Organizational structure is a framework of formal and informal polices


Organizational structure

In the planning of any project, project engineer must organise the whole project with their knowledge, skill and experienced. The beauty of project manager is organise the work in suitable way. Or we can say that it is the manner in which a resource utilizes by a company. For example renewable energy project. This is responsibility of project manager that how do project manager organise the department jobs? How he manage the worker who does what, who work where, when work is started and when it will finish or stopped, who reports to whom in the team work. The framework for answering these all types of questions and more similar to these, is organizational structure.

Organizational structure is a framework of formal and informal polices and rules within which an organization arranges its allocates rights, lines of authority and duties. It determines the way of manner and extent to delegate which power, roles and responsibilities and also controlled and coordinated, and help us to flow of information in between the management levels. Organizational structure relies on the objectives of organizations and the strategy which achieve the goals. In the structure of centralized; only decision taking power is in the hand of high level of management and in tight control is exercised over divisions and departments. Everybody follows the rules and regulations of centralized committee. All rights are reserved to the management which implement these strategic plans. In the structure of decentralized, making the decision power is distributed and department and sections are free to work with their own strategy. They have variety of autonomy and degrees in the decentralized structure.

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Many companies are still wants to implement new structure of organization for better results and more efficient outputs. More and more companies are adopt these new and advanced structural techniques in their organisations. They need flexibility in their project none of other structure provide flexibility like organisational structure.Infact, In academic level who study theory of management are starting to encourage to different kind of industries or firms to change their structure for better and accurate outputs or results. They are prepared to respond to what we call trigger points. "A trigger point is an external event that has an impact on an organization. It could be a change in the markets; it could be a change in global competition; it could be the advent of new technology. These trigger points and any numbers of others call for immediate responses, as well as organizational flexibility and adaptation".

There are various other reasons that business strategies and structures are change in organizations.

The following table below describe a number of these "drivers of change" and the main points of their business impacts; there are some examples of companies who adapted such kind of changes in their organisations.


Key Points


Employee Involvement

Participation in decision making

• General Motors

• Hampton Inn Hotels

• SAS Airlines


Continuous process improvement

• Globe Metallurgical, Inc.

• Motorola

• Westinghouse

Process Reengineering

Redesigning work flow to drive out waste


• Lotus Development

• Southwest Airlines

Concurrent Engineering

Integration of design, manufacturing, support

British Aerospace

• Carolla Development

• Comdial Corporation

Six Sigma

Statistical control of variance; process improvement

• AlliedSignal

• General Electric

• Motorola


Geographic dispersal, national culture, laws

Most large organizations to varying degrees

Business Model Reinvention

Refine customer acquisition and retention


• Southwest Airlines

Table: Drivers of Change and Their Impact on Business

Such adaptation may entail initiatives aimed at increasing employee participation in the decision-making process, or embracing concepts.

such as Total Quality Management (TQM), which has been a trend for about fifteen years. Any company still embracing TQM at this point certainly needs to consider changing its organizational structure.

Process re-engineering and concurrent engineering, as the terms suggest, are measures taken to turn a company's engineering practices towards process analysis and concurrent engineering, combining both the design and manufacture into one division.

Adapting to Six Sigma demands company-wide process improvements and close scrutiny of those processes from one division to another.

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Globalization is an intimidating and sometimes controversial issue that also tends to drive companies to change their Organizational Structures.

Business model reinvention - such as IBM changing from a product manufacturer into a services and consulting firm - is one of the more drastic examples of business reorganization; but even this sort of sweeping change must be an option for a truly flexible organization.

Of course, these examples represent evolving business trends that have come and gone over the years. Flexible organizations try to adapt to such trends as quickly and efficiently as possible to enhance business and achieve organizational goals.

In the discussion of structure of organization, there are few key term which are very helpful to become acquainted. It describes aspects of business organization practices. Simply we can say that arranges or rearranges in the organizations is organizational structure.

Once any organization decided to implement organizational structure then they design or draw up an chart of organization which is called organizational chart. The chart is not only very interesting although it they are very helpful and very easy to handle with the tools which are provided by organizational structure. This structure increases the efficiency of the organization and work very flexible with management and employers, it build relationship among the staff of the organisation.


An organization chart is a figure or diagram in which it shows branches of organization or we can say organization structure and shows relationship between the positions or jobs. This is also same as other different diagrams for example ones showing the different elements of a field of knowledge or languages groups. In the encyclopaedia of French had one of the first chart of organizational knowledge in genera. There are number of way to draw a chart according to the organization requirement and staff.

Hierarchy of Authority

There is one another key term which is familiar in the organization designing; the key is called as hierarchy of authority

Hierarchy of Authority is a concept which explain the how to work, in easy words we can say that who reports to whom, and who take the which charge, this has implication for the labor division because, under this authority, number of tasks are shared and distributed across the organization. This process necessarily entails varying specialization degrees of tasks and jobs, which we see a lot these days as the business environment grows more sophisticated.

Types of Organizational Structures

Regarding Types of Organizational Structures, I will first critically note that an appropriate organizational structure for any given company is a very elusive animal, indeed. Every company tends to organize itself differently, so there is no absolute right and no absolute wrong way to design an organization. Appropriate organizational structure depends upon the unique strategy of the business, its unique customer base, its unique sense of products and services, and its management of these considerations as they are dispersed throughout the enterprise.

The most common organizational types may be classified as follows:

The Functional Structure

The Divisional Structure

The Matrix Structure, and

The Horizontally Linked Structure

Before we discuss each of these structures, I'd like to note that with any given company, and especially with a very large company (an organization with ten, fifteen, twenty, forty thousand people, for instance), we typically do not see that a single organization adheres to a single organizational structure. Different structures may benefit different portions of the organization in both subtle and profound ways.

For a hypothetical example, the very controversial Matrix Structure may work extremely well in a company's research and development environment; however, the sales environment of the same company may benefit greatly from the Divisional option. The distinctions and benefits of these structures will become more apparent as we discuss each of the organizational types.

Dimensions of Organizational Structure

Think about any Organizational Structure and visualize an Organizational Chart in two dimensions: There is the Vertical Dimension, in which the organization is considered to be either a tall or a flat structure; and there is the Horizontal Dimension, in which an organization is considered to be either wide or narrow.

The Vertical Dimension of Organizational Structure

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The Vertical Dimension of the Organizational Structure basically lays out who is in charge of whom and who makes the decisions inside an organization. It is the hierarchy of authority within a company, and herein we find something that we call the Span of Control, which plays an especially important role in our discussion of the Functional Structure.

Span of Control is a very simple concept: It refers to the number of people who can report to a single manager inside of the hierarchy. However, the optimal Span of Control is very difficult to quantify, because it varies based upon the type of organization and the work being executed; the nature of the work, the level of Formalization, the skills of the people, the business culture, and the management style of the organization all influence the optimal Span of Control within any given company.

Let's take another hypothetical example: In a production or manufacturing company, a single manager may very well be able to handle a large number of people (say, 12 to 14 workers), because in a manufacturing facility, the work is most likely driven by machines. Certainly, in this environment there will be numerous processes and procedures, but there's not going to be a great deal of latitude as to what an individual does on the job. It's a simple matter of following Step One with Step Two, Step Two with Step Three, and so forth.

However, a software company or a video game manufacturing firm will call for an entirely different type of task, entirely different skill sets, with an entirely different type of people executing the work. Herein we find people who are very well versed in computer technology, and they tend to excel in creative and innovative tasks. Their work is not driven by rigid processes and procedures. It is a creative environment. And, in a case like this, obviously the Span of Control would need to be smaller, because a manager cannot oversee as many people when those individuals are granted greater creative latitude.


The aim of this strategy is to set out a clear corporate framework to achieve the most effective method of procuring outcomes in line with the Council's business objectives and best value principles.

The term procurement, in this strategy, has the widest meaning covering all aspects of securing services or products, whether through external means or internally through the Council's own resources. The principles will also apply where the Council is party to the provision of a service to the community but may not have initiated the process or be the main body recognised as accountable for the provision of the service or activity.

The process of "getting a building built" (Construction Round Table 1995) has many different terms, meaning much the same thing. Writers on the subject refer to "procurement method" (Minogue 1994, Siddiqui 1996), "procurement route" (Latham 1994, Park 1994) and "procurement path" (Hibberd et al 1990, Construction Round Table 1995), "procurement systems" (Masterman 1992, Brook 1993) and "procurement strategy" (Morledge and Sharif 1995).

Potter (1995) states the approach to construction procurement is "the process of obtaining building work, from deciding to proceed with construction to accepting the completed work".

Franks (1984) uses a systems approach and defines the procurement system as "the amalgam of activities undertaken by a client to obtain a building".

The main elements that have been identified can be included in a diagram to represent a construction procurement system:

Within the procurement system it is the subject of defining the procurement strategy which leads to many definitions and categories for the method of appointing the designers and constructors of a project. A number of terms used for the procurement of construction projects were identified earlier. The preferred term that will be adopted within this paper to mean the design and construction of a project is procurement strategy.

Evolution of current procurement strategies.

The evolution of procurement has been identified in three phases up to 1991 (Masterman, 1992). Procurement strategies are now in the fourth phase of development, the first being 1945 - 1972, the second being 1973 - 1980, the third being 1981 - 1991 and the fourth being 1992 to the present date.

During the first phase both the Simon Report (1944) and the Phillips Report (1950) recommended a move from predominant open competitive tendering to the use of selective bidding. The Phillips Report and the Emmerson Report (1962) both noted that there was a greater need for better co-operation in the construction process, which was also identified by the Banwell Report (1964). In 1967 the Action on the Banwell Report noted some progress since 1964 and indicated greater use of serial and negotiated tendering was required.

For the purposes of categorising the procurement strategies, the following categories will be used for comparing the surveys; conventional and variants, design and build and variants and management and other. The following table from 1 - 13 was carried out by Rowlinson (1986), the remainded compiled from recent, comparable surveys.

Procurement strategies used by category as % of all strategies.

Year of survey


and variants

D&B and



and other