Organizational structure is a system which specifies the firm's reporting relationships, controls, procedures, decision making processes and authority. It specifies the work to be done and how it should be done given the organization's strategy. Wal-Mart uses a divisional structure that consists of separate and semi-autonomous division, each with its own functional hierarchy. Wal-Mart falls under the multi-divisional structure since it sells different products in various markets. The structural divisions include various departments such as Electronics and office; movies, music and books; sports and fitness, etc. (Wal-Mart, Inc., 2011). Each department has its own support functions and controls that ensure products and services are provided to meet the customers' needs. The narrow focus of each division allows Wal-Mart to perform more effectively since they can be able to pinpoint specific areas that need to be changed or addressed appropriately.
Other forms of organizational structure include functional and matrix structure among others. Functional differentiation is a horizontal differentiation with each individual taking up different functional tasks based on the common skills (Lussier, 2008). Organizations with this structure organize various jobs into functional tasks in order to produce high-quality products at fair prices. In this manner, it can acquire core competence and gain competitive advantage. Multidivisional structure differs from functional structure because it is more integrated than the latter. The former has more vertical and horizontal differentiation but functional structure is simpler, and thus, can only be used for one business. However, multidivisional structures can allow functional specialization in each division just as in functional structure in facilitating knowledge sharing in that area.
According to Jones (2007), matrix structure has both product and functional responsibility and it is used for high level group coordination in response to the changing conditions. Matrix structure differs from multidivisional structure because it is flat with decentralized authority while the latter has hierarchical authority. The corporate managers in multidivisional structure monitor the divisional managers who, in turn, monitor the functional managers (Lussier, 2008). There is organizational effectiveness in multidivisional structure because of a clear division of labor between the corporate and divisional managers unlike in matrix structure where employees remain under a functional head but work under product managers, and thus, creating ambiguity in role and authority relationships. Both structures use departmentalization where the staff is allocated specific tasks and responsibilities and can use teamwork in fostering organizational performance. Besides, they can be integrated to form a hybrid structure, a multidivisional matrix structure.