Organization

Organising
The process of identifying & grouping the work is to be
performed ,defining & delegating responsibility & authority &
establishing relationship for the purpose of enabling people to
work most effectively together in accomplishing objectives
-allen
An identified group of people contributing their efforts towards
the attainment of goal is called an orgensiation
-Mc Farland
Orgenisation is the form of every human association for the
attainment of common purpose
-Mooney & Reily

The term orgenisation is used in two different sense in first it

is denote the process of orgenisation & second sense it is used
to denote the result of that process 'namely as orgenisation
structure

Features/ characteristics of organization

1. Deliberate & conscious creation

Orgenisation is a deliberately & consciously created human group.

Orgenisation can also recombine its personnel through promotion
,demotion & transfer

2. Purposive creation

All the orgenisation have some objectives

The objectives are mutually agreed upon the members of the groups.

3. Coordination of activities

Coordination is necessary because all the members contribute to

commonly agreed goal

4. Structure

Structure provides power centers which co-ordinate & control concerted

effort of the orgenisation & direct towards its goals.

5. Rationality

Every orgenisation has some specified norms & standards of behaviour

Every individuals & every member should behave according to these
norms

Orgenisation structure
Organizational structure is the pattern of relationship among
various components or parts of the orgenisation.
Organization structure refers to the differentiation & integration
of activities & authorities ,role & relationship in the orgenisation

 Features of good organization structure.

o
o
o
o
o
o
o
o

Clear line of authority.

Adequate delegation of authority.
Application of ultimate responsibility.
Minimum managerial levels.
Unity of direction.
Proper emphasis on staff activities.
Simplicity.
Flexibility.

Departmentation
The process of grouping the activities known as departmentation
Departmentation means the process by which similar activities of
the business are grouped into units for the purpose of facilitating
smooth administration at all levels
According koontz & O,Donnell a departmentation is process of
dividing the large functional orgenisation into small & flexible &
administrative unit.
Choosing basis for departmentation

Specialization
Coordination
Control
Economy
Recognition of local condition
Adequate attention
Human consideration

 Types of departmentation/ways to structure the

business
1. Departmentation by product
2. Departmentation by function
3. Departmentation by region or territory
4. Departmentation by customer
5. Departmentation by process

1. Departmentation by Product
Product structure based on organizing employees and work on
the basis of the different types of products.
if a company produce three different types of products, they will
have three different division for these products.

Each division has its own internal departments & operates like a
mini business
Each product line has its own functional orgenisation with
production ,sales ,R& D & accounting

Product departmentation

Chief Executive

Car Division

production

Truck Division

Marketing

Bus division

finance

Long vehicle

HR

Advantages

Clear focus on market segment helps meet customers needs

Positive competition between divisions
Better control as each division can act as separate profit centre
Improve coordination of functional activities.
Places responsibility for profit at division level.
Places attention & effort on product line.

Disadvantages

Duplication of functions (e.g. different sales force for each division)

Negative effects of competition
Lack of central control over each separate division.
Require more personal with general manager abilities .
Trend to make maintained of economical central services difficult

2.Functional departmentation
The grouping of common & homogeneous activities to form an
organizational unit is known as functional orgenisation
Function are two types basic function & secondary function
basic function can be divided into sub-function
Each department have a head with the title departmental manager
The functional departmentation will include both line function as
well as staff function
Board of Director

Managing Director

Production

Marketing

Accounts

Personnel

IT

Advantages
Specialisation each department focuses on its own work
Accountability someone is responsible for the section
Clarity know your and others roles
Simplifies training
Disadvantages

Closed communication could lead to lack of focus

Departments can become resistant to change
Reduce Coordination between function
Gap between top and bottom

3.Territorial /geographical departmentation

Territorial Orgenisation is especially attractive to large scale firms
or rather enterprises whose activities are physically or
geographically dispersed.
All the activities of given area of operation are grouped into zone
,division ,branches

This structure is suitable for large scale orgenisation or whose

activities are physically or geographically spread.
This structure is most often used in sales & in production

Territorial /geographical departmentation

Head Office
Mumbai

Eastern Zone
Kolkata

jalandhar

branch

Central Zone
Kolhapur

Northern zone
Delhi

Southern zone
Chennai

chandigarh

New delhi

branch

branch

Western zone
Mumbai

ajmer

branch

 Advantage

Place responsibility at lower level

Place emphasis on local market & problem
Take advantage of economic of local operations
Better face to face communication with local interest
Improve coordination in a region

Serve local needs better

Disadvantage
Require more person wit general manager abilities .
increases problem of top management control
Require good caliber managers
Increase problems of control

4. Departmentation by customer
Customer based departmentation is basically market oriented
in which department are created around the market served or
around marketing channel
CUSTOMERS ARE THE KEY TO THE WAY ACTIVITIES ARE
GROUPED
Marketing Manager

wholesale

Retail

Hire purchase

export

Advantage

It fulfills the expectation & needs of customer

Better service to customer
Fully focus on customer

Disadvantage
Their may be duplication of activities
Co-ordination is difficult
Conflict

5. Departmentation by process
When production activities involve the use of several
distinctive process ,these can be used as the base for
grouping of activities

Production Manager

spinning

dyeing

Weaving

Packaging

 Advantage

Machine can be used effectively

Economy in operation
No duplication of activities
Principle of specialization & division of labor is followed

Disadvantages
Heavy cost of operation
More specialist are essential

Forms of orgenisation structure

1. Line organization structure
a) Pure line orgenisation structure
b) Departmental line orgenisation structure

2.
3.
4.
5.
6.

Line & staff orgenisation structure

Functional orgenisation structure
Divisional orgenisation structure
Project orgenisation structure
Matrix orgenisation structure

1.Line organization structure

A. Pure line orgenisation structure

Similar activities are performed at a particular level

Each group activities is self contained unit & able to perform the
assigned activities without assistance of others

Production Manager

Foramen A

workers

Foramen B

workers

Foramen C

workers

Foramen D

workers

B.Departmental line orgenisation structure

Entire activities are divided into different department on the basis
of similarity of activities
All department are controlled by departmental head
Production Manager

Foramen A
Spinning

workers

Foramen B
weaving

workers

Foramen C
Dyeing

workers

Foramen D
finishing

workers

Characteristics of line orgenisation structure

1.
2.
3.

Lines of authority & instruction are vertical

The unity of command is maintained in straight & unbroken line
All person at the same level of orgenisation are independent of each other

1.
2.
3.
4.
5.
6.

Simplicity
Discipline
Prompt decision
Orderly communication
Easy supervision & control
Economical

1.
2.
3.
4.

Advantage

Disadvantage

Lack of specialization
Autocratic approach
Problems of co-ordination
Not suitable for large scale orgenisation

2.Line & staff orgenisation structure

It structures refers to a pattern in which staff specialist advice
managers to perform their duties
Secretary

Public relation

General Manager

Manager finance

Manager HR

Manager Production

Production eng

foreman

worker

Manager Marketing

Sales officer

Sales supervisor

salesman

Advantage
Planned specialization
Quality decision
Prospect for personnel growth

Disadvantage
lack of well defined authority
Line & staff conflict

3.Functional orgenisation structure

Function orgenisation is created by grouping the activities on the
basis of function required to achievement of organsational
objective

Board of Director

Managing Director

Production

Marketing

Accounts

Personnel

IT

advantages
Specialisation each department focuses on its own work
Accountability someone is responsible for the section
Clarity know your and others roles
Simplifies training
Disadvantages

Closed communication could lead to lack of focus

Departments can become resistant to change
Reduce Coordination between function
Gap between top and bottom

4.Divisional orgenisation structure

Orgenisation is divided into several fairly autonomous units
Each unit is relatively self contained in that it has the resource to
operate independently
It is dividing an orgenisation in to smaller orgenisation is not
completely independent
Product divisionalisation
Territorial divisionalisation

Advantage
Division focuses its attention on a particular product or service
Higher level of managerial motivation
Each product or customer is able to get specialized service

Disadvantage
Expensive
Control problem
Co-ordination problem

Managing
Director
Corporate
planning

Legal service

Consumer
product design
Mfg
Mktg
Personnel
purchase

Accounting

R&D

Chemicals
division

Finance

Electronics
division
Mfg

Mktg
Personnel
purchase

Mfg
Mktg
Personnel
purchase
Accounting

5.Project orgenisation structure

General manager

Project A

Quality
control

Project B

R& D

admin

scheduling

Quality
control

R& D

admin

scheduling

6.MATRIX ORGANISATION
COMMONLY CALLED THE GRID ORG.
Matrix orgenisation structure is the realization of two dimensional
structure
Matrix structure applied when the orgenisation has large number of
smaller projects so that when one project is completed it resources are
directed to other project
Project manager is appointed to coordinate the activities of the
Personal are drawn from their respective functional departments
Employee should receive instruction from two boss
Application:-insurance & retailing , manufacturing electronics
equipment ,industrial product

DIRECTOR-ENGG. **

Line authority
Project authority

MANAGE Producti
R
on

Marketing Finance

personnel

PROJECT
A

prod

Mktg

Finance

pers

PROJECT
B

prod

Mktg

Finance

pers

PROJECT
C

prod

Mktg

Finance

pers

PROJECT
D

prod

Mktg

Finance

pers

Advantage
Matrix structure focuses resources on single project ,
permitting better planning & control
Flexible structure compared to traditional hierarchical structure
It improves motivation because people can focus more on
completion of one project than they can in the traditional
functional structure
Disadvantage
People have to work under multiple command
Delay in decision making process

Centralization & decentralization

Centralization
means
concentration
of
authority
decentralization means dispersion of authority
Centralization is the systematic & consistence reservation of
authority at central point within an orgenisation
Physical or geographical decentralization refers dispersion of
an orgenisation operations throughout the country.
Factors deterring degree of decentralization
1. Size of the orgenisation
2. Availability of manager
3. Control technique
4. Rate of change in orgenisation
5. Environmental influence

Benefits of centralization
1.
2.
3.
4.
5.

Facilitating personal leadership

Providing integration
Uniformity of action
Handling emergencies
Effective control

1.
2.
3.
4.

Benefits of decentralization

Reducing burden of top executives

Facilitating diversification
Motivation to managers
Better coordination activity