Choosing the Right Functional Structure for a New Consulting Business

Katelyn Ensley 011417311 D078: Task 1 12/12/2023 Kensl12@wgu.edu A1. Choosing the right organizational structure for a new business is essential to success. For this new consulting business, I would choose the functional organizational structure. The main features of the functional structure are:  Departmentalization: each functional area of the organization is divided into departments based on specialized functions such as marketing, finance, human resources, etc. Each department has its own manager.  Hierarchy: functional structures have a clear and well-defined chain of command so there’s no confusion regarding authority and responsibility. Employees know to report to their functional managers.  Specialization: since each department is focused on a specific function, employees become highly skilled in their function. Employees becoming experts in their respective functions increases operational efficiency.  Decision-Making: decisions are usually less complicated because they are centralized and made by the owner/CEO.

 Resources: resources are used in the most beneficial way because they’re allocated based on functional priorities. This reduces waste, unnecessary spending, etc.  Standardization: typically has formal rules and procedures so there’s little room for unpredictability. Workers know what to do and when to do it.  Communication: communication is usually effective, but it can sometimes be difficult between the different functions. This type of structure applies to the consulting business in many ways. Delegating tasks efficiently is extremely important because there’s only three part-time employees. Creating functional departments such as social development, economic development, and environmental development will allow each employee to focus on their specific functions. Operational effectiveness is increased: resources are used most efficiently, there’s little to no confusion regarding roles or responsibility, and decisions are made by the owner. Everyone works towards the same organizational goals while performing separate but equally important tasks. A2. The Functional Structure and the Four Factors:  This structure supports the use of functions by allowing the most important tasks to be carried out by each one of the three employees, so the limited human resources are used effectively and efficiently. The employees can expand their knowledge in their area of expertise, need for more training can be easily identified by monitoring each function, it encourages collaboration between functions and performance can be easily evaluated.

Using the three main areas defined in the mission statement of the consulting business as separate functions is the best way to ensure the goal of creating a more sustainable business community.  The functional structure supports the chain of command because it establishes clear, well-defined reporting relationship. Each function would typically have a manager to report to, but since each function only has one employee, they will report to the owner. As the business grows, another level can be added without much change to the chain of command.  The functional structure supports centralized decision-making for the consulting business because important decisions need to be made by top management, who then communicate the decisions down through the chain of command. This ensures efficiency in making decisions, avoids confusion, and allows faster implementation. Having decisions made this way ensures the business goes in the direction its supposed to. Strategy is consistent and it aligns the company with the mission and vision of the owner.  A high level of formality is important for this new consulting business. It’s crucial, especially for startups, to establish a good professional image because it builds confidence in potential stakeholders and clients. Formal rules and policies lessen unpredictability because it establishes consistency in the way the business operates. These things foster trust in the company, which is essential for a consulting business whose clients rely on them for advice and solutions to their problems. Formality will also make it easier as the business grows to add more employees.

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B1. I would choose the contingency theory for this consulting business.  Contingency theory states there is no management approach that fits all situations because there is no one best way to manage. It should be contingent on factors like the environment, the tasks, and people involved. Management should be able to adapt styles and strategies based on the needs of a particular situation. This theory acknowledges that different situations may need different styles of leadership, structures, or strategies to ensure the highest performance. Management styles should be aligned to the specific circumstances the company faces.  The contingency theory supports the functional structure for this consulting business because it allows for flexibility in management styles and structure. Since the business only has a few people working in the beginning, you must use them wisely to get the best outcomes. They must be able to adapt to the changing needs of clients, as well as the changing environment, society, and the economy. It supports functions because it states there is not a single best way to manage a business. This allows the tasks of specific functions to easily adapt to what is best at any given time, instead of being strictly one function. C1. The goal approach model involves identifying specific objectives, then assessing performance against those objectives. In the context of this consulting business with goals like aiming for sustainable and innovative results for their clients, increased profitability and

improved brand reputation, forming partnerships resulting in sustainable changes for the community, and raising the city’s ranking, the functional structure can impact effectiveness in many ways:  Functional structure allows for specialized roles, which enables consultants to focus on their area of expertise. This enhances the quality of the services provided, contributing to sustainable results, increased efficiency, and increased profits.  Functional structures allow resources to be allocated based on priority of the goals. This ensures resources are used for the most important activities, that will have the most impact, first.  Functional structures promote effective communication and collaborative efforts that are essential to achieving goals like establishing partnerships and increasing the company’s reputation.  Functional structures usually have clear performance metrics for each function. The business can track progress towards goals easily, assess profitability, and it provides information necessary for continuous improvement. This helps find ways to increase profits and improve relationships with clients and the community.  The functional structure can be adjusted to meet the needs of changing circumstances and opportunities, ensuring sustained efforts in achieving all organizational goals.  Functional structures positively impact effectiveness of the consulting business by fostering efficiency, strategic alignment, the optimal use of resources, measuring performance, and the ability to adapt to the changing internal and external environments.

C2. Disadvantages of using the divisional structure for this consulting business are:  The inefficient use of resources. Since divisional structures are more complex and typically better suited for larger companies, having separate divisions that each have their own functions is likely to be disproportionate to the consulting business. In small businesses it’s extremely important for resources to be used efficiently; a divisional structure can lead to unnecessary costs.  Decision-making can be slow. Small businesses like this new consulting business need to make decisions quickly and divisional structure can impede this because of response time and communication issues between the divisions. Divisional structures can impact goals negatively because resources are used optimally, and conflicts can arise between divisions regarding the allocation of the resources. Communication deficits and the divisions competing for resources are detrimental to any business, especially a new one. The divisions tend to focus on their own goals because they are more important to them, at the expense of the company’s goals. Strategies and goals must be aligned with the company and its mission to effectively achieve the desired outcomes.

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*I didn’t use any sources other than the reading from the class, which is why I didn’t include a list or in-text citations. I also didn’t reference the book while writing, just what was in my head. I just wanted to explain why there aren’t any.

task 1

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