Key determinant and influences on organisational structure Essay Example

led by Ed Gilligan. This is then divided into various functions such as Risk management and Merchant services. However, in the following layer, there is a division based on geographical areas, indicating a divisional hierarchy. As mentioned before, the Amex organizational structure is a matrix that combines both functional and divisional structures to maximize their benefits (Fortune, 2009).

Various factors are determinant for the current organisational structure. These factors include strategy, size, technology, change, environment, and culture. All of these factors have a significant influence on the structure adopted by an organisation. American Express is an example where all of these factors played a significant role in determining its structure.

When it comes to strategy, there are several important aspects of different organisational structures. Functional structures group people with similar skills together, while divisional structures group people based on products, customers, or locations. Matrix structures combine both functional and divisional structures, and team structures involve using both permanent and temporary teams. Network structures heavily rely on strategic alliances.

Functional structures have various advantages, including economies of scale that lead to efficient utilization of human resources. It has been observed that functional experts excel at solving technical problems.

Functional structure in Amex has several advantages. Firstly, training within functions helps in developing skills. Additionally, each function offers career paths. These benefits are effectively utilized when the functional structures are implemented at the highest level in the organization. However, the primary challenge of functional structure is the lack of communication and coordination among different functional organizations. This results in the problem of financial chimney's, as displayed in the diagram below (Erlingsdottir, 2005). To address this issue at the middle management layer,

Amex has implemented a divisional organizational structure.

The divisional organizational structure offers several advantages, such as focused expertise on special products, customers, and regions. It also enables better coordination across functions within divisions and enhances accountability for product or service delivery. Additionally, it provides flexibility to adjust the size of the organization as conditions change.