Dell has a functional organizational structure with some degree of decentralization. This means functional departments share information, contribute ideas to the success of the organization and have some degree of decision-making power.
Department
Structure
Details
Advantages
Drawbacks
Sales and Marketing
Matrix
– Teams organized by product lines or customer segments. – Functional managers for product expertise. – Regional managers for geographical coordination.
– Enhanced coordination between product lines and regions. – Expertise-based functional management. – Adaptability to market variations.
– Potential for power struggles between functional and regional managers. – Complex communication channels. – Decision-making bottlenecks.
Research and Development
Matrix
– Teams organized by product categories or technology areas. – Functional managers for domain expertise. – Regional managers for market-specific insights.
– Specialized focus on product development. – Market-specific knowledge at regional level. – Efficient technology exploration and innovation.
– Conflicts over resource allocation. – Complex reporting structures. – Slow decision-making in some cases.
Manufacturing and Operations
Matrix
– Teams for various manufacturing aspects (assembly, quality control, logistics). – Functional managers for process oversight. – Regional managers for supply chain coordination.
– Potential for process conflicts between functional and regional managers. – Challenges in balancing production capacity. – Increased overhead.
Finance and Administration
Matrix
– Teams organized by financial functions (accounting, budgeting, administration). – Functional managers for financial strategy. – Regional managers for compliance and administration support.
– Expert financial management within functions. – Localized support for administrative tasks. – Effective financial control and reporting.
– Potential for discrepancies in financial practices. – Administrative redundancies between functions. – Communication complexities.
Table of Contents
Introduction
Dell is an American company that sells PCs, servers, data storage devices, software, peripherals, and consumer electronics from other brands, among other things.
Dell is perhaps best known for its direct-sales business model where consumers purchase made-to-order computers. However, parent company Dell Technologies has made several acquisitions in recent years to support the company’s new focus on analytics, cloud computing, and information security.
How is Dell structured?
Dell has a functional organizational structure with some degree of decentralization. This means functional departments contribute ideas to the wider success of the organization and have some level of autonomy in terms of decision-making.
However, the company is less decentralized than it has been in the past. In the 1990s, Dell’s information technology systems were highly fragmented. With most of the company’s applications developed independently across different departments, management lacked the necessary information to make even the most basic of decisions.
Dell realized that this way of doing business contradicted its organizational structure of centralized, functional groups reporting directly to headquarters in Austin, Texas. As the company entered the 2000s, it developed a system called Information to Run the Business (IRB). This system gives all Dell managers basic indicators such as financial performance, product margins, and product quality.
Today, these are managers of function-based groups such as:
Michael Dell is the founder, chairman, and CEO of Dell.
In 2016, the hierarchical leadership structure was altered after Dell acquired computer-storage corporation EMC for $67 billion. In the process, a new company called Dell Technologies was born, with 14 top executives reporting directly to Dell himself.
Some of the members of this executive group are in charge of Dell Technologies companies that run independently. These include Virtustream, VMware, and Secureworks.
Dell also has two COOs beneath him in addition to Chief Officers for customers, marketing, services, human resources, global sales, operations, and finance.
Dell has a functional organizational structure with some degree of decentralization. This means functional departments share information, contribute ideas to the success of the organization and have some degree of decision-making power.
Function-based groups are considered in the context of three business markets, with each market supported by functions from some or all groups. The company is also structured according to three broad geographic regions and three within the Americas to improve sales efficiency.
Dell’s leadership structure changed somewhat after it acquired Dell Technologies in 2016. Michael Dell returned to the CEO position with a cohort of 14 executives who report directly to him.
Key Highlights
Introduction to Dell: Dell is an American company known for selling PCs, servers, data storage devices, software, peripherals, and consumer electronics. It employs a direct-sales business model, offering made-to-order computers, and has expanded its focus to include analytics, cloud computing, and information security.
Functional Organizational Structure with Decentralization: Dell employs a functional organizational structure with a level of decentralization. This structure allows functional departments to contribute ideas to the organization’s success and exercise some degree of decision-making autonomy.
Decentralization History: In the past, Dell had highly fragmented information technology systems that contradicted its centralized functional group structure. To address this, the company developed the Information to Run the Business (IRB) system. This system provides managers with essential indicators for decision-making.
Functional Groups and Markets: Dell’s function-based groups include product design, manufacturing, sales, service, and corporate systems. These groups are aligned with three business markets: relationship (enterprise clients), transaction (consumers and small businesses), and international/public (non-US markets, government, healthcare, education).
Geographic Regions: Dell’s operations are organized into three geographic regions: Americas, Asia-Pacific and Japan, and Europe, Middle East, and Africa (EMEA). The Americas is further divided into sub-regions to enhance sales efficiency.
Hierarchical Leadership Structure: Michael Dell is the founder, chairman, and CEO of Dell. After the acquisition of EMC, Dell Technologies was formed, and 14 top executives report directly to Michael Dell. Some of these executives manage independent Dell Technologies companies, including Virtustream, VMware, and Secureworks.
COOs and Chief Officers: Dell’s leadership structure also includes two COOs and Chief Officers for various functions such as customers, marketing, services, human resources, global sales, operations, and finance.
In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.
In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.
Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.
Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.
The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.
The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.
The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.
Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.
OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffman’s charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.
The Coca-Cola Company has a somewhat complex matrix organizational structure with geographic divisions, product divisions, business-type units, and functional groups.
Costco has a matrix organizational structure, which can simply be defined as any structure that combines two or more different types. In this case, a predominant functional structure exists with a more secondary divisional structure.
Costco’s geographic divisions reflect its strong presence in the United States combined with its expanding global presence. There are six divisions in the country alone to reflect its standing as the source of most company revenue.
Compared to competitor Walmart, for example, Costco takes more a decentralized approach to management, decision-making, and autonomy. This allows the company’s stores and divisions to more flexibly respond to local market conditions.
Dell has a functional organizational structure with some degree of decentralization. This means functional departments share information, contribute ideas to the success of the organization and have some degree of decision-making power.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).
Goldman Sachs has a hierarchical structure with a clear chain of command and defined career advancement process. The structure is also underpinned by business-type divisions and function-based groups.
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
McKinsey & Company has a decentralized organizational structure with mostly self-managing offices, committees, and employees. There are also functional groups and geographic divisions with proprietary names.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Nestlé has a geographical divisional structure with operations segmented into five key regions. For many years, Swiss multinational food and drink company Nestlé had a complex and decentralized matrix organizational structure where its numerous brands and subsidiaries were free to operate autonomously.
Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).
Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.
Samsung has a product-type divisional organizational structure where products determine how resources and business operations are categorized. The main resources around which Samsung’s corporate structure is organized are consumer electronics, IT, and device solutions. In addition, Samsung leadership functions are organized around a few career levels grades, based on experience (assistant, professional, senior professional, and principal professional).
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple, overlapping chains of command and divisions.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
Toyota has a divisional organizational structure where business operations are centered around the market, product, and geographic groups. Therefore, Toyota organizes its corporate structure around global hierarchies (most strategic decisions come from Japan’s headquarter), product-based divisions (where the organization is broken down, based on each product line), and geographical divisions (according to the geographical areas under management).
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
