Different approaches to organising a business

There are three main approaches to organising a business: by function (or department), product, or geography. These can apply to both tall and flat organisational structures.

Function (department)

Function refers to organising a business in relation to the seniority of employees within each different department of a business. In this type of structure, each department functions individually and are responsible for their own targets. Each department may have a leader, senior manager, supervisors and operatives.

Advantages	Disadvantages
Each department has a specific purpose Each department has specialised employees Each department has a clear chain of command	Departments have their own objectives so may act in their own interests Departments have to work closely with each other to achieve success

Advantages	Each department has a specific purpose Each department has specialised employees Each department has a clear chain of command
Disadvantages	Departments have their own objectives so may act in their own interests Departments have to work closely with each other to achieve success

Product

Businesses that produce a large number of products may focus their organisational structure around each different product category. For example, a food production business may produce crisps, chocolate, sweets and cereal bars. The structure would be split into these four sections, and then each product category may have individual business functions, such as marketing and human resources within it.

Advantages	Disadvantages
each product will have a dedicated team employees will become experts in their product encourages constant product-focussed innovation	can be a complex structure, departments may be split across different products roles may be duplicated across the business, leading to higher costs

Advantages	each product will have a dedicated team employees will become experts in their product encourages constant product-focussed innovation
Disadvantages	can be a complex structure, departments may be split across different products roles may be duplicated across the business, leading to higher costs

Geography

Geographic structuring is usually used for both large businesses that may operate in a number of different countries around the world, and smaller businesses that may have a number of locations around the UK. Departments and roles may be duplicated across different business locations.

Advantages	Disadvantages
business can adapt to meet local needs quickly local decision making can be quicker and more effective	roles are often duplicated at different business locations businesses may lack continuity, which could impact their reputation

Advantages	business can adapt to meet local needs quickly local decision making can be quicker and more effective
Disadvantages	roles are often duplicated at different business locations businesses may lack continuity, which could impact their reputation

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Organisational structures - EduqasDifferent approaches to organising a business