Organizational structure is a function of the organizations mission and strategy.

An organizational structure allows companies to shape their business model according to several criteria (like products, segments, geography, and so on) that would enable information to flow through the organizational layers for better decision-making, cultural development, and goal alignment across employees, managers, and executives.

Inhaltsverzeichnis Show

Introduction to organizational design
Starbucks Organizational Structure
Apple Organizational Structure
Amazon Organizational Structure
Microsoft Organizational Structure
Nestlé Organizational Structure
Nike Organizational Structure
Tesla Organizational Structure
Walmart Organizational Structure
Toyota Organizational Structure
McDonald’s Organizational Structure
Samsung Organizational Structure
Facebook Organizational Structure
Dell Organizational Structure
eBay Organizational Structure
IBM Organizational Structure
McKinsey Organizational Structure
Sony Organizational Structure
Create business innovation units not necessarily aligned with the core organization
Intrapreneurship
Centralization vs. Decentralization
What are the 4 types of organizational structures?
What is organizational structure example?
Why is organizational structure important?
Connected Business Frameworks
Is organizational structure a function of the organization's mission and strategy?
What are the functions of organizational structure?
What is organizational structure and strategy?
What is the organization structure?

https://fourweekmba.com/wp-content/uploads/2022/11/Organizational-Structure.mp4

Contents

Introduction to organizational design
- Functional organizational structure
- Divisional organizational structure
- Matrix organizational structure
- Flatarchy organizational structure
- Other types of organizational structures
  - Holacracy
  - Flat Organization
  - U vs. M Organization Structure
  - Circular Organization
  - Decentralized Organization
  - Decentralized Autonomous Organization
  - Mechanistic Organizational Structure
  - Mintzberg Organizational Structure
When does organizational structure really matter?
Aligning organization and business model
Organizational structure case studies
- Google Organizational Structure
- Starbucks Organizational Structure
- Apple Organizational Structure
- Amazon Organizational Structure
- Microsoft Organizational Structure
- Nestlé Organizational Structure
- Nike Organizational Structure
- Tesla Organizational Structure
- Walmart Organizational Structure
- Toyota Organizational Structure
- McDonald’s Organizational Structure
- Samsung Organizational Structure
- Facebook Organizational Structure
- Dell Organizational Structure
- eBay Organizational Structure
- IBM Organizational Structure
- McKinsey Organizational Structure
- Sony Organizational Structure
Create business innovation units not necessarily aligned with the core organization
Intrapreneurship
Centralization vs. Decentralization
What are the 4 types of organizational structures?
What is organizational structure example?
Why is organizational structure important?
Connected Business Frameworks
- Related

Introduction to organizational design

Understanding the organizational structure of a company allows an understanding of how decisions are made. It is also a powerful tool for executives to shape their organization toward desired goals and long-term objectives.

For that sake, designing a proper organizational structure also allows the execution of a company’s business model. Based on the organizational structure the company will also have a different shape.

For instance, some organizations are typically hierarchic, which implies a top-down approach of information flow and definition of roles.

Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Starbucks Organizational Structure

Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple, overlapping chains of command and divisions.

Apple Organizational Structure

Apple has a traditional hierarchical structure with product-based grouping and some collaboration between divisions.

Amazon Organizational Structure

The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.

Microsoft Organizational Structure

Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

Nestlé Organizational Structure

Nestlé has a geographical divisional structure with operations segmented into five key regions. For many years, Swiss multinational food and drink company Nestlé had a complex and decentralized matrix organizational structure where its numerous brands and subsidiaries were free to operate autonomously.

Nike Organizational Structure

Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).

Tesla Organizational Structure

Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.

Spotify Organizational Structure

Spotify has an N-form organizational structure with an emphasis on knowledge sharing and integration across business activities. Spotify’s N-form organizational structure emphasizes knowledge sharing and integration.

Walmart Organizational Structure

Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Toyota Organizational Structure

Toyota has a divisional organizational structure where business operations are centered around the market, product, and geographic groups. Therefore, Toyota organizes its corporate structure around global hierarchies (most strategic decisions come from Japan’s headquarter), product-based divisions (where the organization is broken down, based on each product line), and geographical divisions (according to the geographical areas under management).

McDonald’s Organizational Structure

McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

Samsung Organizational Structure

Samsung has a product-type divisional organizational structure where products determine how resources and business operations are categorized. The main resources around which Samsung’s corporate structure is organized are consumer electronics, IT, and device solutions. In addition, Samsung leadership functions are organized around a few career levels grades, based on experience (assistant, professional, senior professional, and principal professional).

Facebook Organizational Structure

Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).

Dell Organizational Structure

Dell has a functional organizational structure with some degree of decentralization. This means functional departments share information, contribute ideas to the success of the organization and have some degree of decision-making power.

eBay Organizational Structure

eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

Goldman Sachs’ Organizational Structure

Goldman Sachs has a hierarchical structure with a clear chain of command and defined career advancement process. The structure is also underpinned by business-type divisions and function-based groups.

IBM Organizational Structure

IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

McKinsey Organizational Structure

McKinsey & Company has a decentralized organizational structure with mostly self-managing offices, committees, and employees. There are also functional groups and geographic divisions with proprietary names.

Sony Organizational Structure

Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Create business innovation units not necessarily aligned with the core organization

Business model innovation is not an easy game. Indeed, in many cases, innovation spurs from the most unexpected places, and an organization that is not ready to capture it might be well disrupted in the future.

But how do you structure a large company for business model innovation? Where a small company is able to adapt more quickly to changing times. Large corporations might not survive and adapt fast enough.

In part that’s due to the fact that large corporations are extremely well aligned with their key customers. And as highlighted in the book, The Innovator’s Dilemma, in most cases managers in those companies make sound decisions in not pursuing certain opportunities.

That’s because often opportunities that don’t make sense in terms of the bottom line and key customers might also be those that in the long run will turn out to succeed.

That is why it’s important to have within any organization “innovation units” or small teams of people that operate independently and that are not necessarily aligned with the overall organization’s goal and vision.

That bit of “messiness” might be well repaid when those small innovation units stumble upon a new business line, which will become the core business in the years to come.

Intrapreneurship

The intrapreneur is an employee which is usually assigned to innovative projects that can impact the company’s future success. As such, the intrapreneur is an employee that acts as an entrepreneur within the organization. While the intrapreneur has access to the resources of the organization she does not bear the risks connected to it.

In some cases, organizations design their company to empower employees to take action as they were entrepreneurs.

While this sounds interesting in theory, for larger organizations – where most of the activities are focused on keeping and maintaining existing processes – intrapreneurship might not be viable, if applied to the whole organization.

Instead, the company will have a dedicated group of people that will be more independent or assigned to specific projects, that are highly innovative. Or the company, still in a scale-up stage, can assign part of the time of its employees to run projects they like.

For instance, Google’s 20% Project used to give its employees the freedom to pursue the products and projects they loved the most.

Centralization vs. Decentralization

The debate over centralization vs. decentralization is still open. Classic examples of extremely centralized organizations are represented by Government and bureaucracies in general.

Companies, especially at a large scale use a hybrid approach, where one part of the business is highly centralized, and other parts are instead, highly decentralized.

For instance, Coca-Cola uses what I defined as a franchained business model where its corporate structure is centralized. However, at the level of the bottler, once operations are established, Coca-Cola leaves them independent to run the business.

Coca-Cola follows a business strategy (implemented since 2006) where through its operating arm – the Bottling Investment Group – it invests initially in bottling partners operations. As they take off, Coca-Cola divests its equity stakes, and it establishes a franchising model, as long-term growth and distribution strategy.

Another example is Amazon. In general a centralized company, mostly run in hierarchies. To run some parts of its business it uses a different approach. In last-mile delivery, Amazon relies on an army of “independent drivers” or partners, that are not directly tied to Amazon’s hierarchy, but kept independent.

Last-mile delivery consists of the set of activities in a supply chain that will bring the service and product to the final customer. The name “last mile” derives from the fact that indeed this usually refers to the final part of the supply chain journey, and yet this is extremely important, as it’s the most exposed, consumer-facing part.

What are the 4 types of organizational structures?

The four main types of organizational structures can be divided into functional, divisional, matrix, and flatarchy. Organizational structures can move from vertical and pyramidal structures, with a rigid structure, to more horizontal, flat systems, which are way more fluid, and with much less space between employees and management.

What is organizational structure example?

In the Internet era, organizations have been more horizontal and flat, thus reducing the space between employees and management. An example is Google’s early days, a flat organization with functional teams organized around projects. The startup culture has introduced flatter organization patterns. Yet, as some of these startups have scaled to a much bigger size, they have become more centralized and hierarchical.

Why is organizational structure important?

Organizational design is a critical puzzle for making a company successful. Indeed, suppose we identify a corporation or startup as comprised of three main layers (product, business model, and organizational design). In that case, how these companies structure their organization will also determine their ability to execute their mission. Thus, in a sense, the organizational structure is critical for executing the overall business strategy.

Other resources for your business:

Types of Business Models You Need to Know
Marketing Strategy
Blitzscaling Business Model Innovation Canvas In A Nutshell
How To Create A Business Model
What Is Business Model Innovation

Connected Business Frameworks

Porter’s Five Forces

Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces

Ansoff Matrix

You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived by whether the market is new or existing, and the product is new or existing.

Blitzscaling Canvas

The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.

Business Analysis Framework

Business analysis is a research discipline that helps drive change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

Gap Analysis

A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution is in line with the company’s mission and long-term vision. Gap analyses then help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool to improve execution.

Business Model Canvas

The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.

Lean Startup Canvas

The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.

Digital Marketing Circle

A digital channel is a marketing channel, part of a distribution strategy, helping an organization reach its potential customers via electronic means. There are several digital marketing channels, usually divided into organic and paid channels. Some organic channels are SEO, SMO, and email marketing. And some paid channels comprise SEM, SMM, and display advertising.

Blue Ocean Strategy

A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

Is organizational structure a function of the organization's mission and strategy?

Answer and Explanation: True. Organizational structure is viewed as a means of achieving an organization's mission and strategy. It is an instrument of getting people to work towards the achievement of a common mission, therefore, acting as a facilitator in pursuing organizational goals.

What are the functions of organizational structure?

The role of organizational structure is to help make clear who answers to whom and where they fit in the chain of command. An employee may have a director who reports to a vice president who in turn reports to a chief executive officer who reports to a board of directors or company ownership.

What is organizational structure and strategy?

Strategy is how your organization goes about its work is its strategy (vs. your strategic plan document). This includes the plans that set out how your organization will use its major resources to meet specific goals. Structure is the way the pieces of your organization fit together to meet a common goal.

What is the organization structure?

A system that outlines how specific activities are handled to fulfill a strategic mission is known as an organizational structure. Rules, roles, and obligations are all part of these activities. The organizational structure also determines the flow of information between divisions within the corporation.