The organizational structure refers to the formal and informal arrangement of tasks, responsibilities and lines of authority and reporting relationships by which the firm is administered.
Two basic kinds of organizational structures exist: (1) a formal organizational structure, and (2) an informal organizational structure.
The formal organizational structure represents the relationships between resources as designed by management.
The informal organizational structure represents the social relationships based on friendships or interests shared among various members of an organization.
Basic elements determining organization structure :
- The assignment of tasks and responsibilities that define the jobs of individuals and units.
- The clustering of individual positions into units and units into departments and larger units to form an organization’s hierarchy.
- The various mechanisms required to facilitate vertical coordination, such as the number of individuals reporting to any given managerial position and the degree of delegation of authority.
- The various mechanisms needed to foster horizontal coordination, such as task forces and interdepartmental teams.
Conclusion :
Organization structure specifies the linkages among parts of the organizations, the reporting relationships ,the direction of information flows and the decision making processes . A well designed organization structure enables the firm to execute the strategy successfully.