Organizational Structure May Be Organized By Product


Functional Organization StructureOrganizational structure may be organized by product, services, major projects or programs, or profit centers.
Throughout the semester, we have considered various structural dimensions and the contextual factors that determine the appropriate organization structure to adopt.

  1. Identify three structural dimensions and describe how each dimension varies. (5 marks)
  2. Explain the impact of two contextual factors on organization structure and design. (5 marks)

Answer: (1) Here is a list of structural dimension that attributes to the designing of an organization and are also useful during strategic planning too:

  • Specialization – The roles of specialists are often dispersed within an organization and also closely associated to the form of the organization. So, one can say that when an organization segregate into departments, the role of specialization comes into focus.
  • Standardization- The process of standardization varies from firm to firm. The recurrence of procedure and control also varies.
  • Formalization-. Formalization focuses more on written guidelines, procedures, events etc. It ensures consistency and keeps the organization safe.At times people get confused with formalization and standardization, as they consider both to be same

(2) Two contextual factors that impacts organization structure and design are:

  • Business strategies are also an important factor that affects the organization’s structural development. High-growth firms usually have a small organization structure so they can react to changes in the environment of the business that is faster than other companies.
  • The external business environment is a crucial factor that plays an important role in the company’s organizational structure. Dynamic environment that changes constantly with the consumer desires and behavior is often more turbulent than steady environment. Companies often struggle when they are creating some organizational structure in an environment that is immobile.


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