Organisational Structures and Business Management

The success of a business lies in the ability of the Management to streamline and harmonize operations. Business leaders can adopt different organizational structures based on the nature of the venture (Cosh, Fu & Hughes, 2012). The functional structure works well with small enterprises and promotes specialization. Nevertheless, it discourages cooperation amid departments. Divisional structure is mostly used in multinational corporations that have subsidiaries in different geographic regions. It enhances organizational efficiency and facilitates the realization of strategic goals. The primary disadvantage of the divisional structure is that it promotes departmentalization, thus leading to incompatibilities (Drafke & Murtaugh 2009). The matrix structure is a blend of functional and divisional structures and the most complicated business configuration. It facilitates specialization and teamwork.

Nowadays, many companies utilize contemporary management techniques to run their operations. Modern Management is customer-centric and ensures that employees have requisite skills and resources to meet consumer needs (Brocke et al. 2014). For organizational leaders to succeed, they must hone certain qualities. They include assertiveness, adaptability, and dependability. Besides, they must have experience in strategic Management. According to Mullins and Christy (2013), strategic Management entails the formulation and discharge of critical initiatives, paying attention to organizational goals, and the internal and external environment.

Types of Organisational Structures

Functional Structure

There are three primary types of corporate structures, which are functional, divisional, and matrix. The functional structure entails splitting an organization into departments based on their purposes. Gebauer and Kowalkowski (2012) allege that in the functional structure, an institution comprises sales, marketing, and production departments. Employees are assigned to individual units depending on their knowledge and talent. Additionally, some boundaries define the functions of each department. The individual units operate independently, and communication between the departments is minimal. The functional structure is most feasible in small organizations.

Advantages and Disadvantages of Functional Structure

The functional structure facilitates specialization. Individual departments function as self-reliant mini-companies that are responsible for specific tasks. Additionally, it promotes efficiency and productivity. One of the disadvantages of the functional structure is that it discourages teamwork. The presence of boundaries between departments inhibits cooperation. Vandeveer and Menefee (2010) argue that functional structure is difficult to manage, especially as an institution continues to grow.

Divisional Structure

Divisional structure is mainly applied in multinational corporations or companies that cover a broad geographic area. Robbins and Judge (2014) assert that the divisional structure comprises multiple parallel teams that work on one product or service line. An example of a corporation that uses a divisional structure is General Motors. The company has multiple identical units where each division works on a single car brand and manages its advertising, budgeting, and hiring. Small companies can also use the divisional structure to run their operations. They can come up with numerous sales teams to target various geographic regions.

Advantages and Disadvantages of Divisional Structure

The divisional structure enables an organization to realize its strategic objectives as individual teams concentrate on one product or service line. An individual division has a president or vice president. It helps to ensure that the units get the necessary financial support from the company. The divisional structure enables an organization to create a common culture, which enhances employee motivation and knowledge acquisition. One demerit of the divisional structure is that it promotes office politics at the expense of strategic thinking, thus impeding efficient allocation of resources. The structure may result in compartmentalization, which can cause inaptness.

Matrix Structure

The matrix structure is “a hybrid of divisional and functional structures” (Steiger, Hammou & Galib 2014, p. 241). It is one of the most complex organizational structures that a business can implement. The matrix structure is mostly applied in multinational corporations, and workers have dual reporting relationships. Tolbert and Hall (2016, p. 52) alleges, “The reporting relationships are set up as a grid, or matrix, rather than in the traditional hierarchy.” The employees report to both the production and functional managers. Examples of companies that use matrix structure include Hughes Aircraft, Caterpillar Tractor, and Texas Instruments.

Advantages and Disadvantages of Matrix Structure

Simon, Fischbach, and Schoder (2014) maintain that matrix structure is intrinsically multifaceted and flexible, making it suitable for multinational corporations. Furthermore, the structure is dynamic and promotes teamwork and specialization. The primary disadvantage of the matrix structure is inconsistent commitments amid workers due to the high manager-to-employee ratio.

Contemporary Management

Modern Management refers to the use of advanced strategies and techniques to run organizations (Franco-Santos, Lucianetti & Bourne 2012). Today organisations design their operations in ways that suit the needs of the target customers. Additionally, they ensure that employees have essential skills to guarantee success. Contemporary Management focuses mainly on the needs of the customers. Organisational departments, particularly the sales division are encouraged to forecast changes in consumer demands and work with the production unit to generate goods that can satisfy the needs (Jarrar & Smith 2014).

Leadership Theories

The Great Man Theory

The great man theory refers to “a 19th-century idea according to which history can be largely explained by the impact of “great men”, who due to their charisma or political skills used power in a way that had decisive historical impact” (Dinh et al. 2014, p. 43). An analysis of renowned leaders like Julius Caesar, Queen Elizabeth, Alexander the Great and Napoleon reveals that they all differ from average people in many ways (Dinh et al. 2014). The same applies to modern leaders such as Mahatma Gandhi and Barrack Obama. The leaders demonstrate a high degree of aspiration and transparent image of what they wish to attain. Politicians, sports personalities, and top executives often appear to have a quality that distinguishes them from other people. According to the great man theory, leaders are unique and do not require being omniscient prophets or academically geniuses (Spector 2016). The theory supposes that leaders are born and not created. It argues that leaders are endowed with unique traits that capture the thoughts of the masses. It is these characteristics that result in the individuals assuming positions of power and leadership. According to the great man theory, the persons in authority merit the positions due to their singular endowment. The theory argues that these qualities remain constant regardless of time or associations. It is criticised for citing masculine qualities as the only traits that make individuals active leaders.

The Trait Theory

The trait theory maintains that leaders possess special intrinsic qualities that allow them to lead. It identifies qualities such as dependability, assertiveness, adaptability, and persistence as the main traits that distinguish leaders from other people (Germain 2012). It is imperative to note that these qualities do not determine if an individual will be a successful leader. However, they are preconditions that make people become prospective leaders. People cannot succeed as leaders without these traits. Proponents of trait theory argue that leadership development entails determining and gauging qualities, separating potential leaders from non-leaders, and equipping them with essential skills through training. The modern thinking holds that a majority of the traits associated with successful leaders can be acquired through training. In line with the contemporary thinking, the trait theory argues that leadership is a “skill to be mastered and therefore, the mentioned characteristics can all be honed” (Tyssen, Wald & Spieth 2013, p. 58). Potential leaders require understanding the skills and working on their weaknesses to ensure that they have all the essential traits. The major limitation of trait theory is that it leads to biased judgment when establishing who is a successful leader.

Strategic Management

According to Fitzroy, Hulbert, and Ghobadian (2012, p. 23), “strategic management entails the formulation and implementation of crucial initiatives taken by a company’s top management based on consideration of resources and an assessment of internal and external environments of the organisation”. Strategic Management gives the direction that a business requires taking to realise its goals. It entails definition of organisational goals, allocation of resources, plan design, and policy development. According to Vickers and Lyon (2012), strategic Management is dynamic in nature. Three essential principles inspire strategic Management. They include “creating unique and valuable market position, making trade-offs by choosing what not to do, and creating fit by aligning company activities with one another to support the selected strategy” (Vickers & Lyon 2012, p. 52). Critiques of strategic Management argue that it can limit managerial discretion in a vibrant setting. They contend that strategic Management leads to organisational leaders initiating programs without adequate knowledge, therefore leading to challenges in the course of their implementation. Some theorists recommend the use of an iterative method to implement organisational goals. The managers must have room to adjust their strategies based on the changes in the internal and external environment.

Strategic Objectives of an Organic Food Start-Up

Establishing New Platforms for Growth

Today, many customers are conscious of their health and prefer to buy organic food products. Indeed, the demand for organic food has increased significantly over the last five years resulting in the emergence of numerous organic food start-ups (Falguera, Aliguer & Falguera 2012). Competition in the organic food industry requires start-ups to have clear and feasible strategic objectives. One of the strategic goals of an organic food start-up is to establish new platforms for growth. The demand for organic food continues to rise across the globe. Therefore, any start-up would require coming up with innovative platforms to enable it to exploit the regional or global market. The start-up would come up with strategies to invest in new avenues like opening more outlets in regions with high demand for organic food or establishing an online platform to market its products. Additionally, the outlet would strive to improve its customer services as a way to attract more clients, thus growing its market share.

Establishing a High-Performing Organisation

Another strategic objective of an organic food start-up would be to establish a high-performing organisation. Enhanced performance promotes business sustainability. As the demand for organic food continues to increase, any venture would try hard to come up with sustainability measures to continue to profit from the industry. The organic food start-up would treat sustainability as a key business strategy and ensure that it is reflected in all its operations (Jolink & Niesten 2013). The organisation would try hard to make sure that it initiates projects aimed at enhancing its efficiency and productivity. Moreover, it would try to avoid processes that might increase its operations costs and lower profit (Stead & Stead 2014). The start-up would invest in processes that might help to source products with ease and at low prices.

Aligning Operations to Boost Performance

An organic food start-up would endeavor to align all its operations to strengthen its performance. The success of a business lies in its ability to fulfill customer needs. As a result, the start-up would use customer-centric retailing approach to ensure that it meets the requirements of individual clients. Moreover, it would strive to enhance services and increase the varieties of products to boost customer experience. Lobley, Butler, and Winter (2013) allege that consumer experience determines if a client will return to business. Positive customer experience enables an organisation to establish a rapport with clients. Thus, the start-up would continue to look for strategies to enhance in-store services to boost customer experience.


Business management involves identifying an appropriate structure for a company to improve productivity. Organisational leaders are at liberty to use different organisational structures depending on the nature and size of the enterprise. The functional structure is suitable for small businesses and allows specialisation. Divisional structure is appropriate for multinational corporations that have numerous subsidiaries or cover a wide geographic area. The matrix structure is a multifaceted configuration and difficult to implement. Employees who work under such a structure report to both the production and functional managers. Organisations require adopting contemporary management strategies to guarantee success. The strategies should be customer-centric to make sure that business satisfies consumer demands. Moreover, organisational leaders must have certain traits for them to be successful. Leadership theories differ on whether leaders are born or made. The great man theory holds that leaders are born with inherent qualities that make them successful. On the other hand, the trait theory maintains that leaders are made. The theory identifies various features that individuals must acquire to be successful leaders. Organisational leaders require formulating and implementing important initiatives to facilitate business growth and sustainability. Start-up companies must identify and implement strategic objectives to guarantee sustainability.

Reference List

Brocke, J, Schmiedel, T, Recker, J, Trkman, P, Mertens, W & Viaene, S 2014, ‘The principles of good business process management’, Business Process Management Journal, vol. 20, no. 4, pp. 530-548.

Cosh, A, Fu, X & Hughes, A 2012, ‘Organisation structure and innovation performance in different environments’, Small Business Economics, vol. 39, no. 2, pp. 301-317.

Dinh, J, Lord, R, Gardner, W, Meuser, J, Liden, R & Hu, J 2014, ‘Leadership theory and research in the new millennium: current theoretical trends and changing perspectives’, The Leadership Quarterly, vol. 25, no. 1, pp. 36-62.

Drafke, M & Murtaugh, J 2009, The human side of organizations (10th ed.), Prentice Hall, New York.

Falguera, V, Aliguer, N & Falguera, M 2012, ‘An integrated approach to current trends in food consumption: moving toward functional and organic products?’ Food Control, vol. 26, no. 2, pp. 274-281.

Fitzroy, P, Hulbert, J & Ghobadian, A 2012, Strategic Management: the challenge of creating value, Routledge, New York.

Franco-Santos, M, Lucianetti, L & Bourne, M 2012, ‘Contemporary performance measurement systems: a review of their consequences and a framework for research’, Management Accounting Research, vol. 23, no. 2, pp. 79-119.

Gebauer, H & Kowalkowski, C 2012, ‘Customer-focused and service-focused orientation in organizational structures’, Journal of Business & Industrial Marketing, vol. 27, no. 7, pp. 527-537.

Germain, M 2012, ‘Traits and skills theories as the nexus between leadership and expertise: reality or fallacy?’ Performance Improvement, vol. 51, no. 5, pp. 32-39.

Jarrar, N & Smith, M 2014, ‘Innovation in entrepreneurial organisations: a platform for contemporary management change and a value creator’, The British Accounting Review, vol. 46, no. 1, pp. 60-76.

Jolink, A & Niesten, E 2013, ‘Sustainable development and business models of entrepreneurs in the organic food industry’, Business Strategy and the Environment, vol. 24, no. 6, pp. 386-401.

Lobley, M, Butler, A & Winter, M 2013, ‘Local organic food for local people? organic marketing strategies in England and Wales’, Regional Studies, vol. 47, no. 2, pp. 216-228.

Mullins, L & Christy, G 2013, Management & organisational behaviour (10th ed.), Prentice Hall, New York.

Robbins, S & Judge, T 2014, Essentials of organizational behavior (12th ed.), Prentice Hall, New York.

Simon, D, Fischbach, K & Schoder, D 2014, ‘Enterprise architecture management and its role in corporate strategic management’, Information Systems and e-Business Management, vol. 12, no. 1, pp. 5-42.

Spector, B 2016, ‘Carlyle, Freud, and the great man theory more fully considered’, Leadership, vol. 12, no. 2, 34-59.

Stead, J & Stead, W 2014, Sustainable strategic Management (2nd ed.), M.E. Sharpe, Inc., New York.

Steiger, J, Hammou, K & Galib, H 2014, ‘An examination of the influence of organizational structure types and management levels on knowledge management practices in organizations’, International Journal of Business and Management, vol. 9, no. 6, pp. 238-251.

Tolbert, P & Hall, R 2016, Organizations: structures, processes, and outcomes (10th ed.), Routledge, London.

Tyssen, A, Wald, A & Spieth, P 2013, ‘Leadership in temporary organizations: a review of leadership theories and a research agenda’, Project Management Journal, vol. 44, no. 6, pp. 52-67.

Vandeveer, R & Menefee, M 2010, Human behavior in organizations (4th ed.), Prentice Hall, New York.

Vickers, I & Lyon, F 2012, ‘Beyond green niches? growth strategies of environmentally-motivated social enterprises’, International Small Business Journal, vol. 32, no. 4, pp. 45-62.

Cite this paper

Select style


BusinessEssay. (2022, October 25). Organisational Structures and Business Management. Retrieved from


BusinessEssay. (2022, October 25). Organisational Structures and Business Management.

Work Cited

"Organisational Structures and Business Management." BusinessEssay, 25 Oct. 2022,


BusinessEssay. (2022) 'Organisational Structures and Business Management'. 25 October.


BusinessEssay. 2022. "Organisational Structures and Business Management." October 25, 2022.

1. BusinessEssay. "Organisational Structures and Business Management." October 25, 2022.


BusinessEssay. "Organisational Structures and Business Management." October 25, 2022.