.   a large retailer that sells an array of goods including groceries, hardware, clothing (premium and low-cost) and liquor

d.   a multinational corporation that produces a single product, but must adapt it for each county they operate in due to legal constraints.

ANS:  

This question requires students to consider the advantages and disadvantages of each of the structure types mentioned in the text against a number of different contexts. There may be a number of structures that can be justified, and this question allows the students to explore the variables they think are important to their choice.

PTS:   1   DIF:   Difficult       NAT: AACSB Analytic  

TOP:   Organisational structure

Answer 1

Depend on the publications and authors there are various different types of organization structures that can be applied to an organization. Depending on the type of organization, their market landscape and approach to business, the organization structures vary. Let’s look at the organizations mentioned and choose a structure accordingly.

A government owned Telecom Company with monopoly (

This organization is not competitive. That is because of its monopoly in the market. The company likely produces a product that is inelastic to price and market factors. The only concern for this type of organization will be sustenance and efficient management of operations. As a result, the type of structure they can follow is vertical structures with bureaucratic and functional method of operation.

In this type of structure, there will be fewer people in higher level of management and as the level reduces, the number of workers increase. This also means that the policies and practices will be in place and according to bureaucratic system the whole organization is systematic. The organization will follow strict policies and hierarchy to get their work done.

Private entrepreneurial organization

These types of organization attempts to disrupt the existing market with new approach and products. This means the organization needs to be extremely nimble and sensitive to the market dynamics. For such organization, the most appropriate structure is the team structure.

This is a comparatively newer structure adapted in 20^th century. The organization is more horizontal and flat in nature. They are quite similar to horizontal structures. The organization will be led by few leaders but overall the team across the organization works together and in rapid manner.

Large retailer that sells an array of goods

These type of organization needs to focus on several things. Their operations, marketing, finance, HR and all other functions need to work across the different categories of goods. For example, each category (electronics, apparels, etc.) must also have an efficient operation, marketing and HR function. However, exclusive use of each business function may not be feasible and the best approach for such organization is the matrix structure.

In the matrix structure, as the name suggest, there is an overlap of two distinct domains within the organization. Here the two domains are categories and business functions. Categories are the different types of good such as groceries, hardware, clothing, and liquor. These categories will cut across different business operations such as sales, marketing, operation, finance, and HR.

Multinational Corporation

The challenge for multinational corporations are to operate within the legal boundaries that changes across different countries. This means that the company needs to operate as a different unit at different countries. The best organizational structure for such companies is divisional structure where each country is divided in to different division.

Divisional structures traditionally mean that each division operates comparatively autonomously. While this can be done in terms division of function, this can also be done by division of geography. This is particularly required for companies that need to adapt to different markets, different laws, different culture for their products and services. For a MNC, it is important to adapt to local markets and hence a divisional structure is the best suited.