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Organizations according to Daft (2007) are considered social entities that are goal-directed, designed as deliberately structured and coordinated activity systems and linked to the external environment. The key element of an organization is not a building or a set of policies and procedures; organizations are made up of people and their relationships with one another. An organization exists when people interact with one another to perform essential functions that help attain goals (Daft 2007).

Organizational structure refers to how an organization is put together. Structure reflects some of the underlying ways that people interact with one another in and across jobs or departments (Sims 2002). Organizational structure refers to how job tasks are formally divided, groped, and coordinated.

Organizational Structure institutionalizes:

* How people will interact with each other

* How communications will flow

* How rewards are distributed

* How power relationships are defined

* What is important to the organization

Organizational structure provides the basic template for the continuance of an organization's culture, norms, values, philosophies, and informal activities.

According to the article 'What is the Right Organization?' by Duncan (1979), organizations are undergoing change. The development of organizational structure is divided into different eras which moved from matrix to horizontal to virtual (cited in Anand and Daft 2006).

There are two general theories of organizational design: the universalistic approach (the standard hierarchical design) and the contingency approach, which has no identified form. The universalistic approach is based on the premise that there is one "best" way to structure an organization regardless of the situation and is based on a set of principles that guide the design process. The universalistic approach is based on the classical and the bureaucratic theories of organizational design. The classical and the bureaucratic forms are characterized by having highly specialized jobs, departments based on function