INTRODUCTION

An organization able to be described as management structure that determine

relationships between functions and positions, and subdivides and delegates roles,
responsibilities, and authority to carry out defined tasks in a section or department.
Organizations able to be seen regardless in large or small scale and old or new
concept, organization should be solid, permanent, and orderly structured.

Modern organizations are more structured and hierarchical as compared to

conventional one. Organizations are observed to exist with various structures. As
pointed out by Mohr (1982, pp. 102103), the early theorists of organizational
structure, Taylor, Fayol, and Weber had seen vital of structure for effectiveness and
efficiency and assumed if there is no any issue rise on the current structure , people
could fashion and adapt accordingly. Meanwhile in the 1930s, the rebellion began
which defined as human relations theory, no more people should be treated as the
artifact, but rather an advocacy of the creation of a distinguish sort of structure, one in
which the requirements, knowledge, and opinions of employees might be given
greater recognition towards an organization.

Nevertheless, a different view arose in the 1960s, recommending that the

organizational structure is "an externally caused phenomenon, an outcome rather than
an artifact." (Mohr, L. B, 1982). This explains organization may build by the
influenced of the environment regardless specific or general issue. In the 21st century,
organizational theorists such as Lim, Griffiths, and Sambrook (2010) are proposing
that organizational structure development is very much dependent on the management
strategies and the workers as a limitation by the power and authority distribution
between them, and influenced by their environment and the outcome.

In the new centuries, many organizations are designed as hierarchies, with each
manager reporting to one and only one manager at the next higher level. Within the
hierarchical structure, there is substantial variation in the number of levels and in the
set of activities grouped together. The several groupings are pertaining to organization
such as functional, product, matrix, geography and customer. For instance, other
organizations may apply a matrix structure in which each low-level manager reports
to two or more superiors.

In the 21st century, parts of organizations are not purely employed hierarchical
structures, many management are still prone to practice the existence of the flat
community structure within their organizations (Butler Jr., J.K., 1986, p.5). For
functional hierarchy, departments were distributed into styling, engineering,
manufacturing, research, public relations, and personnel division (Sloan 1963, p. 190).
 2.0 TYPES OF
ORGANISATIONAL STRUCTURE

Generally, organizational structures are able to be described based on the type of

departmentalization. It means the different organizational units which the division of
system and organization that is responsible to resolving the duties given.
Differentiation of task or activity into separate segments is called departmentalization.
Briefing about grouping tasks in different departments or it can be defined as division
of work. The functions reflect the nature of the business. The advantage of this type of
grouping is obtaining efficiencies from consolidating similar specialties and people
with common skills, knowledge and orientations together in common units. There are
several types of departmentalization that being applied in most of the organization in
Malaysia which are functional, product, matrix geographical and consumer. Each type
of departmentalization will be described as below:
 2.
1 Functional structure:
 Figure 1.0: Functional Departmentalization example

Departmentalization by function organizes by a group of people who have similar

skills which has its own functions and objectives to be performed. The functions
reflect the nature of the business. The advantage of this type of grouping is obtaining
efficiencies from consolidating similar specialties and people with common skills,
knowledge and orientations together in common units.

Functional departmentalization indicates grouping activities by functions performed.

Activities can be grouped according to function to pursue economies of scale by
placing employees with shared skills and knowledge into departments for example
human resources, IT, accounting, manufacturing, logistics, marketing, and
engineering. Functional departmentalization can be used in all types of organizations.
Figure 1.0 illustrates departmentalization by
function.
 Figure 1.1 Sourced by: Error! Hyperlink reference not valid.

According figure 1.1, this organization involves in developing and implementing

departmentalization by function. In this case, managing director is a top level
management followed by business management, corporate function, human resources
management and operations as a middle level management. Business management as
marketing department is responsible to project BASF PETRONAS Chemicals'
manufactured products (OMP) around

the world. Management for corporate functions is divided by three sections. This
department responsible for accounting and financial, information technology related
services to the various constituents of the business and acquires goods and services
through world class procurement of raw materials, technical goods & services and
packaging. Human resources management recovers all areas related with recruitment
of employees, including delegates from BASF and staff seconded from PETRONAS.
Meanwhile, operation management is responsible to apply procedure, technique and
specialist knowledge required in a certain task. This management can be categorized
as technical
division.
 Figured 1.2 - Sourced by: http://www.mpc.gov.my/home/?
cont=ds&item=d3

The Malaysia Productivity Corporation (MPC) known as the

National Productivity Corporation which is a cooperative project between the United
Nations Special Fund and the Federal Government, with the International Labour
Organisation acting as its executing agency. Based on figure 1.2, development,
measurement and certification management were put together in a line of authority to
provide value-added information on productivity, quality, competitiveness and best
practices through research activities and databases. In addition, MPC also is
responsible to develop human capital and organizational excellence for building a
knowledge-based society through training, systems development and best practices.
 WINTRAD INDUSTRIES SDN BHD

Figure 1.3 - Sourced by: http://www.wintrad.com.my/chart.htm

The management is illustrated in figure 1.3, WINTRAD INDUSTRIES SDN BHD

which known as a professional company in designing, manufacture and supply of
Low Voltage Switchgear. As a top level management, managing director as well as
general manager is responsible to be as an advisor and negotiator for new tender and
role as a leader for this organization. Middle level management, manager for each
functions are responsible as a spokesperson to general manager and managing director
from lower level management. And as a leader for lower level management to
ensure the organization move towards achieving its objectives. Manufacturing
division, sales and marketing division, finance and administration division as a lower
level management responsible to focus on objectives organization and controlling
work daily to ensure achieve organization target.
 Figure 1.4 - Sourced by:
http://www.murata.com.my/Portal/MMEPortal.nsf/dx/organization-structure.htm

Murata Electronics (Malaysia) Sdn. Bhd.(MME) is an overseas subsidiary of Murata

Manufacturing Co. Ltd. in Japan. The objective of the organization is solely on
production base and sales footing of the Murata Group in Malaysia and Southeast
Asia. According figure 1.4, managing director as a top level management responsible
as figurehead entertaining his clients and act as channel for communication between
his department and outside his organization. There are divided by seven department
management for implementation, this section responsible carry out time planning and
effectively organize the sources and information.
 2.
2 Geographical structure:

Figure 2.0 Geographical Structure example

A geographic structure is typically found in companies with operations in large

region, such

as national or international organizations. Each location will have its own internal
structure and

management, allowing them to conduct business activities in certain geographical

locations. The

advantage of this structure is most beneficial in international locations, where

companies need help

in transitioning their operations to specific international markets. In addition the

organization can

organize effective and efficient to the requirements of the specific market and
advantage to market

to different countries.

Other than that, the organization can reduce of costs management to allocate any

organization to entire location. The disadvantage for the geographical structure is the
organization
difficult to make centralized of decision-making. This difficult will be arising in
coordinating between

department as the departments in geographic structure cause of location far from each
others.

Manager must give responsibility to another authority to take actions and improve
organization rather than giving a directive from the head of organizations.

Figure 2.1 - Sourced by : http://www.cosway.com.my/

COSWAY (M) Sdn Bhd is a Malaysian-
based is multi-level network marketing. They began

their operations in December 1979. It is a simple concept of distributing quality

product and unique

network marketing system. Concept for the business, to allocate the hundreds of
COSWAYs

stockiest centre throughout the country which ensure that there will always be a centre
close to
where you work or live via a network. Today, it has grown to become one of Asias,
Brazils and

Mxicos largest network marketing companies. The consumer product related home
care, personal

care, food, auto care, healthcare and fashion.

Figure 2.3 - Sourced by: http://renchin.com/?tag=7-eleven

7-Eleven operating as a franchise, is the world's largest

operator, franchisor and licensor of

convenience stores. Private labels for 7-Eleven are slurpee and big gulp. In addition,
7-Eleven would

come to own or operate several brands of food and concepts. Concept for the
business, operating in

24 hours per day and easy for customer to buy any food and beverages located in any
places. The main objectives for the organization are to fulfill the needs of customers.
 2.3 Matrix
Structure:
Figure 3.0 Matrix Structure example

As above
illustration figure 3.0, the matrix structure defined as a product manager (A until D)
can report more than two different of managers. The type of this structure combines
two or more types of departmentalization at the same time. For example, in this
organization, product manager A has to produce the sample product which is
ordered from design vice president. When the product has been produce, product
manager A must report the progress of the product to three of vice president from
manufacturing, marketing and controller to evaluate cost of the product and customer
satisfied.

Advantage for matrix structure, the organization can manage effective and efficiency
in a large scale production. Furthermore, organizations can achieves synchronization
necessary to meet dual demands from customer, easy to make decisions and frequent
changes in unstable environment. Apart from that, matrix structure provides
opportunity for both functional and product skill development and exceptional for
medium size organization with multiple product to produce.

The disadvantage of this matrix structure is employees must have excellent

interpersonal skills and extensive training to conduct the big projects that have many
phases to be completed. This situation can make conflict of authority and confusing
among employees to make report more than one supervisor and managers. Besides
from that, the

matrix structure will not functioning unless participants understand it and adopt
collegial rather than vertical-type
relationship.
 Figure 3.1 - Sourced by:
http://www.townplan.gov.my/english/image/service_regionalplan_chart.jpg

Based on figure 3.1, this is the chart of organization department of town

country planning in peninsular Malaysia, Ministry of Housing and Local Government.
The objective for this department requires the setting up of a Regional Planning
Committee (RPC) for a region in an area consisting of two or more States. Example
for matrix structure determined in regionals planning committee secretariat
department and projects of national priority department, those lower-level
management have to report more than one supervisor or manager.
 Figure 3.2 - Sourced by: http://www.chemlab.com.my/organization.asp

Chemical Laboratory or
CHEMLAB is a member of the KAM Holdings Group of Companies. The objectives
this organization to specializing in many aspects of scientific and technology services
in this part of the world. This requires technical people excellence in assisting its
clients to operate extra optimally and profitably, even as complying with existing and
future government regulations. Figure 3.2 shows the matrix structure able to be
implemented by regions manager to report two or more different managers. As an
example, Johor and Kuching region managers must report to quality assurance
manager, senior manager, sales manager and quality
director.

PERUNDING DMA SDN

BHD

Figure 3.3 Sourced by: http://www.pdma.com.my/ver1/?

mobj=001&mact=content&pid=14

According figure 3.3, PERUNDING DMA SDN BHD was

incorporated on 1st August 1995 in Kuala Lumpur, and the objective for the
organizations is a chartered quantity surveyors consultant firm. The matrix structure
for this organization interconnected with low level management. As a professional
surveyor consultancy firm, most of surveyor related to each other to make right
decision to preparation tender report and tenders document. Human relations skill
needed to build long term relationships and increase the number of clients who value
the services we provide to their business and their
success.
 2.4 Product
Structure:

Figure 4.0 Product Structure example

The intention for

product structure is to focus of producing a product and services. Based on figure 4,
the organizations have to produce three different products with three different
structure organizations. Employees in different units that is responsible to accomplish
the duties given. In such an arrangement, the top manager of the product group
typically has considerable autonomy over the operation.

The advantage of this type of structure is that the personnel in the group can focus on
the particular needs of their product line and become experts in its development,
production, and distribution. A disadvantage, at least in terms of larger organizations,
is the duplication of resources. Each product group requires most of the functional
areas such as finance, marketing, production, and other functions. The top leadership
of the organization must decide how much redundancy it can afford.
 Figure 4.2 Sourced by: http://thinking-brands.blogspot.com/2010/09/nestle-brand-
portfolio.html

Family
branding or corporate branding in word of Nestle is attached all the brands in all
categories. Figure 4.2 illustrates, every food product meets the needs of customer
demands. In this era, customer more likely to buy the product based on branding name
and not compromise on price. Advantages for the product, if customers constantly to
use the nutrition products for their child, customer will continuously used the next
level product to make them satisfy if the company has a well managed product
portfolio.

Figure 4.3 - Sourced by: http://www.terusmaju.com.my/chart.html

 Teras Maju Services Sdn Bhd
actively involved in the transportation bus industry. Main service for this organization,
to provide transportation as a factory buses for their clients. Refers illustration figure
4.3, specialist employees develop that are well trained to provide specific services for
buses maintenance. Advantage for the organization, no cost rises to hire external
expertise to service the buses
maintenance.

Figure 4.4 - Sourced by: http://www.dolcera.com/wiki/index.php?

title=Samsung#Geographical_Presence

Refer figure 4.4, Samsung Electronics is worldwide

supplier in consumer electronics. There are the largest technology company in the
world, Samsung is guided by a simple philosophy, strong values and high ethical
standards that authority of departmentalization. The most important for the
organization, the line authority and staff authority have cooperation to each other to
ensure the effective and efficient of an organization.
 SUMMARY

This study attempts to explain organization structure based on rationalization

coordination of interactions among activities. Many organizations are designed as
hierarchies, with each manager reporting to one and only one manager at the next
higher level. Therefore, the function of organization structure is work arrangement by
division or management to individual or grouping intended for achievement of an
organizations objectives. The important potency to accomplish organizational
structure is organizational strategies, size of organization, technology and
environmental factor. Combination between people, hierarchies and system may
recognize as a departmentalization. Departmentalization can be described as a
distribution of work and employees to different organizational units that are
responsible for resolving the duties given. There are few types of departmentalization
had been applied by variety of companies. It can be observed through their types of
organization chart. As above mentioned, those types of structure are functional,
geographical, matrix and product base.

Functional structure is the most common type departmentalization whereby it is quite

straight forward in coordinating the interactions between top management and each
specific department representative which is normally department managers. This
typical structure allows one company to have in depth knowledge and skills on each
function. However, there is still some limitations if they are facing with global and
environment changes which it might slow the response time on it.

Depending on the types of businesses, some companies able covers certain region,
meanwhile the others cover all areas of market demand. For the companies that apply
geographical structure, most likely they will determine the regions either by cardinal
directions or by name of the states. Cardinal point of directions such north, south, east
and west are normally being applied by major players. It is much easier for them to
monitor and track performance and market demand analysis instead of by product or
services itself.

Matrix structure presents complex design of hierarchy whereby the authority and
responsibility of manager is bigger than the functional structure. Those companies
that apply matrix structure are more fragile and flexible in terms of reporting matters.
Even though, staff works in the different department, they are able to cross report to
another department.This

structure is normally applied within production department by the maintenance

people. For those who applied this structure are able to create huge network within
multidisciplinary department. However, management of this company has to ensure
that their staffs are self driven to carry out major tasks and deal with the multi cross-
sectional network.

Product structure is normally applied by those companies who have numbers of

products as their bullet to succeed. In order to penetrate current global changes,
certain companies have to survive to run their businesses. Varieties of product almost
certainly have variety of margin and able to analyze market trend which one is worth
to be sold and vice versa. Limitation on product structure is the companies have to
spend their time on market analysis and determining thoroughly the market trend as
well as their benefits on it.

However, in order to fulfill customer demand, an organization is required to study the

market trend and observe the best in class or multinational company best practices.
They might assist new born company and developing company to take a step further
in establishing their own businesses.
 Refere
nces
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BASF

BASF PETRONAS Chemicals Sdn Bhd (2008). [Online] Available: Error!

Hyperlink reference not valid.. n.d..

Butler Jr., J.K. (1986). A global view of informal organization. Academy of

Management Journal, 51, 3, 39-
43.

CHEMLAB CORPORATE WEBSITE. [Online]. Available:

http://www.chemlab.com.my/organization.asp. n.d.

Chewbacca. 7Eleven Global Presence. [Online]. Available: http://renchin.com/?

tag=7eleven. [2010, January
14].

COSWAY (m) Sdn Bhd. [Online] Available: http://www.cosway.com.my/. n.d.

Faheem Shahzad. (2010). Nestle Brand Portfolio.

[Online]. Available: http://thinkingbrands.blogspot.com/2010/09/nestle-brand-portfolio.html. [2010,
september 25].
JABATAN PERANCANGAN BANDAR DAN DESA.
[Online]. Available: http://www.townplan.gov.my/english/image/service_regionalplan_chart.jpg. n.d`

Lim, M., G. Griffiths, and S. Sambrook. (2010). Organizational structure

for the twenty-first century. Presented at the annual meeting of The Institute for Operations Research
and The Management Sciences, Austin.

MALAYSIA PRODUCTIVITY CORPORATION. [Online]

Available: http://www.mpc.gov.my/home/?cont=ds&item=d3. [2008, September 13].

Mohr, L. B. (1982). .Explaining Organizational Behavior. San Francisco: Jossey-Bass

Publishers.
Murata Electronics (Malaysia) Sdn Bhd. [Online] Available:
http://www.murata.com.my/Portal/MMEPortal.nsf/dx/organization-structure.htm. n.d.

Organizational chart.
[Online]. Available: http://www.terusmaju.com.my/chart.html. n.d.

OUR MAIN OPERATING

COMPANIES. [Online]. Available: http://www.berjaya.com/corporate-structure.html. n.d.
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