If a firm lets go all other functions except its own core competency, it can have a clearer focus on what it does the best. This flat nature of network structure makes its span of control wider, leading to a possibility of a bottom to up communication. A network structure has its pros and cons. The network structure is less hierarchical it is flatter because many layers of management are cut from between and their functions are passed on to other organizations. They control the internal as well as external relationships. Managers in the network structure play a vital role. For example, to benefit from the cheap labor in China, companies move their production there. However, it is not at all binding to outsource work in different countries companies do this usually to reduce costs. As it can be seen, the core company distributes its functions to different companies which, in this case, are present in different countries: product development company in Australia, Call center company in New Zealand, the Accounting company in Australia, Distribution company in Singapore and Manufacturing company in Malaysia. A core company is a company that outsources or initiates the partnership in a network. In the middle, there is a blue circle with ‘core company’ written on it. The figure above explains the fundamentals of a network organizational structure. H&M has outsourced the production and processing of their goods to different countries majorly Asian and South East Asian countries. Network Organizational Structure ExamplesĪn organization that has been using network structure is H&M (Hennes & Mauritz), a very popular brand that has followers world over. Network Organizational Structure Examples.