Organizational Unit - Meaning & Definition

Published by MBA Skool Team, Last Updated: May 28, 2012

What is Organizational Unit?

Organizational Units are basically organisational groups each comprising of a set of people who get together to accomplish a specific function. The key business functions in an organisation are often divided into units in order to streamline processes and maximize efficiency. The different organisational units could be Finance, HR, IT and systems, marketing, specific line functions depending on the industry and so on.


Enterprises, Teams, Companies, Departments etc. could be units. The units are formed based on a broad organisation definition which defines the characteristics and attributes of that unit. Further, for every unique value of the attributes, there can be multiple units. For example, if an organisation has many design departments, the definition would be Design Department and then the units could be Head Office Design Department, Product Layout Department, Product design Department etc.


Mostly, each organisational unit has a considerable degree of freedom and flexibility in its nature of operations and decision making. This facilitates efficient allocation and utilisation of resources coupled with a faster decision making process.


This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 2000 business concepts from 5 categories.

Continue Reading:

Share this Page on:
Facebook ShareTweetShare on Linkedin