Organizational Structure

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Definition of 'Organizational Structure'

Organizational structure is the framework that defines how a company is managed and how its employees interact with each other. It includes the company's hierarchy, reporting lines, and decision-making processes.

There are many different types of organizational structures, and the best structure for a particular company will depend on its size, industry, and goals. Some common types of organizational structures include:

* **Functional structure:** This is the most traditional type of organizational structure, and it is based on the functions that are performed within the company. For example, a company might have a sales department, a marketing department, and a finance department.
* **Divisional structure:** This type of organizational structure is based on the products or services that the company offers. For example, a company that sells both cars and trucks might have a separate division for each product line.
* **Matrix structure:** This type of organizational structure combines the functional and divisional structures. Employees report to both a functional manager and a divisional manager.
* **Network structure:** This type of organizational structure is made up of a network of independent units that are linked together by common goals or interests.

The organizational structure of a company can have a significant impact on its performance. A well-designed organizational structure can help to improve communication, coordination, and decision-making. It can also help to create a sense of shared purpose among employees.

However, an organizational structure that is not well-suited to the company's needs can lead to problems such as inefficiency, conflict, and low morale.

When designing an organizational structure, it is important to consider the following factors:

* The size of the company
* The industry in which the company operates
* The company's goals
* The company's culture

It is also important to remember that organizational structures are not static. They need to be able to adapt to changes in the company's environment. As the company grows, changes its products or services, or enters new markets, its organizational structure may need to be modified.

By carefully considering the factors involved in organizational structure, companies can create a framework that will help them to achieve their goals and objectives.

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