Strategic Management: Formulation and Implementation

Basic Elements Of Organizational Structure

Two basic kinds of organizational structures exist: (1) a formal organizational structure, and (2) an informal organizational structure.

The formal organizational structure represents the relationships between resources as designed by management.

The informal organizational structure represents the social relationships based on friendships or interests shared among various members of an organization.

When implementing a strategy, managers must take both the formal and the informal organizational structure into consideration for three reasons:

An organization exists when two o more people coordinate their efforts, on an ongoing basis, to strive for a common purpose. When a entrepreneur consider taking on another person, the time has arrived for creating organizational structure.