Organizational unit is after the job the second keystone of a formal organizational structure. Organizational unit provides one or more jobs joined together based on the following organizational principles:
- Functional specialization
- Geographical position
- Product specialization
- Customer type
Lower organizational units are joined into the units of higher order - for example, sales department and marketing department create together department for customer relations. Number of organizational units within an organization is given by its complexity and number of employees and above-mentioned principles.
Examples of organizational units (from lower to higher):
- Group, team
In case of large and complex organizational structures, it is also used the term strategic business unit.