Organizational Structure | Tutor Marked Assignment

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Lloyd's and the Lloyd's Crest are the registered trademarks of the Society incorporated by the Lloyd's Act 1871 by the name of Lloyd's.

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Table of Contents
1. Introduction............................................................................................................1
2. Possible organizational structures.........................................................................2
2.1. A Multi-Divisional structure..............................................................................2
2.2. Matrix structure................................................................................................3
2.3. The holding company structure.......................................................................3
3. Recommended organizational structure................................................................4
3.1. Transnational structure....................................................................................4
4. Potential risks in supply chain and recommendations...........................................5
4.1. Outsourcing and marketing risks.....................................................................5
4.2. Financial flow risk............................................................................................6
4.3. Environmental risks.........................................................................................8
5. Conclusions............................................................................................................9
References...................................................................................................................9

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1. Introduction
Structures in organizations refer to the relationship between different elements of the
organizations as a whole. The concept behind structure can be used for many things
such as describing responsibility or show a linkage between line managers reporting
in organizations. Since the firm is expanding its business in new geographic
locations, this report will identify possible organizational structures such as multi-
divisional, matrix and holding company structures, however, the transnational
structure seems to be most appropriate among all. Considering supply chain risk is
also essential due to the complex supply chain the firm may face under new
structures, this report will identify the three greatest supply chain risks the firm may
face along with making recommendations to eliminate them.
2. Possible organizational structures
2.1. A Multi-Divisional structure
A multi-divisional structure is one of the organizational structures which aligns
organization according to sperate divisions that are based on products, services or
geographic location. According to Ahmady, Mehrpour, and Nikooravesh (2016), in
the path of organizational development or growth, if the functions or units are
developed, it can be transformed into a multifunctional division to reduce the
decision-making responsibility by top executives. A multi-divisional structure
organization follows a separate functional criteria’s which reports to its head or
primary business unit. The central staff shows responsibility for management and
supervision of organization functions to align with the present business environment
needs and strategies. In this sense, the company can implement its manufacturing
units and offices in North and South America, South Africa and South East Asia so
that they can quickly respond to changing consumer preferences and market

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competition within their respective locations while the decision-making authority will
lie with its primary head office situated in the Netherlands.
2.2. Matrix structure
This structure can be created in the company to create a structure which is based on
manufacturing and distribution function of its primary division. Matrix structure in
organizations provides a combination of flexible functional structure and
multidivisional structure sensibility which is not only based on a geographical or
customer-centric approach but based on logic behind functional dimension within the
multidivisional organizational structure. This structure replaces formal reporting
between authorities between subsidiaries, however, the major decision making may
take a longer time as compared to other structures (Ahmady, Mehrpour, &
Nikooravesh , 2016). Overall, matrix structure can provide the firm with effective
knowledge transfer as it allows management to share distinctive knowledge across
organizational boundaries i.e. to its subsidiary units.
2.3. The holding company structure
A holding company can be defined as a company which consist of shareholdings in
several individual business units. Usually, the subsidiaries of organizations operate
independently with different and outside shareholders, however, retain the name of
the original company. The main function of a holding company is to manage, acquire
and sell and make investments in group companies, primarily its subsidiaries to
provide organizational and transactional flexibility within the group companies
(Legwaila, 2013). In the context of group’s business, the company can develop an
intermediary holding company where an appropriate jurisdiction will enhance the
transactional flexibility of groups’ or subsidiaries manufacturing and product
distribution units and assist new facilities in establishing a strong offshore group