Strategy and Structure | Management Optional Notes for UPSC PDF Download

 Organization Structure

The structure of an organization encompasses two overarching dimensions:

1. Vertical Dimensions

• Tall Structures:

  • Think of tall structures as organizations with many layers of hierarchy, like a skyscraper.
  • In these organizations, managers have more control over their subordinates, and there's a clear line of authority from top to bottom.

• Best for Mass Production:

  • Tall structures work well for companies that produce large quantities of standardized products or services using mass production methods.
  • These organizations typically rely on well-established technologies and processes to achieve efficiency in production.

• Characteristics:

  • Specialization of Tasks: Each employee has a specific role and set of responsibilities within the organization.
  • Chain of Command: There is a clear hierarchy of authority, where each level of management oversees the one below it.
  • Formal Reporting Relationships: Employees report to their immediate supervisors through formal channels.
  • Grouping into Departments: Employees are organized into departments based on their specialized functions or areas of expertise.
  • Upward and Downward Communication: Communication flows both upward, from subordinates to superiors, and downward, from superiors to subordinates, following the chain of command.

2. Horizontal Dimensions

• Flat Structures:

  • Horizontal structures are characterized by fewer layers of management and a more decentralized decision-making process.
  • In these organizations, there is less emphasis on hierarchy and more focus on collaboration and teamwork among employees.

• Ideal for Different Products:

  • Flat structures are suitable for companies that produce differentiated products or services and require flexibility and innovation.
  • They are often found in medium-sized businesses, as well as non-profit organizations that provide specialized social services.

• Characteristics:

  • Sharing of Tasks: Employees in flat structures often have overlapping roles and responsibilities, allowing for greater flexibility and adaptability.
  • Sharing of Information: There is a culture of openness and transparency, where information is shared freely among team members to facilitate collaboration.
  • Decentralized Decision Making: Rather than decisions being made solely by top management, authority is distributed across different levels of the organization, empowering employees to make decisions within their areas of expertise.
  • Focus on Learning: Flat structures encourage a culture of continuous learning and improvement, where employees are encouraged to share knowledge and skills to enhance the overall effectiveness of the organization.

Types of Organization Structure

The main types of organizational structures are given below:

1. Entrepreneurial Structure:

• This is the simplest type of structure where one person owns and manages the organization.
• It's typically found in small businesses that focus on a single product or service for a local market.
• Elementary form of structure
• Organization owned and managed by one person
• Serving single business, product or serve local markets
• Owner looks after all decisions, day to day operations of strategic nature.

2. Functional Structure:

• When a business grows and offers more products, tasks need to be specialized.
• Different areas like production, marketing, finance, and personnel have their own leaders.
• Suitable for businesses that are not too big, with a limited number of products.
• It's like dividing the work into building blocks based on functions performed (like making the product, selling it, managing money, and handling people).
• This structure can extend to different levels as the organization grows.

• Functional Structure seeks to distribute decision making and operational authority towards each.

Structural Considerations in Strategic Implementation