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. However, the company declined since 1927, falling to the third place in market share. In the next 20 years, the company had been suffering loss in business performance. The situation didn’t change until Henry Ford II took over the company and reorganize the structure which was highly centralized before. He arranged a new group of leaders for the company and got its redevelopment. The reason of Henry Ford I’s failure is that he thought no matter what the scale of the company is, a boss and a certain assistants are the only person needed in it. Without the knowledge of professional managers, the assistants must do business under his decisions and orders, not being able to cope with situations just like managers. In fact, such a centralized structure did not fit a large organization such as Ford Motor Company.
 
Usually there are 5 types of organizational structure: functional organizational structure, divisional structure, matrix structure, network structure and learning structure (Smith, 2012). There are many factors that can influence the organizational structure, such as size, the nature of the work, the environment it operates in, the history and culture of the company, the Leadership and so forth. The key elements of organizational structure involve work specialization, departmentalization, chain of command, span of control, centralization and decentralization, formalization.
 
The importance of organizational structure can be demonstrated in the following aspects.
 
First, the organizational structure clarifies the responsibility. Organizational structure occupies an essential role in the process of decision making. It is quite common for the small companies to have a flat or tall organizational structure. A typical example is that a manager can report to the president rather than a director and the level of his assistant is just two levels below the president. This kind of structure has advantage in making decisions as soon as possible. The flat structure is quite popular in the organizations that rely on flexibility and the rapid growth of new products. Large business organizations have much more levels of management. The process of a small company growing into a big one, more complicated levels should be added to the management. In the complex management system, responsibility of each role should be defined clearly and the organization structure will function well in the clarification.
 
Second, the organizational structure plays a crucial role in promoting communication within it. Organizational structure makes the distribution of authority possible. Each employee knows clearly the person he will directly report to. In most situation, the companies convey the information through leaders in charge of different departments. An obvious example is that the technicians communicate directly with their managers and the managers directly communicate with their upper management or even the vice president.
 
Third, the organizational structure makes it convenient to evaluate the performances of the employees. Evaluating the workers’ performance is more convenient in the liner structure of functional and product structures for the supervisors. They can judge from workers’ skill, time and the way to get along with others during the process of accomplishing the work. As a result, the supervisors can finish the evaluation more efficiently.
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