Organizational structure defines a company’s formalized interactions between tasks, technologies, and people. Structure identifies the hierarchical levels of the company, indicating the responsibilities and relationships between each level. There are four traditional types of organizational structure: simple, functional, divisional, and matrix. Which structure a company uses depends on several factors like size, complexity, and business strategy.

A simple organizational structure is the most common and informal type of structure. The simple structure is used by small businesses with the owner/manager controlling the decision-making process, with other staff acting as an extension of the top executive.

A functional organizational structure occurs when a firm grows and needs major functions to be grouped together. It becomes the top executive’s primary responsibility to coordinate and integrate the different functional groups.

A divisional organizational structure is organized around into semi-autonomous divisions organized around products, projects, markets, or geographical locations. At the top of this structure is a central corporate office, with the divisions running relatively independently from each other.

Finally, there is the matrix organizational structure. Matrix is a combination of functional and divisional structure. In this structure, members from each functional group are used to create product groups, where they work together for the duration of a project and report to both a project manager and the manager of their functional group.

Nike uses a geographic divisional organizational structure.  This structure allows them to oversee all their global operations. Their structure features global leadership with a central leadership team that supervises essential departments globally.  Nike’s operation runs off semi-autonomous geographic divisions that are divided regionally. These regional divisions help Nike to tailor products to local consumers. The advantage of Nike’s structure is that global leadership allows for a centralized control point, while their regional breakdown allows them to meet specific market needs.

Nike Inc. Organizational Structure Characteristics (Analysis)