The Best Organizational Structures

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There are a number ways you can structure your company management. However, the best organizational structure is one that fits your management style, company size and overall marketing strategy. Your organizational structure can either expand vertically or horizontally. For example, you may expand your company horizontally with little height when first starting out. You will not likely need many managers as a start-up company. Contrarily, use a more vertical structure when you are well-established.

Functional

Your best organizational structure may be a functional one if you decide to divide your departments by functional area, such as marketing, accounting, finance and research development. The advantage of using a functional organization is efficiently. Departments are combining their talents in a functional organizational structure, which allows for a synergism of expertise and creativity on various projects. For example, a marketing department can use market researchers to study customer needs, advertising people to create ads and brand managers to manage the product line. Despite its efficiently, departments in a functional organizational structure can often stress their own goals over the needs of the company, according to Referenceforbusiness.com. This departmental isolation can largely be alleviated through constant inter-departmental communication.

Product Organizational Structure

A product organizational structure may be best if you have a wide variety of products to market. For example, department stores may switch to an organizational structure as they grow. A department store may have executives heading departments like hardware, men's clothing and electronics. The products may be so diverse that it takes a certain expertise to learn the product line. Therefore, dividing departments by products makes the most sense. A product organizational structure may cause you to duplicate human resources, despite its advantage of providing greater product expertise. For example, you may need a finance manager for each department, when one or two finance managers could adequately do the job.

Customer Organizational Structure

Similar to a product organizational structure, a customer organizational structure may be best when your various customers have diverse product lines. For example, an electronic bill-paying software company will often sell its services to consumers, corporate accounts, banks, health clubs and hospitals. The customers are so diverse in this type of situation that you may need separate account managers for each division. Customer organizational structures will allow you to better serve each type of customer. However, you may find yourself duplicating human resources in a customer organizational structure. Therefore, you will need to weigh the benefits of serving the customer against the extra payroll expenses.

Geographical Organizational Structure

A geographical organizational structure may be best if consumer preferences vary greatly by region. Many consumer products companies use more geographically oriented management structures. For example, a soft drink company may decentralize its marketing department to better focus on the unique customer preferences in various markets. Many sales-driven organizations use geographical organizational structures to maximize their sales per region. Again, you may need to use extra human resources with a geographical organizational structure. However, you may more than adequately cover your extra labor costs with higher sales due to the local consumer focus.

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