Use functional structures when the organization is small, geographically centralized, and provides few goods and services.

When the organization experiences bottlenecks in decision making and difficulties in coordination, it has outgrown its functional structure.

Use a divisional structure when the organization is relatively large, geographically dispersed, and/or produces wide range of goods/services.

Use lateral relations to offset coordination problems in functional and divisional structures.

When the organization needs constant coordination of its functional activities, then lateral relations do not provide sufficient integration. Consider the matrix structure.

To adopt the matrix structure effectively, the organization should modify many traditional management practices.

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