Page 206 - Introduction to Business

180 PART 2 Managing Business Behavior

Different Forms of Organizational Structure. We will briefly examine
four types of organizational structure: functional, divisional, matrix, and network.

functional organizational structure FUNCTIONAL ORGANIZATIONAL STRUCTURE. Functional organizational structure
The structure of an organization around involves structuring an organization around basic business functions such as pro-
certain functions such as marketing,
duction and operations, marketing, and finance. This organizational structure
finance, and so on
approach is frequently used by small- to medium-sized businesses and other
organizations and is relatively straightforward. A diagram of a functional organiza-
tional structure is shown in Exhibit 5.6.

divisional organizational structure DIVISIONAL ORGANIZATIONAL STRUCTURE. A corporation with a divisional orga-
The structure of an organization with nizational structure has various company divisions operating autonomously as
various divisions operating
businesses under a broad corporate framework. Companies with various dis-
autonomously under a broad
organizational framework tinct products, for example, might establish a divisional organizational struc-
ture whereby the manufacture and sale of each product is more or less con-
ducted by a separate company under a broad corporate umbrella. The
Coca-Cola Corporation, for example, might be organized in this manner. In
addition to making carbonated soft drinks (Coca-Cola, Fanta, etc.), the com-
pany also makes juices and juice drinks (Minute Maid, Hi-C, etc.), sports drinks
(Powerade, Aquarius, etc.), and filtered water (Dasani, Ciel, etc.). A divisional
structure for Coca-Cola Corporation might be similar to the one shown in
Exhibit 5.6.

matrix organizational structure MATRIX ORGANIZATIONAL STRUCTURE. A matrix organizational structure involves
The structure of an organization employees reporting to multiple managers in team project situations. Pfizer, for
around team project situations
example, might establish a project team to further develop its product Viagra. The
where employees report to more
than one manager team might have a research scientist, a sales representative or detailer, an engi-
neer, and an accountant. The project team is then assigned a project manager. In
this situation the scientist, sales representative, engineer, and so on, on the proj-
ect team essentially have two bosses, two reporting relationships. They have as
managers both the project manager for the Viagra team and their regular manager,
who may be the company chief scientist, the head of company sales, or some other
manager.
Exhibit 5.6 assumes that Pfizer establishes three different teams to work on
further developing three of its most important pharmaceutical drugs, Viagra,
Zoloft (for the treatment of depression), and Celebrex (for the treatment of arthri-
tis). Each project team has a project manager and is made up of a scientist, a sales
representative, an engineer, and an accountant. These individuals all report to
their given team project managers and to the regular heads of their functional
areas. For example, scientist A reports both to his or her regular boss, the com-
pany’s vice president, research/chief scientist, and to the head of Project A, the
company’s Viagra project. The resulting diagram of relationships, as Exhibit 5.6
shows, is a matrix.

NETWORK ORGANIZATIONAL STRUCTURE. Finally, increasing numbers of companies
network organizational structures today are adopting what are known as network organizational structures. The
Organizational structures where the main function performed by such organizational structures is administration, with
organization contracts out most
manufacturing, distribution, and sales all contracted out to other firms. Thus, the
functions except administration
main purpose of this structure is to administrate and coordinate agreements and
contracts with other organizations that do all the producing, distributing, and
selling. Some athletic shoe companies have a network organizational structure.
The company designs the shoe, but then contracts with manufacturers to make the

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