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What Is Organizational Structure?What do we mean by the term organizational structure? Consid-er a simple analogy. In some ways, a business is like an automobile. All cars have engines, four wheels, fenders, and other structural components. They all have passenger compartments, storage areas, and various operating systems (fuel, braking, climate control). ALT hough each component has a distinct purpose, it must work in accord with the others.Similarly, all businesses have a common structural and operating components, each composed of a series of jobs to be done and each with a specific overall purpose. From company to company, these components look different and fit together differently, but in every organization, components have the same fundamental purpose — each must perform its own function while working in concern with others. So, the organizational structure can be defined as the specifica-tion of jobs to be done within an organization and the ways in which these jobs relate to one another.Although all organizations feature the same basic elements, each must develop the structure that is most appropriate for it. A large manufacturer operating in a strongly competitive environment re-quires a different structure than a local barbershop or video store.Large British companies generally have a chairman of the board of directors who oversees operations and a managing director (MD) who is responsible for the day-to-day running of the company. In smaller companies, the roles of the chairman and managing director are usually combined. Americans tend to use the term president rather than chairman, and chief executive officer (CEO) instead of manag-ing director. The CEO or MD is supported by various executive of-ficers or vice presidents, each with clearly defined authority and re-sponsibility (production, marketing, finance, personnel, and so on).Top managers are reviewed (and sometimes dismissed) by a company's board of directors. They are supported and advised and have their decisions and performance constituted by the board. The directors of private companies were traditionally major shareholders, but this does not apply to the large public companies with wide share ownership1.
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