What Is Organizational Structure of Management? - Types & Examples

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  • 0:00 Organizational…
  • 0:41 Flat Organizational Structure
  • 1:03 Functional…
  • 1:22 Product Organizational…
  • 1:45 Geographical…
  • 2:08 Lesson Summary
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Lesson Transcript
Instructor: Molly Gigli

Molly has an MBA in HR and a BA in Organizational Leadership and Supervision.

In this lesson, we will provide an overview of the different types of organizational structures a company can utilize. Read on to learn why having an organizational structure is important.

Organizational Structure of Management

An organizational structure lays the foundation for how a company operates. It is a set of policies and rules that determines:

  • How an organization controls and delegates tasks and responsibilities
  • How decisions are made and implemented throughout every part of an organization
  • How information flows within an organization

Depending upon a company's needs, there are several organizational structures that can be used. Some common examples include the flat organizational structure, the functional organizational structure, the product organizational structure, and the geographical organizational structure. Let's take a look at these four structures in more detail.

Flat Organizational Structure

Typically, small companies with 20 or fewer employees will use a flat organizational structure that has very few levels of management between the chief executive officer (CEO), or president of a company, and the lower-level employees. As you might guess, this type of organizational structure allows for rapid decision making because there are only a few levels of management.

Functional Organizational Structure

A second type of organization structure is the functional organizational structure, which focuses on job functions or functional areas.

As you can see, companies use this type of structure when they want to organize their operations into departments, grouping employees with shared skills and knowledge, such as marketing or sales, together.

Product Organizational Structure

A third common type of organizational structure, the product organizational structure, is organized based upon a company's product lines.

Product Organizational Structure

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