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A typical corporate structure consists of various departments that contribute to the company's overall mission and goals. Common departments include
Marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
,
Finance Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fin ...
, Operations management, Human Resource, and IT. These five divisions represent the major departments within a publicly traded company, though there are often smaller departments within autonomous firms. Many businesses have a
CEO A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especial ...
and a
Board of Directors A board of directors (commonly referred simply as the board) is an executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit orga ...
, usually composed of the directors of each department, potentially with the addition of one or more
non-executive director A non-executive director (abbreviated to non-exec, NED or NXD), independent director or external director is a member of the board of directors of a corporation, such as a company, cooperative or non-government organization, but not a member of th ...
s. There are also company presidents, vice presidents, and
CFO The chief financial officer (CFO) is an officer of a company or organization that is assigned the primary responsibility for managing the company's finances, including financial planning, management of financial risks, record-keeping, and fina ...
s. However, there is a great diversity in corporate forms, as enterprises range from single company to multi-corporate conglomerate.Roman Tomasic, Stephen Bottomley, Rob McQueen,
Corporation Law in Australia
', Federation Press, 2002, pp.167-173
The four main corporate structures are
Functional Functional may refer to: * Movements in architecture: ** Functionalism (architecture) ** Form follows function * Functional group, combination of atoms within molecules * Medical conditions without currently visible organic basis: ** Functional s ...
, Divisional, Geographic, and the
Matrix Matrix most commonly refers to: * ''The Matrix'' (franchise), an American media franchise ** ''The Matrix'', a 1999 science-fiction action film ** "The Matrix", a fictional setting, a virtual reality environment, within ''The Matrix'' (franchis ...
. Many corporations have a “ hybrid” structure, which is a combination of different models with one dominant strategy.


Importance

Important. Choosing a structure for a company is an important decision and must be strategically thought out because it could either aid or harm the making of business. The structure must also be a good fit for the type of activities, goals, and vision of the company. The organizational structure is a reflection of how conveniently business is conducted.


Models


Functional structure

This model is commonly used in single-program organizations. It is basically the standard structure mentioned earlier, which is organized around departments. This structure is most appropriate for all small organizations.


Divisional structure

Divisional structures are also called ''cstructures'' because they are based on a certain product or project. This structure is most common in multi-service organizations. Normally, it is based on the departments divided in the firm.


Geographic structure

Geographic structures are used in multi-site organizations and are frequently used by networks across different geographic areas.


Matrix structure

A matrix structure is probably the most complex of these models, as it is organised around multiple dimensions (e.g. geography and product), typically with more than one supervisor. This structure is commonly used in very large organisations because a greater volume requires greater co-ordination. However, this structure is very difficult to manage so it is usually better to reconsider its use and replace it with a different type of structure, then compensate for the tradeoffs.


Classifications

In addition to those models, there are other factors that make up the structure of an organization. Depending on the chain of command, a company's structure could be classified as either vertical or horizontal, as well as centralized or decentralized. A vertical structured organization or a "tall" company describes a chain of management, usually with a CEO at the top delegating authority to lower-level managers through mid-level managers. Horizontal or "flat" companies, however, have fewer middle-managers, which implies that high-level managers are more involved in daily tasks and interact with customers and front-line personnel. A centralized organizational structure describes how a company's direction and decisions are set by one individual only. Centralization complements companies with "tall" structures to create
bureaucratic The term bureaucracy () refers to a body of non-elected governing officials as well as to an administrative policy-making group. Historically, a bureaucracy was a government administration managed by departments staffed with non-elected offi ...
organizations. Decentralized organizational structures allow individuals some autonomy at each level of the business, because they join the decision-making process. Evidently, classifying organizations as centralized or decentralized is linked to them being "tall" or "flat".


Technology

There is an emerging trend in the way companies shape their organizational structures. More businesses are moving towards a much flatter, decentralized organizational structure. Technological developments accelerate these organizational changes as they improve the efficiency of business, causing it to restructure departments, modify position requirements, or add and remove jobs.


Books / authors / theorists


Gareth Morgan's Images of Organization: 6 metaphors

Frank Ostroff's "The Horizontal Organization"
*
Henry Mintzberg Henry Mintzberg (born September 2, 1939) is a Canadian academic and author on business and management. He is currently the Cleghorn Professor of Management Studies at the Desautels Faculty of Management of McGill University in Montreal, Quebec, C ...
* Peter Senge and the Learning Organization
Jay Galbraith's Star Model


See also

* Organisational culture * Organisational design *
Corporate governance Corporate governance is defined, described or delineated in diverse ways, depending on the writer's purpose. Writers focused on a disciplinary interest or context (such as accounting, finance, law, or management) often adopt narrow definitions t ...
*
Management Management (or managing) is the administration of an organization, whether it is a business, a nonprofit organization, or a government body. It is the art and science of managing resources of the business. Management includes the activities ...
*
Consulting firm A consulting firm or simply consultancy is a professional services, professional service business, firm that provides expertise and specialised labour for a fee, through the use of consultants. Consulting firms may have one employee or thousands; t ...
s * Nonprofit governing boards *
Board of directors A board of directors (commonly referred simply as the board) is an executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit orga ...
*
Dual-listed company A dual-listed company or DLC is a corporate structure in which two corporations function as a single operating business through a legal equalization agreement, but retain separate legal identities and stock exchange listings. Virtually all DLCs ...
*
Business model A business model describes how an organization creates, delivers, and captures value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-published, 2010 in economic, socia ...


References

{{reflist Corporations Organizational studies Corporate law