Functional organizational structure (Fathalla Market)

The When referring to the functional organizational structure, employees are grouped based on
their roles and functions, resulting in functional units such as marketing, HR, finance, etc.
Generally, the heads of these specialized units will report to the top management of the
company. According to the company’s size, the functional units might be further divided into
smaller units. The sub-division type of organizational structure seems to be the most common
organizational structures that many companies have applied.

A major advantage is that it offers a high level of specialization. This allows employees to
develop their individual skills rapidly within the functional units in order to be specialists. The
continuing development of employees’ skills will increase their working productivity and
efficiency, thus improve sales. What’s more, employees will be strongly motivated to develop
their careers in line with the hierarchy pathway in their organizational structure. Grouping by
skills and roles results in higher accumulation and skills and expertise with respect to the
employees technical areas referred to as high degree of specialization as each member is
responsible and can do limited number of job duties at which he is specialized due to the
repetition and standardization

This structure involves a feature that has 2 sides which is the decision making centralization
,decisions are made at the top levels of management ,this adds a higher ability of control over the
firm ,helps in efficiency and cost control but also has a large disadvantage which is the delay in
making decisions especially in the urgent situations that needs fast response, a decision is made
after passing by the formal chain of command up to the top of the organization

A major feature is the ability to minimize cost thorough the feature of economies of scale due to
standardization and sharing resources within each department .The control behavior of the
organization requires high formalization levels reflecting many paperwork and documentation
and procedures to follow
One of the main disadvantages is that it will lead to poor communication and coordination across
different functions since functional units are not always accountable to each other. The
viewpoints of one individual division sometimes maybe narrow. As a result, single division
trends to only concern about their own duties and tasks. Moreover, due to the standardized ways
of operation, the organization might be rigid, hence not so flexible or adaptable to fit into the
dynamic environment.
We can expect the firm to have a vertical structure with the narrow span of control maintained
and the levels of responsibility within the firm, the hierarchal referral is the major source of
vertical information sharing while horizontal sharing of information is made through meetings
and information systems

Matrix Structure (Starbucks)

Starbucks has a matrix organizational structure, which is a hybrid mixture of different features
from the basic types of organizational structure. In this case, the structural design involves
intersections among various components of the business, functional groups intersect with
geographic divisions,

This mixture major advantage is it results in gaining both the specialization and technical
expertise required by the functional structure and the innovation,flexibility and creativity
required by the geographical structure

Functional Hierarchy. The functional hierarchy feature of Starbucks Coffee’s organizational

structure refers to grouping based on business function. For example, the company has an HR
department, a finance department and a marketing department. These departments are most
pronounced at the top levels of Starbucks’s corporate structure, such as at the corporate
headquarters. This characteristic is hierarchical. For example, the corporate HR department
implements policies applicable to all of the company’s cafés. The functional hierarchy of the
corporate structure facilitates top-down monitoring and control, with the CEO at the top.
Functional groups are responsible for the organization-wide development and implementation
of strategies
Geographic Divisions. Starbucks Coffee’s corporate structure involves geographic divisions,
which are based on physical location of operations. The company has three regional divisions for
the global market: (1) Americas, (2) China and Asia-Pacific, (3) Europe, Middle East, and
Africa. Also, in the U.S. market, Starbucks Coffee’s organizational structure involves further
geographic divisions: (a) Western, (b) Northwest, (c) Southeast, and (d) Northeast. Each
geographic division has a senior executive. In this way, each local manager reports to at least two
superiors: the geographic head (e.g. President of Europe, Middle East, and Africa Operations)
and the functional head (e.g. Corporate HR Manager). This feature of Starbucks’s corporate
structure enables closer managerial support for geographic needs. Each division head is given
flexibility in adjusting strategies and policies to suit specific market conditions.

The matrix structure major problem is the dual reporting authority by employees to two types of
managers in starbucks functional and geographic ,maintaining a balance of power is very
difficult that’s why starbucks had chosen that its matrix to be geographical oriented which means
that the main power and autonomy is given to the regional managers rathar than the functional
managers who help the regional managers to spread the corporate strategy within each
geographical location

The firm maintains excellent horizontal coordination where both horizontal and vertical
communication is available, the high work overload and time pressure over employees is very
clear translated into good compensation packages , delegation of authority and empowerment is
high pushing down the responsibility to regional managers, formalization is kept at its very low
levels as the firm culture calls for innovation and creative problem solving
One important feature within starbucks is the presence of teams. Teams are used in different parts of
Starbucks Coffee’s organizational structure. However, teams are most visible at the lowest organizational
levels, particularly at the coffeehouses. For example, in each café, the company has teams organized to
deliver goods and service to customers. This feature of Starbucks’s corporate structure enables the
business to provide effective and efficient service to consumers. Team effectiveness is a major
determinant of the financial performance of franchised locations and company-owned
coffeehouses. Starbucks’s corporate culture influences how such team effectiveness is achieved. The
company’s development depends on team-based factors and associated human resource management
strategies.

Since the structure is mostly geographical the firm has a horizontal or flat structuring with wide
span of control, and high level of empowerment

Divisional Based

Hazem Hassan KPMG has diverse services pr products including accounting, HR, Auditing,
consultancy services and taxation services Functional structure is helpful up to a certain limit of
expansion and growth. When organisation grows into unrelated products and services for
different markets then it is difficult to manage. The divisional structure is organized around
products. A divisional structure encompasses a set of relatively autonomous units governed by a
Corporate Office. The operating divisions are relatively independent and consist of products and
services that are different from those of the other divisions. The divisional structure is organized
by products customer, or by process. Horizontal collaboration across functions is excellent with
high degree of information sharing. Employees face a challenging work place due to autonomy,
variety of tasks as well as empowerment

Advantages include Clear accountability, Separate strategic and operational control, Divisional
managers can concentrate on responsible area and can improve performance , Enhances ability to
respond quickly to changes in external environment, Enhances development of general
managerial talent, and Allows new business and new products to be added easily, Organizational
goals are focused rathar than the functional goals, empowered roles and decentralization helps
innovation and creativity in problem solving
The divisional structure is not without limitations: It can be very expensive, due to requirement
of functional specialists, duplication of staff services, facilities and personnel and better qualified
divisional managers, Chance of differences in image and quality may occur across divisions

Formalization is limited due to little range of documentation and paperwork ,specialization is

limited as technical experience is not developed with many and different tasks are assigned to
employees ,

Given the previous factors, accordingly the firm maintains a flat horizontal structure with limited
levels of reporting

Geographical Structure

Our research has generated that Carrefour Egypt has 2 main geographical areas as basis for
departmentalization Cairo area and Alexandria Area. The geographical structure is organized
around locations. A geographical structure encompasses a set of relatively .Horizontal
collaboration across functions is excellent with high degree of information sharing. Employees
face a challenging work place due to autonomy, variety of tasks as well as empowerment

Advantages include Clear accountability, Separate strategic and operational control, Divisional
managers can concentrate on responsible area and can improve performance , Enhances ability to
respond quickly to changes in external environment, Enhances development of general
managerial talent, and Allows new business and new products to be added easily, Organizational
goals are focused rathar than the functional goals, empowered roles and decentralization helps
innovation and creativity in problem solving

The geographical structure is not without limitations: It can be very expensive, due to
requirement of functional specialists, duplication of staff services, facilities and personnel and
better qualified divisional managers, Chance of differences in image and quality may occur
across divisions
Formalization is limited due to little range of documentation and paperwork ,specialization is
limited as technical experience is not developed with many and different tasks are assigned to
employees ,

Given the previous factors, accordingly the firm maintains a flat horizontal structure with limited
levels of reporting

Mechanistic Or Organic

Fathalla Market is a pure example for machine like organization holding the following
characteristics

1. High degree of formalization ,bureaucracy ,paperwork ,rules, and regulations strictly

applied and followed
2. High degree of specialization ,a cashier only works as a cashier ,limited number of tasks
he is good at
3. Strict hierarchical chain of command, an employee only refers to the upper next level
4. Centralized workplace with limited empowerment or delegation of authority
5. Very rigid culture where following rules is rewarded and no place for creativity
6. Rigidity in dealing with unexpected events
7. Efficiency organization as costs are reduced through tight control

Mechanistic Or Organic

Starbucks is a pure example for organic organization holding the following characteristics

1. Limited degree of formalization ,bureaucracy ,paperwork ,rules, and regulations are few
2. Low degree of specialization ,a cashier can prepare drinks, and cleans the unlimited
number of tasks he is good at
3. Loose hierarchical chain of command
4. Decentralized workplace with high empowerment or delegation of authority
5. Very adaptive culture where creativity is rewarded
6. Flexibility in dealing with unexpected events
7. Learning organization ,costs are high ,innovation is the key to achieve goals