Organizational Structure
MGT 230
April 8, 2012
Dr. John Opinski

Organizational Structure Organization and planning are an essential asset for organization’s to attain the highest level of efficiency and achieve success. Microsoft is an organization with a structure composed of a chief executive officer (CEO), who is Steve Ballmer, a board of directors, executives, and senior and technical leaders. Microsoft has grown since it was founded in1975 and is currently a worldwide leader in services and software (Microsoft, 2009). Microsoft has an efficient and productive organizational structure. This paper will show a comparison to other organizations to demonstrate the importance of an organizational structure and show similarity and also distinctness in structure. An evaluation of how organizational functions such as finance, marketing, operations, and human resources influence and determine the organizational structure of Microsoft is given. Additional examination of Microsoft defines the outcome of organizational functions to the organizational structure. Microsoft’s organizational design illustrates the best structure to achieve the organizations goals. Last, Microsoft’s organizational structure of management, functions, and design work together to achieve success. Companies need to have organization and levels of authority to function successfully. The first level of any company’s organizational function is employees. Employees are divided into different departments based on experience and knowledge and is referred to as departmentalization. The departments may include marketing, finance, human resources, and operations. The second level of any company’s organizational function is management. Management may include operational managers, executive managers, and top managers. The last level includes the board of directors and chief executive officer. The level of authority rises from level one with minimum authority to the last level with final authority. “Organization structure is comprised of functions, relationships, responsibilities, authorities, and communications of individuals within each department" (Sexton, 1970, p. 23) and illustrated in an organizational chart. The organizational chart shows the functions and reporting order of the company. Two concepts of organizational structure are differentiation and integration (Bateman & Snell, 2009). Differentiation includes the people who perform different tasks and with integration the differentiated people are organized to attain a specific goal. Part of the differentiation is the Division of labor, who divide jobs into smaller tasks. The completion by an employee of a specific task is known as specialization. Some companies will divide organizational functions into divisional structure. The divisional structure contains the resources needed to function. An example is a software company that has a division for business software and a division for home software that provide support and development. The largest software company in the world that offers services for business and home is Microsoft. The Microsoft Company also develops entertainment software such as music for Zune and video games for Xbox. Microsoft has many positions within the company from Software Engineering: User Experience to Business Services and Administration and has offices throughout the world (Microsoft, 2009). The main function of Microsoft is to develop software, so the largest department within the company is information technology comprised of specialized departments from support to development. Microsoft is comprised of many divisions within the company that include business software and home software and provide support and development. The human resources department’s function is to organize the employees based on qualifications of knowledge and experience. The function of the finance department is the cash flow from accounts payable, receivable, and payroll. The marketing department’s function is to provide informational websites and advertising. The efforts of the marketing department led Microsoft to be known all over the world. Microsoft is a successful and growing company because of the organizational functions of the departments. According to Montalbano, “Microsoft reorganizes and makes sense for the largest software company, which was getting too big and unwieldy under its former structure, to continue to be managed efficiently” (Montalbano, para. 1). Most companies use a six-division structure, but Microsoft has changed to a three-division structure. The three divisions are in the service, product, and customer departments. According to Rob Enderle, “The restructuring will enable Microsoft to more efficiently deliver products, combining technologies from divisions that previously had difficulty working together, because they were in separate organization” (Montalbano, para. 5). The separation of the departments was not allowing Microsoft adequately to serve the customer and produce innovative products. Microsoft’s reorganization provides better employee communication between the departments and management. The company will be more adaptable to change and concentrate on quality, products, excellent service, and the customer. Microsoft portrays an efficient and productive organization because of the organizational structure, function, design, and management. The company is comprised of different committees such as compensation, audit, finance, antitrust compliance, and governance. Microsoft has difference levels starting with employees, management, and leading to a board of directors as well as an executive team and chief executive officer. In comparison, Microsoft is similar to the organizational structure of other companies such as Dell. Other companies will use different organizational structures such as differentiation or integration. In addition, organizational functions such as finance, marketing, operations, and human resources influence and determine the organizational structure of Microsoft. Microsoft implements different organizational functions to improve the success of the organization. The success of Microsoft is also determined by the organizational design. The organizational design of products, service, customers, and departmentalization help determine which structure best suits Microsoft’s needs. In conclusion, Microsoft is successful in achieving goals because of the implementation of proper organizational structures, management, functions, and designs.

References Bateman, T.S., & Snell, S. A. (2009). Management: Leading & Collaborating in a Competitive World (8th ed.). : McGraw-Hill Companies, Inc.
Microsoft (2009). Corporate structure and leadership. Retrieved October 21, 2009, from www.microsoft.com
Microsoft (2009). Corporate Goverance. Retrieved October 21, 2009, from http://www.microsoft.com/australia/citizenship/about/corporategovernance.mspx Montalbano, E. (2005, September). Microsoft reorganizes; Allchin to retire in 2006.. http://web.ebscohost.com.ezproxy.apollolibrary.com/ehost/detail?vid= 3&hid=112&sid=6d77f30c-1085-44dc-a40c-852b1933b438% 40sessionmgr112&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN= 18390330 Sexton, William P. (1970). "Organization Structure." In William P. Sexton, ed. Organization Theories. Columbus, OH: Charles E. Merrill.