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Department of Business Management


Organization is two or more people who work together to achieve organizational

goals and objectives efficiently and effectively. Also it can identify as Non-
random arrangement of components or parts interconnected in a manner as to
constitute a system identifiable as a unit. In an organization, they use
organizational structures for their works. We can identify there are three
traditional organizational design such as simple, functional, divisional.
Organizations face more strength and weakness in these structures. Nowadays
they try to ignore that weakness and develop these organizational designs as
Team structure, Matrix structure, Project structure, Boundaryless structure and
Learning structure.

Using those contemporary organizational designs organizations gain there are

many advantages. Employees are more involved and empowered, Reduce
barriers among functional areas, fluid and flexible design that can respond to
environmental changes, faster decision making, highly flexible and responsive,
draws on talent wherever it’s found, organization can cope with environmental
changes and employees feel free to make decisions are advantages. So,
contemporary organizational designs are better than traditional organizational
structures to the organizations.

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Would you like to know about Organizational Structures &

“Organizational structure is the formal framework by which job tasks are
divided, grouped, and coordinated”. When managers develop or change and
organization’s structure, they are engaged in organizational design, a process
that involves decisions about six key elements:
Stephen P.Robbins & Mary Coulter
 Work Specialization
 Departmentalization
 Chain of Command
 Span of Control
 Centralization and Decentralization
 Formalization

In making organizational design decisions, managers have some common

structural designs from which to choose. Most commonly we consider about two
organizational designs. They are: Traditional organizational structure, and
Contemporary organizational structure.

When we consider the traditional organizational design, especially there are

three major types of structures. They are can be listed out:
• Simple structure
• Functional structure
• Divisional structure


• Lack of flexibility to changing mission needs/rapidly changing world

• Internal and external communication barriers (ideas are not
• Slow/Poor in responding to customer requirements
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Department of Business Management
• Failure to get things done
• Customers/Vendors have a hard time dealing with the organization
(multiple/unknown contacts)

Due to above reasons they need to move in creative ways to structure and
organize works and to make their organizations more responsive to the needs of
customers, employees and other organizational constituents.

In this century, there are more favorable concepts that have being generated,
especially due to global village concept most of organizations have to revise
their organizational structures in order to achieve their overall objectives
through making employees’ job satisfaction. Therefore the contemporary
structure is used by organizations.

Contemporary organizational designs

The flexible structural methods that job tasks are divided, grouped, and
coordinated for response to dynamic environmental factors.

To face highly dynamic and complex environment the contemporary

organizational structure is very important. In response to market place demands
for being lean, flexible and innovative current organization s use these
contemporary structures.

• Team structure
• Matrix structure
• Project structure
• Boundary less organizations
• Network organizations
• Modular organizations
• Virtual organizations

• Learning organizations

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Department of Business Management

Team Based Structure

In the team base structure, the entire organization is made up of work groups or
teams that perform the organization’s work. In the team base structure,
employee’s empowerment is crucial because there is no line of managerial
authority from top to bottom. Rather, employee teams are free to design work
in the way think is best. However, the teams are also held responsible for all
work activity and performance results in their respective areas.

In large organizations, the team structure complement what is typically a

functional or divisional structure. This allows the organizations to have
efficiency of a bureaucracy while providing the flexibility that team provide to
improve productivity at the operational level.

Examples for team structure

o In marketing field sales force is use this team based structure. Also forces
use this team structure.
o Team based structure usually practice in unbranded products, like
furniture, electric equipments, and cosmetics.


Easy Integration. Since it is the most popularly used form of team organization
it is easy to integrate. This is so, because every developer is experienced with
such a structure and understands their role within it.

Better Management, More Control. Since the entire team is physically within
the same building, communication is at its peak, since face-to-face

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Department of Business Management
communication is by far the best method in all situations. The physicality of this
team structure typically means it is easier to find and solve issues together. It is
also easier to spawn a team spirit, particularly in crunch periods, which can
spark increased motivation.

Greater productivity, in a team based structure there are various skills and
ability persons give their contribution produce a great output.


Significant Overheads. Of course hiring a full team and owning or renting office
space with all that goes with it (i.e. electricity, computers) a studio is going to
run high overheads. In fact, overheads can amount to a quarter of the budget
on some productions, which is an incredibly high ratio of cost.

Arising conflicts, team based structure lead to opinion conflicts among team

The matrix structure of contemporary organizational structures assigns
specialist from different functional departments to work on one or more

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Department of Business Management

In matrix structure one employee should report to two managers. So the

employee faces conflict when they address their superiors. To whom should I
report firstly, and to whom should I obey or directly responsible. Their functional
departments manager and their product or project manager who share
authority. The project managers have authority over the functional members
who are part of their project team in area relative to the project’s goals.
However decisions such as promotions, salary recommendations and annual
reviews remain the functional manager’s responsibilities. To work effectively,
project and functional managers have to communicate regularly, coordinate
work demands on employees and resolve conflicts together.

On the other hand the two managers influence to the employee so the
employee should want to their works in correct way. By using matrix structure
can establish high control and greater supervision throughout the project
period. It may helps to increase project performance and effectiveness.

In matrix structure we can easily get high performance because there is skilled,
ability full and experienced employees come from different functional

This structure is most effective to achieve overall organizational goals. It leads

to increase job satisfaction, experience and knowledge of the employees.

Project Structure
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Department of Business Management
An organizational structure in which employees continuously work on projects is
a project structure. In a project structure has no formal departments to which
employee return at the completion of a project. Instead employees take their
specific skills, abilities and experience to other work project.

In addition, all work activities in project structures are performed by teams of

employees who become part of a project team because they have the
appropriate work skills and abilities.

Project structure tends to be fluid and flexible organizational designs. There is

no departmentalization or rigid organizational hierarchy to slow down decision
making or taking actions.

Ex-: Information Systems build by using project structure,


Project structure reduces job boredom, because they work different projects,
and less work specialization.
Although the matrix structure work well and continued to be effective structure
design choice for many organizations are using more advance types project
structure, in which employees continuously work on projects. Unlike the matrix
structure, a project structure has no formal departments to which employees
return at the completion of a project. Instead, employee take there specific
skills, abilities and experiences to other work projects. In addition, all work
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Department of Business Management
activities in project structures are performed by teams of employee who
become part of a project team because they have the appropriate work skills
and abilities.

In this types of structures managers serve as facilitators, mentors and coaches.

They “serve the project teams by eliminating or minimizing organizational
obstacles and by ensuring that team has the resources they need to effectively
and efficiently complete their work.

Boundaryless Organizations

In a boundaryless organization, the boundaries that divide employees such as

hierarchy, job function, and geography as well as those that distance companies
from suppliers and customers are broken down. A boundaryless organization
seeks to remove vertical, horizontal, and external barriers so that employees,
managers, customers, and suppliers can work together, share ideas, and
identify the best ideas for the organization.

What are the boundaries?

Vertical - Boundaries between layers within an organization

Classic Example: Military organization
Problem: Someone in a lower layer has a useful idea; "Chain of command"

Horizontal - Boundaries which exist between organization functional units.

Each unit has a singular function.
Problem: Each unit maximize their own goals but not the overall goal of the

External - Barriers between the organization and the outside world (customers,
suppliers, other government entities, special interest groups, communities).
Customers are the most capable of identifying major problems in the
organization and are interested in solutions.

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Problem: Lose sight of the customer needs and supplier requirements

Geographic - Barriers among organization units located in different countries

Instead of being organized around functions with many hierarchical levels, the
boundaryless organization is made up of self-managing and cross-functional
teams that are organized around core business processes that are critical for
satisfying customers such as new-product development or materials handling.

The traditional vertical hierarchy is flattened and replaced by layers of teams

making the organization look more horizontal than vertical. Some believe that
the boundaryless organization is the perfect organizational structure for the
21st century.

How to remove vertical, horizontal, external boundaries?

By removing vertical boundaries through such structural approaches as cross

hierarchical teams and participative decision making, the hierarchy is flattened.
Managers can remove horizontal boundaries by using cross functional teams
and organizing work activities around work processes instead of arround
functional departments. An extenal boundaries can be minimized or eliminated
by using strategic alliances with suppliers, or value chain management
customer organization linkages,

Types of boundary less Organizations:

 Network Organizations

In a network organization, various functions are coordinated as much by

market mechanisms as by managers and formal lines of authority. Emphasis is
placed on who can do what most effectively and economically rather than on
fixed ties dictated by an organizational chart. All of the assets necessary to
produce a finished product or service are present in the network as a whole, not
held in-house by one firm.
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 Virtual Organizations

The most interesting networks are dynamic or virtual organizations. In a virtual

organization an alliance of independent companies share skills, costs, and
access to one another’s markets. It consists of a network of continually evolving
independent companies. Each partner in a virtual organization contributes only
in its area of core competencies. The key advantage of network and virtual
organizations is their flexibility and adaptability.

 The Modular Organization

A modular organization is an organization that performs a few core functions

and outsources noncore activities to specialists and suppliers. Services that are
often outsourced include the manufacture of parts, trucking, catering, data
processing, and accounting. Thus, modular organizations are like hubs that are
surrounded by networks of suppliers that can be added or removed as needed.
By outsourcing noncore activities, modular organizations are able to keep unit
costs low and develop new products more rapidly. They work best when they
focus on the right specialty and have good suppliers.

Learning Organizations

The concept of a Learning Organizations doesn’t involve a specific

organizational design. Learning Organizations is an organization that has a
developed the capacity to continuously adopt and change because all members
take an active role in identifying and resolving work related issues. In a Learning
Organizations, employees are practicing knowledge management continually
acquiring and sharing new knowledge and are willing to apply that knowledge in
making decisions or performing works. Some organizational designs theorists
even go so far as to say that an organization’s ability to do this-that is, to learn

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Department of Business Management
and to apply that learning as they perform the organization’s work may be the
only sustainable source of competitive advantage.

In a Learning Organization, it is a critical for members to share information and

collaborate on work activities throughout the entire organization, across
different functional specialties and even at different organizational levels. This
can be done by minimizing or eliminating the existing structural and physical
boundaries. In this type of boundaryless environment, employees are free to
work together and collaborate in doing the organizations work the best way
they can and to learn from each other. Because of this need to collaborate,
teams also tend to be an important feature of a learning organization’s
structural design. Employees work in teams on whatever activities need to be
done, and these employee teams are empowered to make decisions about
doing their work or resolving issues.

With these empowered employees and teams, there’s little need for “bosses”
to direct and control.

Leadership plays an important role as an organization moves to become a

learning organization. Leaders should facilitate the creation of a shred vision for
the organization’s future and then keeping organizational members working
towards that vision.

Also organizational culture is an important aspect of being a learning

organization. A learning organization’s culture is one in which everyone agrees
on a shared vision and everyone recognizes the inherent interrelationship
among the organization’s process, activities, functions and external
environment. In learning organizations, employees feel free to openly
communicate, share, experiment, and learn without fear of criticism or

Learning can’t take place without information. For a learning organization to

“learn”, information must be shared among members, that is organizational
members must engage in knowledge management.
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We can identify there are three traditional organizational design such as simple,
functional, divisional. Organizations face more strength and weakness in these
structures. We can see there are many strength and weakness in these
structures. Nowadays they try to ignore that weakness and develop these
organizational designs as Team structure, Matrix structure, Project structure,
Boundaryless structure and Learning structure.

Entire organization is made up of work team is define as team based structure.

Assign specialists from different functional departments to work on projects led
by project managers as matrix structure. Project structure is Employees work
continuously on projects. Design is not define by, organization limited to, the
horizontal vertical, organization external boundaries imposed by a predefined
structure is boundaryless structure. An organizational mind-set rather than
specific organizational design is learning structure. Using those contemporary
organizational designs organizations gain there are many advantages. Finally

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Department of Business Management
we can identify contemporary organizational designs have more important
things rather than traditional organizational designs.


1. Management, Stephen P. Robbins, and Mary Coulter, Seventh Edition 2003,

Prentice-Hall of India (pvt) Limited, New Delhi.

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