Models of Organisational Structure (AQA A Level Business): Revision Note

Functional organisational design

• This is the most common model of organisational design

• Employees are arranged into different functions that complete specific functions, such as finance, human resources or marketing

  • Employees are arranged according to their expertise, bringing appropriate skills, experience and qualifications to a particular area of the business

  • There is a danger that functional areas focus only on their own area of responsibility and lose touch with the objectives of the business as a whole

Organisation by function

• Tesco operates a functional structure at head office level, with separate teams for HR, finance, logistics, and buying

Product-based organisational design

• The business is split into divisions based on individual products or product lines

  • Each division handles its own marketing, operations, and finances

    • For example, Unilever UK uses a product-based structure, with teams dedicated to categories like personal care, home care, and food and drink brands.

    • For example, KitKat has its own team within Nestlé

• It combines the functional areas of a business (HR, finance, marketing, sales) with a specialist team that operates inside the business

  • Each division handles its own marketing, operations, and finances

A product based structure

Evaluating a product based structure

Regional organisational design

• This structure is commonly found in businesses that are located in several different geographical locations - either national or international

  • Regional management and structures allow a business to respond effectively to the needs of customers in diverse locations

Organisation by region

• For example, the BT Group has a regional structure with operations split across different parts of the UK to provide tailored telecoms services

Matrix organisational design

• A matrix structure is a flexible organisational model where employees report to more than one manager — usually a functional manager (e.g. Head of Marketing) and a project or product manager (e.g. Project Leader for a new product launch)

• Employees often work in project teams made up of staff from different functions (e.g. HR, finance, R&D)

  • Encourages innovation and faster problem-solving

  • Temporary or long-term matrix teams depending on the business needs

Matrix organisation design

• GSK, a major UK pharmaceutical company, uses a matrix structure to run global drug development projects

• A scientist might report to:

  • The Head of Research (functional line), and a

  • Project Manager for a specific vaccine or drug trial (project line)

• This structure helps GSK coordinate between R&D, regulatory teams, and regional market teams, speeding up innovation and delivery