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Organizational Structures

頻出~39 min8 terms10 past questions

Goals of this unit

  • Tell a functional organization from a divisional structure by whether departments are divided by work function or by business unit.
  • Distinguish a matrix organization from a project organization by where members belong, how many bosses they have, and how long the organization lasts.
  • Explain how a company system, which delegates authority inside one company, differs from a holding company, which ties separate companies together through shares.
Terms at a glance (8)
TermIn one lineHow departments or units are dividedChain of command and responsibility
階層型組織Basic pyramid structure built from stacked levelsLevels from top to bottomA single line along the levels
機能別組織Departments divided by work functionFunctions such as development, production and salesFrom each function's head up to top management
職能別組織Another name for the same form as a functional organizationSpecialist roles (job functions)Same as a functional organization
事業部制A division set up for each business unitBusinesses such as products or regionsEach division is responsible for its profit
マトリックス組織Functions and businesses combined as a gridBoth a function axis and a business axisTwo or more bosses
プロジェクト組織Formed for a set period to achieve a goalPeople gathered from each department per goalWork under the project leader during the period
カンパニー制Business areas inside the company run like independent companiesBusiness areas (in-house companies)Each in-house company is responsible as a self-supporting unit
持株会社Holds shares to bring subsidiaries togetherEach subsidiary as a separate legal entityOversees subsidiaries as their shareholder

Terms

階層型組織Hierarchical Organization

Open in glossary 階層型組織

A hierarchical organization (階層型組織) is a pyramid-shaped organization with the top manager at the peak and levels stacked from top to bottom; instructions travel down and reports travel up.

  • Top manager
    • Department head (Dept. 1)
      • Section manager
        • Staff member
        • Staff member
    • Department head (Dept. 2)
      • Section manager
        • Staff member
        • Staff member

The path of who gives instructions to whom is called the chain of command (指揮命令系統), and in a hierarchical organization it forms a single line along the levels. How departments are divided is a separate question, and functional organizations and divisional structures are both built on these stacked levels.

AnalogyIt is like a school club where the coach's plan passes through the captain and each section leader before reaching the members.

How to rememberThink of a staircase: messages move up or down one step at a time, never skipping a level.

Exam points

  • Mix-upIn a hierarchical organization (階層型組織), each subordinate in principle has just one direct boss giving instructions. A matrix organization (マトリックス組織), where a person has two or more bosses, differs in the number of chains of command (指揮命令系統).

機能別組織Functional Organization

Open in glossary 機能別組織

A functional organization (機能別組織) divides its departments by work function, such as development, production, sales and accounting.

社長

営業部

製造部

開発部

経理部

Because people with the same specialty gather in one department, knowledge and skills build up easily and the same work is not duplicated across departments. On the other hand, finishing a single product takes several departments working together, and cross-department coordination tends to land on top management.

AnalogyIt is like a restaurant kitchen split into grill, fryer and plating stations. Getting one dish out requires the stations to work together.

How to rememberIf departments named for what they do, such as Sales or Accounting, each appear only once and nothing is grouped by business, it is a functional organization.

Exam points

  • ExamAn organization chart in which departments for each work function sit side by side directly under the president, with no grouping by business, shows a functional organization (機能別組織, also called a job-function organization, 職能別組織).

1 past questions on this term 機能別組織

職能別組織Job-Function Organization

Open in glossary 職能別組織

A job-function organization (職能別組織) forms departments around job functions (specialist roles in the work) and refers to the same form as a functional organization.

The Japanese word for job function (職能) focuses on the specialist role a person plays, while the word for function (機能) focuses on what the work does. Under either name, the boundaries between departments are drawn by differences in specialty.

How to rememberPicture craftspeople, each given a separate workshop for their own trade.

Exam points

  • ExamA job-function organization (職能別組織) divides work by specialist role and uses each role as the unit of a department.
  • ExamA job-function organization suits a company with few businesses and a stable business environment. In that setting, the efficiency of grouping by specialty pays off.

2 past questions on this term 職能別組織

事業部制Divisional Structure

Open in glossary 事業部制

A divisional structure (事業部制) sets up a division for each business unit, such as a product or region, and gives each division profit responsibility along with the functions its business needs.

社長

家電事業部

自動車事業部

食品事業部

営業・製造・経理

営業・製造・経理

営業・製造・経理

Since each division has its own development, production and sales, the division head can respond quickly to market changes on their own judgment. On the other hand, the same kinds of functions are duplicated in every division, which tends to waste people and equipment.

AnalogyIt is like a bakery and a flower shop owned by the same person, each handling everything from buying stock to keeping the books inside its own store.

How to rememberDivisions named for a product or place, such as Home Appliances Division or Kansai Division, each with their own sales and manufacturing departments, mark a divisional structure.

Exam points

  • ExamIn a divisional structure (事業部制), each division is responsible for its profit and has in-house the functions needed to run its business, so business activities are largely completed within the division.
  • ExamAn organization chart with the function-based departments that run each business placed under that business's head shows a divisional structure. Even the same function is handled by a different department when the business differs.

2 past questions on this term 事業部制

Functional Organization vs. Divisional Structure

AspectFunctional OrganizationDivisional Structure
Key differenceBasis for dividing departmentsWork function (development, production, sales, etc.)Business unit (product, region, etc.)
Profit responsibilityBorne by the company as a whole; hard to split by departmentBorne by each division
StrengthSpecialties deepen and functions overlap littleDivisions can respond quickly to market changes on their own judgment
WeaknessCross-department coordination piles up at top managementThe same functions are duplicated in each division, which tends to cause waste

マトリックス組織Matrix Organization

Open in glossary マトリックス組織

A matrix organization (マトリックス組織) is a grid-shaped organization that crosses a function axis with a business axis (products or projects), so that each member belongs to departments on both.

Function boss / Business bossProduct A leadProduct B lead
Head of DevelopmentStaff (Development × Product A)Staff (Development × Product B)
Head of SalesStaff (Sales × Product A)Staff (Sales × Product B)

Because one person takes instructions from both a functional boss and a business-side boss, they can keep their specialty while also working toward the business's goals. The trade-off is that when the two sets of instructions clash, deciding which comes first takes effort to coordinate.

AnalogyIt is like a student guided by both a homeroom teacher and a club adviser. When their plans overlap, the student is unsure whom to follow.

How to rememberMatrix as in math: one person sits in each cell where a row meets a column.

Exam points

  • ExamA matrix organization (マトリックス組織) combines, within a single member, management aligned with the business's goals and the specialist responsibility held by the functional department, so each member has two or more bosses.

1 past questions on this term マトリックス組織

プロジェクト組織Project Organization

Open in glossary プロジェクト組織

A project organization (プロジェクト組織) gathers the people it needs from various departments to pursue a specific goal, is formed for a limited period, and disbands once the goal is achieved.

  1. Set the goal and deadline
  2. Gather people from departments
  3. Work toward the goal
  4. Disband and return to home departments

Once the goal is met, the organization disbands and members return to their home departments.

4 / 4

Members bring the expertise of their home departments, so the team can concentrate on cross-department tasks such as developing a new product. Since people go back to their home departments when it disbands, the team works with a clear deadline and goal.

AnalogyIt is like a school festival committee. Students from each class join it, and once the festival is over, it breaks up and everyone returns to their own class.

How to rememberProject comes from Latin for "throw forward": once it lands on its target, its job is done.

Exam points

  • Mix-upA project organization (プロジェクト組織) is a temporary organization that disbands once its goal is achieved. It differs in how long it lasts from a functional organization (機能別組織) or divisional structure (事業部制), which continue as permanent departments.

1 past questions on this term プロジェクト組織

Matrix Organization vs. Project Organization

AspectMatrix OrganizationProject Organization
Key differenceHow long it lastsContinues as a permanent structureDisbands once the goal is achieved
Where members belongTo both a functional department and a business-side department at onceTo the project during the period, then back to their home department
Who gives instructionsTwo or more: a function boss and a business bossMainly the project leader during the period

カンパニー制Company System

Open in glossary カンパニー制

A company system (カンパニー制) treats the organization for each business area inside one enterprise like an independent company, giving it broad authority and responsibility as a self-supporting unit.

Each in-house company is often entrusted with a wider scope than under a divisional structure, extending to decisions on investment and how funds are used. Legally, however, the whole remains a single company.

AnalogyIt is like siblings under one roof who each manage their living from their own wallet. They still share the same home address.

How to rememberAn in-house company is exactly what the name says: a company that sits inside a company.

Exam points

  • ExamA company system (カンパニー制) sets up highly independent organizations for each business area inside one enterprise, in order to speed up decisions and promote self-supporting accounting (独立採算).

1 past questions on this term カンパニー制

持株会社Holding Company

Open in glossary 持株会社

A holding company (持株会社) controls other companies as subsidiaries by owning their shares, and brings the whole group together.

  • Holding company (owns shares)
    • Subsidiary A (separate entity)
    • Subsidiary B (separate entity)
    • Subsidiary C (separate entity)

One that runs no business of its own and concentrates on group strategy and management is a pure holding company (純粋持株会社), while one that runs its own business as well as owning subsidiaries is an operating holding company (事業持株会社). Many put "Holdings" (ホールディングス) in their company name.

AnalogyIt is like a driver holding reins made of shares, keeping several separately running carriages headed the same way.

How to rememberHolding simply means owning, which is where company names ending in Holdings come from.

Exam points

  • Mix-upA holding company's (持株会社) subsidiaries are separate companies in law as well. That separation goes deeper than under a company system (カンパニー制), which divides things internally while remaining one legal entity.

Company System vs. Holding Company

AspectCompany SystemHolding Company
Key differenceNumber of legal entitiesOne (in-house companies are internal divisions)The holding company and each subsidiary are separate entities
How it holds things togetherDelegating authority within the companyControl through share ownership

Key points

  • The stacked levels of a hierarchical organization also form the base of the chain of command in other organizational forms.
  • Functional organization and job-function organization are two names for the same form, which values efficiency by specialty.
  • In a divisional structure, each division is responsible for its profit and has in-house the functions its business needs.
  • Members of a matrix organization have two or more bosses, so their instructions have to be coordinated.
  • A company system gives internal business areas broad authority and responsibility as self-supporting units, yet it remains one legal entity.

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