Issues about structure are recurring matters of debate and dispute in most businesses. This is because they include matters relating to departmental and sectional groups, the pattern of reporting relationships, the cycle of meetings, information systems, and rules and procedures. A business might be structured in various ways: by function, by product, by service or by geography.
As is the case with most aspects of business, it is unlikely that there is any one ‘best’ model for structure. You would not expect businesses with a professional orientation, such as a legal or medical practice, or a not-for-profit business such as a church or theatre company with a strong values base, to have the same business or management structure as a supermarket or high street bank. The structure of a co-operative would enable the broad-based participation and involvement of its members, while a legal practice would need a more collectivist or collegiate structure. The challenge facing all types of businesses is to develop a structure that recognises what is required while still achieving an efficient use of resources and providing effective services to customers.
Whatever the business, however, structure is pivotal in the relationship between task (what the business does) and process (how the business does it). It is through the medium of its structure that the values, commitments, purposes and aspirations of the business are implemented. Structure has to translate values and processes into a practical, working reality – and to do this while delivering profit to its owners and value to its customers. Functional structures might work best when departments need regular communication with each other. However, a disadvantage may be that functions and the people who work in them may become rather insular.
Structuring by product or service can help to achieve better responsiveness to customer needs, although it might mean professional or functional expertise becomes fragmented. A geographic structure has advantages for a large international business because there are likely to be differences between the markets it serves. There are also likely to be language and cultural differences. However, structuring by location may be problematic in terms of communication and information flows, and support functions such as finance and ICT may have to be duplicated.