Importance of organizational structure for business

There is absolutely fundamental need in company for a solid structure. Organizational structure concerns who reports to whom in the company and how elements are grouped together. A new company cannot go forward with out this.

There are several organizational structures companies can choose from. The most popular structure is functional. The main benefit of this system is clear lines of communications from top to bottom. Another structure is organized along product lines. In this case the focus is always on the product and on low it can be improved. Multinational companies use geographic structure. When there is a need to pool together different skills from a variety of functional areas companies use the matrix structure. This structure organizes a business info project teams with project leaders.

During the 1980-s there was the wave of restructuring, which is called delayering. This process made changes in traditional structures by removing middle management and reducing costs. Delayering influenced on how company organizes itself in the move towards centralization, outsourcing and more customer centric approach.

Without a huge bureaucratic infrastructure companies are able to react more quickly and work more efficiently.

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