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Advantages and Disadvantages of Interrelationships Between Organizational Functions and Impact on Organisational Structure Essay

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Topic:Organizational Structure

Document Type:Essay


1. Advantages and Disadvantages of Interrelationships between Organizational Functions and Impact on Organisational Structure

Organizational Functions

The functions of an organization take into account the different aspects undertaken by the business including production or manufacturing, marketing, sales, accounting as well as research and development. In accordance to Sherman and Thompson (2019), the organizational structure delineates the relationship and interrelations between the functions of a business and ascertains the manner in which the chain of command operates through the various levels. The interrelationship between organizational functions and organizational structure is akin to a flow chart. This is in the sense that an entity can set up its business structure around the organizational functions. However, even if the entity fails to do so, the organizational functions and structure will have an impact on one another (Sherman and Thompson, 2019).

Functional Organizational Structure

A functional organizational structure creates distinct and separate departments. Plenty of businesses adopt a functional organizational structure that includes a pecking order or chain of command within the entity. Basically, the inference of this is that various functions do into distinct departments or divisions that report to the managers that head them, who subsequently report to an individual positioned higher up in the ranking (Aquinas, 2008). One of the key advantages of espousing a functional structure includes clear and well outlined lines of authority, which include the fundamental decision-makers in every department responsible for setting the general mission and tasks. In addition, there is the advantage that this functional structure permits every employee to lay emphasis on his or her specific mission. Nonetheless, the functional structure does have its shortcomings. First of all, this can give rise to different departments that fail to communicate with one another or collaborate properly. Ultimately, a consumer may get moved from one department to another in the event that his or her issue fails to be in relation to one specific function (Vitez and Baligh, 2011).

Divisional Organizational Structure

The interrelationship between functions implies that a divisional structure has numerous branches. Basically, a divisional organizational structure extends functions across various branches. That is, if an organization has dissimilar lines of production, the department for every line of production has its own functional groups, for instance, accounting, research and development, and marketing (Jones, 2013). The advantage of this is that every division of the organization has the staff to undertake all the essential functions. Fundamentally, every division can undertake its business operations relatively independently. The disadvantage is that with personnel in every department undertaking similar functions, the organization could ultimately be adversely impacted by plenty of redundancy or inefficiency. A fitting instance is the aspect of having to manage six different human resources or accounting operations, instead of a single, centralized operation. This implies that there is repetition of functions, systems of management, development of policies and others (Daft, 2015).

Matrix Organizational Structure

The matrix organizational structure facilitates flexibility. An organization utilizing a matrix structure within its business operations can bring about increased flexibility within business functions as compared to a progressively more hierarchical entity (Cunlifee, 2008). Within a matrix organizational structure, the advantage is that every employee operates within a function-oriented department, for instance, finance or sales and marketing, but the employee can be apportioned to projects under various supervisors or managers and also placed into teams with other employees who have dissimilar functions. In addition, there is the advantage that the structure adapts organizational functions to the changing necessities of the organization. The shortcoming, however, is that the pecking order within the matrix can grow to be overcast and disputed (Cunliffe and Luhman, 2012).

Case of Air India

Taking into consideration that Air India is a statutory company, it submits a report encompassing its activities on an annual basis to the Indian Parliament via the Ministry of Civil Aviation. The company relishes functional independence. Air India’s center of operations situated in Bombay comprised of well delineated divisions and departments. All matters regarding organizational policies are decided at the H.Q. level and carried out through field and branch offices. Imperatively, the field stations as well as branch offices are disseminated in a significant number of cities not only in India but also overseas. The hierarchical structure of Air India comprises of a Managing Director who supervises the Deputy Managing Director and a group of Directors in charge of different functions and departments (Rani, 2013).

Air India comprises of significant functions that are conducted by various departments. The operations department of the company is culpable for flight operations and also takes care of issues pertaining to navigation, training and development as well as licensing of the organization’s air crew. Secondly, Air India’s engineering department deals with matters pertaining to maintenance, repairing and renovating of aircrafts. In addition, the department is responsible for manufacturing of basic equipment necessitated for the airplanes. The commercial department of the organization deals with sales and revenues, business promotion and publicity, as well as matters that pertain to public relation and advertisement. What is more, the personnel department of Air India is liable for recruitment, assessment and hiring of employees. It is also responsible for training and maintaining the records of all members of staff. In addition, the stores and procurement department of Air India is responsible for all of the organization’s purchases and maintenance of the stores. There is also the tourism division of Air India, which is a separate and distinct cell that is purposed to promote tourism (Rani, 2013).

Structure, Size, and Scope of Organizations and Linkage to Business Objectives and Products and Services


Organization structure is delineated as the totality of the methods and approaches by which an organization splits its labor into separate tasks and subtasks and thereafter conducts their coordination (Koontz, 2010). Organizational design is the process of evaluating the strategic objectives and environmental demands of the organization, and thereafter, ascertaining the suitable organizational structure (Cichoki and Irwin, 2014). The…

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…kind of decision making that is done:

Source: Shellar (2018)

As aforementioned, Air India Ltd. was established under the Companies Act 1956 on 30 March 2007 and the Government of India has ownership of the organization. The Corporation was generated to enable and expedite the merger of the two key state-owned airlines in India including Air India, with its subsidiary Air-India Express and Indian Airlines, together with its subsidiary Alliance Air (Civil Aviation, 2019). Being owned by the government, the ultimate decision making undertaken by Air India is not only formalized but also centralized and the highest level of management reports to the Ministry of Civil Aviation.

Situated at the Safdarjung Airport in the city of New Delhi, the responsibility of the Ministry of Civil Aviation takes into account formulating and articulating nationwide policies and programmes that facilitate the development as well as regulation of Civil Aviation individual within the nation. What is more, the institution is also culpable for the administration of different legislations including the Aircraft Act of 1934 and the Aircraft Rules of 1937 as well as other laws relating to India’s aviation industry. This Ministry carries out directorial and executive control over involved and self-governing establishments such as the Directorate General of Civil Aviation, Bureau of Civil Aviation Security and conglomerated Public Sector activities (Civil Aviation, 2019).

The complexities of Air India’s business structure significantly impact the company’s organizational functions. It is imperative to note that the management of Air India Limited has been entirely Indian, both before and after the merger. The inference of this is that the company should not face problems of intercultural differences. However, India is one of the biggest nations in the world and is more often than not deemed to be a sub-continent comprising of numerous cultures. As a result, these cultural dissimilarities may give rise to clashes between managers and employees in different departments (Karanam, 2012).

India has the second largest population in the world and therefore has a major workforce. In addition, owing to the huge population, there is cheap labor force, an appealing aspect for several businesses such as Air India. India is also experiencing a significant transformation in its culture and lifestyle embracing the Western culture. However, the ancient Hindu caste system continues to have an impact on the societal order (Sharma and Singh, 2015). For instance, there was an instance in June 2009, where a clash took place in the freight operations function of Air India where the pilots poorly interacted with one another. As Air India was conducting its business operations in the sub hubs situated in Frankfurt and London, the key management personnel within the hubs are Indians. In spite of the fact that Indian management in other nations is competent and skillful, the individuals with the local knowledge are necessitated for efficacious handling of local problems (Karanam, 2012). Nonetheless, management insisted that since Air India is a government establishment, then managers ought to be Indian-born. In addition, all…

Sample Source(s) Used


Air India. (2019). Board of Directors. Retrieved from:

Aquinas, P. G. (2008). Organization structure and design. India: Excel Books India.

Burns, T., & Stalker, G. M. (2005). Mechanistic and organic systems. Organizational Behavior, 2, 214-25.

Choo, S., & Bowley, C. (2007). Emerald Article: Using training and development to affect job satisfaction. Journal of Small Business and Enterprise Development, 14(2),339 - 352.

Cichocki, P., & Irwin, C. (2014). Organization design: A guide to building effective organizations. Kogan Page Publishers.

Civil Aviation. (2019). About Us: Organizational Setup. Retrieved from:

Cunliffe, A. L. (2008). Organization theory. New York: Sage.

Cunliffe, A. L., & Luhman, J. T. (2012). Key concepts in organization theory. New York: Sage.

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