organizational structure

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organizational structure

the particular way in which a firm or public authority is structured in order to perform its economic, social etc. activities.

A firm may be structured in two main ways: in a PRODUCT-BASED STRUCTURE activities are grouped together according to product, with each product being supported by its own functional teams of marketing, production, finance etc.; in a FUNCTIONAL STRUCTURE activities are grouped into departments by function – marketing, production, finance etc – which support all the firm's products.

Organizational structure can also be looked at in terms of the number of management layers involved, TALL ORGANIZATIONS having many management levels and FLAT ORGANIZATIONS only a few management levels.

The way in which a firm is organized around products and functions and the number of management layers can have a significant effect on the efficiency of the firm and its ability to respond quickly to changes in its market environment.

See CORPORATE RESTRUCTURING, BUSINESS PROCESS REENGINEERING.

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