Traditionally, organizations have had a hierarchical or pyramidal structure, with one person or a group of people at the top, and an increasing number of people below them at each successive level. This is sometimes called line structure. There is a clear chain of command running down the pyramid. All the people in the organization know what decisions they are able to make, who their line manager (or boss) is (to whom they report), and who their immediate subordinates are (over whom they have line authority, and can give instructions to). 

Functional structure
Yet the activities of most organizations are too complicated to be organized in a single hierarchy. Most large manufacturing companies, for example, have a functional structure, including, among others, specialized production, finance, marketing, sales, and human resources departments. This means, for instance, that the production and marketing departments cannot take financial decisions without consulting the finance department. Large organizations making a range of products are often further divided into separate operating divisions.
A disadvantage of functional organization is that people are often more concerned with the success of their own department than that of the company as a whole, so there are permanent conflicts between, say, finance and marketing or marketing and production over what the objectives are.

Flattening hierarchies and delegating responsibility
A problem with very hierarchical organizations is that people at lower levels can't take important decisions, but have to pass on responsibility to their boss. However, the modern tendency is to reduce the chain of command, take out layers of management, and make the organization much flatter.
Advanced IT systems have reduced the need for administrative staff and enabled companies to remove layers of workers from the structure.
Many companies have also been forced to cut back and eliminate jobs in recessions.
Typically, the owners of small firms want to keep as much control over their business as possible, whereas managers in larger businesses who want to motivate their staff often delegate decision making and responsibilities to other people.

Matrix management
Another way to get round hierarchies is to use matrix management, in which people report to more than one superior. For example, a product manager with an idea could deal directly with the managers responsible for a certain market segment and for a geographical region, as well as managers in the finance, sales and production departments. Matrices involving several departments can become quite complex, so it is sometimes necessary to give one department priority in decision making.

Teams
A further possibility is to have wholly autonomous, temporary groups or teams that are responsible for an entire project, and are split up as soon as it is successfully completed. But teams are not always very good at decision making, and usually require a strong leader.

The text mentions the often incompatible goals of the finance, marketing and production (or operations) departments. Classify the following strategies according to which department would probably favour them.
1 a factory working at full capacity
2 a large advertising budget
3 a large sales force earning high commission
4 a standard product without optional features
5 a strong cash balance
• 6 a strong market share for new products 7 generous credit facilities for customers 8 high profit margins 9 large inventories to make sure that products are available
10 low research and development spending
11 machines that give the possibility of making various different products
12 self-financing (using retained earnings rather than borrowing)