Strategic Management: Formulation and Implementation

Functional Structure

The functional structure is characterized by the simultaneous combination of similar activities and the separation of dissimilar activities on the basis of function. All engineers are located in the engineering department, and the vicepresident of engineering is responsible for all engineering activities. The same is true in marketing, research and development, and manufacturing.

The functional organizational form is one of the most common organizational structures found in firms pursuing a strategy of concentration or very high relatedness. A functional structure is most appropriate when the organization is small to medium size and relatively stable.

Two types of functional organizational approaches are diagrammed in Figure 32. "typical" functional organization structure and a process oriented functional structure.

Geographic Structure

Another basic form structural grouping is geographic structure, in which activities and personnel are grouped by specific geographic locations. Each geographic unit includes all functions required to produce and market products in that region. The strengths and weaknesses of a geographic structure are listed in Figure 33.

Organizing according to geographic areas or territories is rather common structural form for largescale enterprises whose strategies need to be tailored to fit the particular needs and features of different geographical areas.