Answer to Question #156566 in Economics for juwita

Question

The Malaysian government has proposed RM55 billion for the recovery and development of small-medium enterprises (SMEs). It is continued support for digitalization and automation transition through the Prihatin Rakyat Economic Stimulus Package (Prihatin), Prihatin SME+, National Economic Recovery Plan (Penjana), and the Prihatin Supplementary Initiative Package (Kita Prihatin). The initiatives were well-received by Malaysians. Considering you are starting a new company selling small electrical appliances, what organizational structure would you use? Provide THREE (3) reasons for selecting the organizational structure.

Answer 1

Functional structure. When the workload on employees increases and the organization continues to grow further, then the organizational structure moves from a line-staff structure to a functional one, which means the distribution of work not by departments, but by functions performed. Whereas before everything was simple, now managers can safely call themselves directors of finance, marketing, and production.

It is with the functional structure that you can see the division of the organization into separate parts, each of which has its own functions and tasks. A stable external environment is an indispensable element of supporting the development of a company that has chosen a functional structure for itself.

 Such companies have one serious drawback: the functions of the management personnel are very blurred. If in a linear organizational structure everything is clear (sometimes even too much), then in a functional organizational structure everything is a little blurry.

For example, when there is a problem with sales, the director has no idea who exactly to blame. Thus, the functions of managers sometimes overlap, and when a problem arises, it is difficult to establish whose fault it occurred.