Various types of organizations are classified along with their advantages and disadvantages.

1. CLASSIFICATION OF ORGANIZATIONS
PREPARED BY:-
AXAY SHARMA
CIVIL-5TH SEMESTER
ROLL NUMBER-16BCL008

2. CLASSIFICATION OF ORGANIZATION
WHAT IS AN ORGANIZATION?
• A group of people who form a business , club , etc. together in order to achieve a particular aim.
• Example of organization(CASE STUDY):- in Indian railways the clerical department consists of chief
office superintendent , office superintendent , senior clerk , clerk , junior clerk under which group-d
staff works. This forms an organization .

3. CLASSIFICATION OF ORGANIZATION
ORGANIZATION CLASSIFIED ON THE BASIS OF RELATIONSHIPS:-
1) FORMAL ORGANIZATION: This is the one which refers to a structure of well defined jobs each bearing a measure of authority and
responsibility.
• It is a conscious determination by which people accomplish goals by adhering to the norms laid down by the structure.
• It has a formal set up to achieve predetermined goals.
• Example-organization chart of an electrical co-operations.
• Case study note:- Clerical department of Indian railways fall in this category.

5. 2) INFORMAL ORGANIZATION: It refers to a network of personal and social relationships which spontaneously originates within the
formal set up.
• Informal organizations develop relationships which are built on likes , dislikes , feelings & emotions.
• A network of social groups based on friendships can be called as informal organization.
• There is no conscious effort made to have informal organization , it emerges from formal organization & is not based on any rules.
• Case study note:- Clerical department of Indian railways , may or may not fall in this category , depending upon employees
relationships.
The given venn diagram will strengthen the concept of the 2 organizations:-

6. ORGANIZATION CLASSIFIED ON THE BASIS OF STRUCTURE:-
1)LINE ORGANIZATION:-Under this system , authority flows directly and vertically from the top of the
managerical hierarchy `down to different levels of managers and subordinates and down to the operative
level of workers.
• It clearly identifies authority , responsibility and accountability at each level.
• Case study note:-Clerical department of Indian railways fall in this category.

7. ADVANTAGES:-
1. Line organization structure is very simple to understand and simple to operate.
2. Communication is fast and easy & feedback can be acted upon faster.
3. Responsibility is fixed and unified at each level & authority and accountability are clear-cut.
DISADVANTAGES:-
1. It is rigid and inflexible form of organization.
2. There is a tendency for line authority to become dictatorial.
3. Different departments may be much interested in their self-interests , rather than overall organizational
interests and welfare.
4. It is likely to encourage nepotism.

8. 2) LINE AND STAFF ORGANIZATION:- It is a modification of line organization and is complex than line
organization.
• According to this administrative organization , specialized and supportive activities are attached to the line of
command by appointing staff supervisors and staff specialists who are attached to the line authority.
• Mere , staff is basically advisory in nature and usually does not posses any command authority over line
managers.
• In the line and staff organization , staffs assist the line managers in their duties in order to achieve the high
performance.
• The company president (the head of the department) , is provided with experts in each field to counsel him
on the various specialize staff .
• A staff member may serve as a coach , diagnostician , policy planner , coordinator , trainer, strategist etc.
• Case study note:- clerical department of Indian railways does not fall in this category.

10. ADVANTAGES:-
1. The system is flexible for new activities , which may be undertaken by the staff without forcing early
adjustments of line arrangements.
2. Line officers can concentrate mainly on the doing function as the work of planning and investigation is
performed by the staff.
DISADVANTAGES:-
1. Confusion and conflict may arise between line and staff. Because the allocation of authority and
responsibility is not clear and members of the lower levels may be confused by various line orders and staff
advices.
2. Staff generally advice to the lines , but line decides and acts. Therefore the staffs often feel powerless.

11. 3) FUNCTIONAL ORGANIZATION:- it was evolved by F.W. Taylor while he was working as a foreman. According to him “appointment of specialists
at important positions”.
• Each worker receives instructions not only from one supervisor , but also from a group of specialists.
• Three types of authority relationships are in the functional organization such as line authority , staff authority and functional authority.
• Staff specialists are given the authority to decide and do things in a limited way.
• The scope of the work is kept limited but the area of authority is left unlimited.
• There is a grouping of activities of the enterprise into certain major functional departments.
• Case study note:- clerical department of Indian railways fall in this category.
Advantages:-
1. The greater degree of specialization leads the improvement in the quality of product.
2. It increases the work satisfaction for specialists who presumably do what they like to do.
Disadvantages:-
1. Since there is no direct boss or controller of the workers , co-ordination is hard to achieve.
2. Since the control is divided , action cannot be taken immediately.

12. Project organization:- this organizational structure are temporarily formed for specific projects for a specific
period of time , for the project of achieving the goal of developing new product , the specialists from different
functional departments such as production , engineering , quality control , marketing research etc., Will be
drawn to work together.
• These specialists go back to their respective duties as soon as the project is completed.
• The project organization is set-up with the object of overcoming the major weakness of the functional
organization , such as absence of unity of command , delay in decision-making , and lack of coordination.
• Case study note:- clerical department of Indian railways does not fall in this category.

14. Advantages:-
1. The grouping of activities on the basis of each project results in introduction of new authority patterns.
2. Since the specialists from different departments is drawn to work together under the project organization
it helps in coordination.
Disadvantages:-
1. The uncertainty may be attributed to the diverse backgrounds of the professional who are deputed to the
project.
2. Delay in completion of the project may occur.

15. Matrix organization:- any organization that employs a multiple command system & related support mechanism
and an associated organizational culture and behaviour pattern.
• It is also referred as the “multiple command system”(since it has 2 chains of command).
i. One chain of command is functional in which the flow of authority is vertical.
ii. The second chain is horizontal depicted by a project team , which is led by the project , or group manager who
is an expert in his team`s assigned area of specialization.
• Since the matrix structure integrates the efforts of functional and project authority , the vertical and horizontal
lines of authority are combination of the authority flows both down and across.
• Case study note:- clerical department of Indian railways does not fall in this category.
• The flow diagram of such structure is as follows:-

17. Advantages:-
1. Since there is both vertical and horizontal communication it increases the coordination and this
coordination leads to greater and more effective control over operations.
2. Since the matrix organization is handling a number of projects , available resources will be used fully.
Disadvantages:-
1. Since , there is more than one supervisor for each worker , it causes confusion and conflicts and reduce
effective control.
2. There is continuous communication both vertically as well as horizontally , which increases paper work and
costs.