Organisational Structure and Different Types of Structures

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26/09/17 Business Reference this

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Organisational structure and different types of structures

Organsational structure is the internal, formal framework of a business that shows the way in which management is linked together and how the authority is transmitted. (Stimpson P. 2011)

It is basically a framework used to describe the hierarchy inan organisation. Every business needs to have their own organizational structure as it helps in identifying the job at each level of an individual followed by its functions and it also assists in obtaining their own goals for development. There is a need for every type of organisation to have their own structure specially when it comes to large enterprises as it becomes difficult activities of the various departments and functions. Following are the various type of organisation structure a business can have:

  1. Functional Structure:

Figure 1: Functional


This type of structure mainly focuses on the functions set up for each department of the organisation. It works well for small enterprises as each department is mostly dependent on the knowledge, skill and talent of the other employees to support themselves. It leads to specialization and efficiency in the performance, however on the other hand it can also lead to conflicts as it restricts the employee of different departments to communicate and coordinate with each other because of the boundaries of working in their own department separately.

  1. Product Structure:

Divisional Structure

Figure 2: Product


It’s focus is on the organisations product lines and this type of structure can mostly be found in retail stores which exist in a number of cities. Mostly large enterprises who have different type of products with their own departments and functions have this structure. Despite this structure being faster when it comes to making decisions, it can also lead to extra cost due to repeated functions for each product.

  1. Regional Structure:

Chief executive officer overseeing North America, South America, Europe, Asia, and Africa.

Figure 3: Regional


Organisations who develop and duplicate department in various functional areas across the region use this structure as they want to focus on the local strategies of the area to keep up with the competition by studying their preferences and demands.

  1. Multi-divisional Structure:


Figure 4: Multi-division


This structure is used for large companies which operate in wide geographical areas as the number of functions, employees and activities are very large. The benefit of this structure is that it is more specific and rapid but on the other hand due to the employees being in different divisions the communication is uneasy.

  1. Multi-function Structure:

It mostly focuses on achieving the business goals as it diverse functional expertise to work together on it.

  1. Matrix Structure:

Figure 5: Matrix


This happens to be a combination of divisional and functional structure as it handles product line and functions together. Though it provides benefit of both structures to be in one enterprise it can create a conflict when it comes to increased costs and internal complexity.

Organisational culture and different types of cultures

Culture is compromised of the assumptions, values, norms and tangible signs of organisation members and their behaviour. Members of the organisation soon come to sense the particular culture of an organization. (Katrin O. ,2010)

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Organisational culture refers to the values, expectations and behaviour which hold the organisation together. It basically based on customs, beliefs and rules which develop over time. It also refers to an arrangement of the objectives and ideas made by the people in the organisation and is not only referred to the people employed in the company but also their products, services and the various process involved. There are four main types of cultures:

  1. Power Culture: This is used by most organisations where the power lies at the top level of management as they make the decisions. It is mostly suitable for organisations which have small number of employees. The relationship is adaptive and informal which leads to good personal relations.
  2. Role Culture: This is mostly found in large hierarchical enterprise where each employee has their own role to perform specifically. Here the employees work more close to their job description and are creative in their own way. The relationship is formal in nature.
  3. Task Culture: Here teams are made to complete tasks appointed. Every team ends up making their own cultures as they have their own authority to make decisions. In this type of culture teams are creative but on the other hand it can also be costly due to the market price being demanded for their service by the experts.
  4. Person Culture: This is more of an individualistic culture where everyone are allowed to express themselves and make decisions of their own.

Compare and contrast two organizational chart of real companies

The two organisations taken for this report are Nestle and McDonalds.

I. Nestle

Figure 6: Nestle Logo

Source:, 2014

Nestle is a multinational company headquartered in Switzerland. It’s main focus is to provide health oriented food for its customers for a healthier lifestyle following with different varieties of products including beverages. They have products which are specially for people who are very conscious about weight gain, cornflakes that contain iron and proteins for the development of young children. It believes in satisfying its customers at any point of the day and all around the world as their products can be found worldwide. They want to provide reliable quality food products which will contribute towards the nutritional factor of consumers till the brand’s existence. (, 2014)

Organisational Chart of Nestle


Figure 7: Nestle Organisational Chart


It can clearly be seen from their organizational structure that Peter Brabeck-Letmathe is the main chairman of this multinational organizational. According to their website there are 14 members of the Board of Directors. Here the shareholder are the owners of the company followed by them having their own separately legal identity from the main owner.

II. McDonalds


Figure 7: McDonalds


Mcdonalds has been operating since the year 1948 which is more than 100 years ago, they have a well- established market through out the different countries in the world. McDonald’s is the leading global foodservice retailer with more than 34,000 local restaurants serving nearly 69 million people in 119 countries each day.

Organisational Chart of McDonalds


Figure 8: Organisation Chart McDonalds

Source: (, 2014)

Over 70% of McDonalds are run through franchise. It is form of organisation where a business who doesn’t want to sell directly come in contact with a franchisee to sell their product to consumers based on certain rules and regulations. McDonalds has a functional structure design. Big companies normally have this structure where the departments carry out most of the work. According to the chart above you can see how everything is structured along the lines. Their hierarchy starts from their Chief Executive Officer who is at the top followed by operating officer and so on.

When it comes to comparing these two organisations they are both multinational companies with a reputed image among their customers. Both of their purpose of existence is to engage into getting maximum customers satisfaction as their Research and Development department is very efficient.

On the contrary, Nestle happens to have a decentralized form of structure where the authority makes the decision through all levels of the organisation which means that their strategies and rules are flexible.

Whereas McDonalds has a centralized structure where the top management makes the strategies and decisions that make the procedures and rules become rigid.

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Nestle has a structure in their hierarchy chart which is tall with a long chain of command. On the other hand, McDonalds has a flat structure with a controlling group at each level of their hierarchy.

Followed by Nestle having a decentralized structure, it makes their rules and regulation flexible where the management have the opportunity to make changes in decision according to the situation. But in McDonalds due to lack of flexibility in their organisation structure their effectiveness and efficiency lack behind in decision making.

The major difference between these two companies is that Nestle has a regional structure which is based on the different geographical areas. Whereas McDonalds has a functional structure in which different functions are performed by different departments.

Bibliography List


Stimpson P.(2008). Business Studies. Cambridge University Press: UK

Katrin O.(2010). Organisation Culture – An Insight in Organisation. Grin Verlag: Germany[Online]

Available at: culture&f=false

[Accessed on 25th Sep 2014]

Websites nestle organizational chart organizational chart of mcdonalds

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