ITEE ITEE-1 | Page 24

Sales department Production department Human resources department Line (direct) department Accounting department Staff (indirect) department The staff department includes the following departments: ●Human resources, accounting, general affairs, and information systems. The line department includes the following departments: ●Sales, production, and materials. Corporate and legal affairs Management Reference Staff department and line department Chapter 1 ●Functional organization A “functional organization” is structured by job function such as manufacturing, sales, marketing, accounting, and human resources. This type of organization’s key characteristic is that it enables the pursuit of specialization and efficiency in each job function, which in turn allows each organization to produce high quality results. At the same time, there is a tendency for boundaries to develop between each functional organization, and issues can arise from departments acting in their best interest. A functional organization is comprised of a “line (direct) department” and a “staff (indirect) department.” A line department is directly involved in the areas of earning profit such as sales, production, and materials. A staff department supports the line department in areas such as human resources, accounting, and general affairs. ●Hierarchical organization A “hierarchical organization” is an organization form with a hierarchical structure so that there is typically one chain of command. For example, in a hierarchical organization, there are a number of departments below the president. Below these departments are sections that are responsible for different business segments. This organization’s key characteristic is that it facilitates the spread of corporate policies throughout the organization. Board of directors Management department Human resources General affairs Sales department Corporate sales Consumer sales Manufacturing department Plant X Plant Y ●Divisional system organization A “divisional system organization” is separated along the lines of product, region, or market with each business division having its own staff department, either partially or in entirety. This organization’s key characteristic is that since each business division is capable of performing a broad base of functions, it is possible to issue unified directions so as to rapidly accommodate shifting market needs. 18