Organizational structure is the hierarchical arrangement of the organization along which communications, duties and authority flows. The structure determines how duties are assigned, monitored, coordinated and controlled. It also sets a very clear chain of command along which information related to the organization flows. An organization’s strategy and objectives determine the type of organizational structure that is adopted by the organization. The most common organization structure types are Bureaucratic Structures, Divisional Structures, Matrix Structures and Functional Structures (DuBrin, 2012, pg.272).
Wal-Mart is an American retail corporation that operates warehouses and departmental stores in several countries. The type of organizational structure employed by Wal-Mart’s management team is the Divisional Organizational Structure. Products offered and geographical locations are some of the measurements that this method uses to divide the organization’s structure. Wal-Mart’s functional areas are divided into divisions that are under a common leadership team. The three structural divisions are the product structure, the geographic structure and the market structure. The leadership team further sub-divides into three geographic units that are West, North and South. The divisions are semi-autonomous, and each of them has its goals and objectives. This structure has helped Wal-Mart to achieve its objectives because each of the divisions can concentrate on successful completion of their tasks such as customers, services and products. The market structure has grouped Wal-Mart’s employees based on the markets in which it operates. Departments like the customer service and sales department are coordinate using a market type of structure. Consumer customer service and sales execute their duties together while corporate customer service and sales operate together. The product structure divides Wal-Mart’s workforce based on the products that it sells. The geographical structure divides the workforce based on the geographical locations of the company.
The divisional organization structure used by Wal-Mart differs from other organization structures. Functional organization structure is a structure that groups employees based on the functions they perform for the organization. The functions may include marketing, production, accounting, and human resource among others. Productivity is the main advantage of this structure. Specialization leads to enhanced operational efficiency and boosts the production levels of the organization. The structure reduces work related mistakes because workers confident and they perform their tasks efficiently. Divisional organization structure does not focus on grouping workers with similar skills together. Instead, workers are divided on factors like geographical locations regardless of their skills. This design does not nurture the level of productivity associated with the functional structure of the organization. However, functional organizational structures give rise to management issues because of their high level of formalization. Communication under this structure is very rigid. This makes the decision-making process slow and inflexible because the functional units are not answerable to each other. Too much focus negatively affects employee motivation. Restricted views on the goals of the organization and lack of innovation also affect employee motivation. On the contrary, divisional organization, structure encourages employee participation in achieving organizational goals. Decision making in a divisional organization structure is easy since each group of employees is answerable to supervisors who run the entire organization. Bureaucratic organization structure is another organizational structure, which is different from the division organization structure in several ways. In a bureaucratic structure, there are several layers of authority from the top downwards. For example in the bureaucratic structure, frontline employees report shifting supervisors who report to departmental managers. The departmental managers are under regional managers who report to senior executives of the organization. Unlike in a divisional structure, a rigid bureaucratic system discourages innovation and creates dissatisfaction among employees. Organizations that operate in rigid bureaucratic systems find it hard to adapt to dynamic market conditions unlike those with divisional organizational structures.
Organization functions in every organization are the main determinants of the way a particular organization is structured. The marketing function for an international organization such as Wal-Mart needs to be divided amongst the employees so that each of them is aware of the role they play. There are five core marketing functions; corporate marketing, strategic marketing, product management, product marketing and field marketing. To ensure successful completion of these functions, Wal-Mart, therefore, employs divisional organizational structure. In divisional organizational structure, each division is tasked with completing the responsibilities falling under the particular division. The various tasks falling under the marketing function, therefore, make it a necessity, for Wal-Mart to use divisional organizational structure. Finance function is another crucial part of an organization. The finance function ensures that; all the transactions carried out by the organization are documented and processed completely and in the appropriate manner. Wal-Mart being a large organization, division of this role among the employees is, therefore, a necessity.
The human resource function in Wal-Mart is tasked with workforce planning. Since Wal-Mart is a large organization with many employees, it is, therefore, necessary to divide the Human resource function into various divisions to ensure successful management of workforce in the organization. The operations function is another area that made it necessary for Wal-Mart to use the divisional structure organization. The operations function is responsible for supervision, planning, and monitoring the process of production in the organization. It is also tasked with reshaping of the business processes in terms of goods and service production. Considering that Wal-Mart is an international organization, management of these tasks can be quite challenging. To make the tasks easier, they are divided among the employees such that each employee knows exactly what they are supposed to do. This reason, justifies the use of divisional organizational structure at Wal-Mart.
Different organizational designs exist because different organizations require different structures to ensure their successful operation. The divisional structure is designed in such a way that, the organization has different divisions, which are self-reliant. A self-reliant division is made up a group of functions, which work to ensure production of a given product. In such an organization structure, divisions can compete against themselves as separate organizations. Large organizations are, therefore, more suited for such a design. The matrix organizational design groups the organizational employees by both function and product. Employees are teamed together to ensure successful task completion by taking advantage of their strengths and making up for their flaws. An organization producing two distinct products is best suited for such a structural design.
A functional organization structure is designed in such a way that there are activities such as organization, management and allocation of tasks (Kerzner, 2013, pg.120). Employees are organized according to their functions in the organization. This way, employees can specialize in their fields and therefore become experts leading to improvement in quantity and quality of production. Geographic structure groups employees based on their geographical location. A delegation is given the responsibility of assign tasks to other subordinate employees. However, the manager is given the role of ensuring successful completion of such tasks and is accountable in case of any problem with completion of given tasks. This design is used by large organizations that operate in many areas.
References List:
DuBrin, A. J. (2012). Essentials of management. Mason, Ohio: South-Western/Thomson Learning.
Kerzner, H. (2013). Project management: A systems approach to planning, scheduling, and controlling. Hoboken, New Jersey: John Wiley & Sons, Inc.
