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Ch 5


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Ch 5

  1. 1. Ch. – 5 : Organisation - I<br />
  2. 2. What is organisation<br />Meaning<br />A group of humans organized with an intention to achieve common goal is caused Organization.<br />In other word, plans are made for the implementation of managerial policy and to put these into practice an administrative structure is created. This is called Organization.<br />
  3. 3. What is organisation<br />Definitions<br />“Organization is that structure that assigns authority and responsibility amongst individuals working together for the accomplishment of a common objective.<br />“Organisation is that structure, which assigns functions among individuals, in such a manner, that every person involved, can contribute his optimum, for the accomplishment of the objective.”<br />
  4. 4. Formation of organisation<br />The formation of an organisation is a scientific process. Organisation exists so long the business exists. Only a flexible organisation that can adjust itself to changing circumstances can work successfully. <br />A ready-made organisation may not be suitable for all business units. So every business has to form an organisation suitable to its objectives and functions. For the formation of an ideal organisation the following stages are helpful.<br />
  5. 5. Formation of organisation<br />Clarification of objectives: An organization can be formed only after knowing clearly the primary andsecondary objectives of the business. Structure of an organisation can be decided only with respect to these objectives. An organisation formed without clarifying of objectives is liable to fail.<br />Listing of functions: After clarification of objectives next step of organizing involves dividing the total work into sets of activities (functions). Which helps to accomplishment of the objective of the business. <br />
  6. 6. Formation of organisation<br />Departmentation: The next step in organizing is to group identical functions. This is called departmentation. Advertising department, sales department, market research department, distribution department, purchase department are the examples of an identical functions being grouped. Division of labour and specialization can be achieved by such departmentation. <br />Departmental Positions & Qualifications there of: When the work of departmentation is completed, the position of the head of the department must be decided who can handle all the responsibility. E.g. Sales manager for sales department and purchase manager for purchase department etc.<br />
  7. 7. Formation of organisation<br />Delegation of Authority and Assignment of responsibility: The next vital step in process is delegation of authority & responsibility. In which every departmental head should be assigned his duties with the necessary authority to perform these successfully.It is also necessary that authority should be in proportion to responsibility. <br />Establishment of Inter-relationship: Inter department relationship should be clarified. Such relationship as to who is to be at the top, who is the subordinate, who will be at the same level, who will issue orders, etc. must be clarified. It must be decided that who will report to whom which helps to establish & maintain effective coordination.<br />
  8. 8. Formation of organisation<br />Preparation of Organizational Chart: An organizational map or chart should be prepared & kept on notice board, so that every level of employees, officers and other personnel involved in the organization, get a clear idea about their position clearly.<br />
  9. 9. Formation of organisation<br />
  10. 10. Types of Organisation <br />Introduction:-<br /><ul><li>The scope of business expands with its size.
  11. 11. Services of various individuals become necessary, & the administrative structure or the organization there by increases.
  12. 12. On the basis of such assignment, the following will be the types of organizations.</li></li></ul><li>Types of Organisation <br />The scope of business expands with its size. So service of various individuals become necessary, and the administrative structure or the organisation thereby increases. Assignment of authority and responsibilitiesbecomes complex. Hence, clarity of inter-relationship of personnel becomes necessary. Assignment of authority is the basis of organisation. <br />
  13. 13. Types of Organisation <br />On the basis of such assignment the following will be the types of organisations<br /><ul><li>Line Organisation.
  14. 14. Functional Organisation.
  15. 15. Committee Organisation.
  16. 16. Line and Staff Organisation.
  17. 17. Matrix Organisation.</li></ul>Not in course<br />
  18. 18. Line organization<br />Line organization is an traditional & simple type of organization has been used (military for years) or for last so many years by military organization.<br />The delegation of authority & responsibility is made in (Q) or in sequence from top level in such organization.<br />In which they have authority over bottom level & are responsible towards top level management.<br />
  19. 19. Line organization<br />Advantages of line organization <br />Easy to understand:- The formation of line organization is simple & which can be easily understood by a common man.<br />Clearly defined:- Authority & responsibility are clearly demarcated. in this type of organization.<br />Discipline:- The superior has authority & moral control over subordinates. Which help to maintained the discipline.<br />Quick decision:- Each department head is independent to take decisions related his department. This will help unit to take proper decisions in a quick manner.<br />
  20. 20. Line organization<br />Advantages of line organization <br />Development of skill:- department head man develop his efficiency & personality as he has to perform all the functions of department.<br />Co-ordination:- Each employees is given orders only by his senior officer hence unity of command is maintained.<br />Flexibility:- The department head can adopt changes with the changing in environment are requirement. That extent flexibility 4 makes line org. efficient.<br />Less expensive:- This structure is comparatively less expensive.<br />
  21. 21. Line organization<br />Advantages of line organization <br />Easy to understand<br />Clearly defined<br />Discipline<br />Quick decision<br />Development of skill<br />Co-ordination<br />Flexibility<br />Less expensive<br />
  22. 22. Line organization<br />Disadvantages of line organization <br />Centralization of authority:- The authority becomes centralized in departmental heads, there is possibility of they becoming (autocratic)<br />Lack of specialization :- There is a lack of specialization in this type of org., as departments have more importance than the functions.<br />More work load: There is more work load on top level management, this does not allow them to concentrate on planning, research etc. which reduces the efficiency.<br />
  23. 23. Line organization<br />Disadvantages of line organization <br />Central services difficult :- To acquire the service of higher qualified executives which is capable in every respect. Its become difficult in this type of org.<br />Lack of co-ordination:- In this type of org. co-ordination is difficult, to independent of dept, and officer.<br />Lack of communication:- It will creates many problem. If the flow of communication from bottom to top level is not effectively done. In this type of org.<br />
  24. 24. Line organization<br />Disadvantages of line organization <br />Centralization of authority<br />Lack of specialization<br />More work load<br />Central services difficult<br />Lack of co-ordination<br />Lack of communication<br />
  25. 25. Functional Organisation<br />In Line type of Organisation department, the departmental heads have total responsibility. This increases their burden of work and hampers the growth of the business. <br />As one single officer cannot have expertise of every function, specialization becomes impossible. Hence, another type of organisation that would give importance to functions by including experts and adopting specialization became necessary.<br />
  26. 26. Functional Organisation<br />Formation:<br />In the functional type of organisation, authority and responsibility are assigned on the basis of functions rather than on division or departments. <br />Different experts are appointed for every function. These experts are not mere advisers but are also administrative officers. These experts are assigned responsibility not for a specific department, but for the unit as a whole, e.g. a purchase officer will make purchases for all departments of the unit. Likewise a personnel manager will have the responsibility of recruiting, selecting and training staff for all departments.<br />Workers are not responsible to a single officer but receive orders from different officers. Experts are not independent, but are linked inter-se to one another. The entire organisation can be made efficient through their expertise and thus co-ordination becomes easy. <br />In the functional organisation the chief executive has the topmost authority. The unit is divided into two; Planning Department and Factory Department. Small segments are decided upon and are handed over to various experts such as Information officer. Accounts officer, Quality officer, Maintenance officer, and group officer etc. Every officer can give orders to every worker of the unit, meaning thereby that here it is the function that is important and not the Department.<br />
  27. 27. Functional Organisation<br />Merits :<br />Different experts are appointed for each function, which makes specialization possible.<br />No single executive has total authority, but all have equal authority and so decentralisation of authority is made possible.<br />Every expert is not totally independent, but remains mutually connected. So co­ordination is maintained.<br />Executives are responsible only for their part of the work. So the burden of work is reduced.<br />As the responsibility of every work is given to various officers their recruitment becomes easy and hence, the benefit of their expertise is obtained.<br />Training to workers and officers is easy.<br />Since benefit of expertise is available, flexibility as demanded by time and circumstances is possible.<br />Decision making process becomes simple and quick.<br />
  28. 28. Functional Organisation<br />Demerits :<br />Functional organisation tries to remove the limitations of Line Organisation, but in so doing, it creates certain specific limitations which are as follows<br />Due to lack of simplicity complexity results.<br />Unity of command is not maintained.<br />Since no single executive has total authority, lack of discipline and control may results.<br />Every executive has authority for his work only. So it becomes difficult to pin-point responsibility in case of failure.<br />Decisions are delayed as they are to be taken by various officers.<br />Various experts are appointed so this type of organisation is generally found to be expensive.<br />
  29. 29. Committee organization<br />Introduction:<br />In this organisation the responsibility of any special function or that of taking decisions is vested in a group of individuals and not in a single person. This group is called the committee. Since there are more people in the committee, the benefit of their experience, knowledge and skill is obtained. In short committee Organisation is that type of organisation that takes decisions collectively for the business, by a majority. <br />Various functions of business are performed by a committee of individuals instead of a single person. Members of this committee work as a group. The decisions of this committee are taken after free deliberations among themselves. Decisions taken after a healthy discussion among people represented by various factions become more effective.<br />
  30. 30. Committee organization<br />Meaning:<br />The organisation wherein functions of the unit are done with group majority; is called committee organisation.<br />The organisation formed to execute functions allocated to individuals with group majority or with corporate method.<br />
  31. 31. Committee organization<br />Merits :<br />Since more individuals are included in decision-making, mature decisions are possible.<br />All members of the committee are given an opportunity to express their views and opinions democratically.<br />The members of the committee are experts in their respective fields and hence the benefits of specialization are available.<br />Co-ordination is easily maintained as decisions are taken after free deliberations.<br />Reporting is speed up as the members of the committee are in the know of the decisions taken.<br />As more individuals are involved in the decision-making process, there is decentralisation of authority.<br />Burden of work of executives is reduced due to the help of committee.<br />As workers are included in the committees, employer-employee relations are strengthened<br />Research is encouraged.<br />
  32. 32. Committee organization<br />Demerits :<br />As discussions take place regarding functions or decisions among members of the committee, business secrets are not maintained.<br />At times decisions are delayed due to less attend once of members of the committee or differences of opinion among them.<br />The decisions of the committee are implemented by the administrative officers, so it becomes difficult to hold any one person responsible for any failure.<br />Decisions in the committee are taken by a majority. So, many times even if the minority members are right their views are not accepted and there is a likelihood of injustice to the minority.<br />If the members of the committee adopt a political stance, there is a possibility of groupism or internal conflict.<br />
  33. 33. Formal Organisation<br />Any structure, established to bridge the relationship, between functions and individuals, for the accomplishment of specific objectives, is called formal organisation. Line Organisation, Functional Organisation, line and staff organisation are all formal organizations in which necessary authority is given for the responsibility of some functions only. Matters such as who is superior, who is equal, who is subordinate are all made very clear. (The hierarchy of authority is clarified.) Everyone involved develops and maintains inter-relationship.<br />
  34. 34. Informal Organisation<br />In a Formal Organisation individuals work. On the other hand when a group of willing and concerned employees is formed on the basis of human relations it becomes an informal organisation.<br />An Informal Organisation in fact, is only a shadow of Formal Organisation and has no place in the Organizational chart.<br />Informal Organisation is a social structure established for the purpose of satisfying needs and depends on informal relationship. All groups formed with the growth of human relationship on the basis of similar ideology, feelings, religion, taste and aptitudes are known as Informal Organisation. In short Informal Organisation concerns itself with their individuals and their normal inter-relationships. It depends on individual attitudes and preferences and not on management rules or planning processes. The concept of Informal Organisation has been largely accepted in modern times.<br />
  35. 35. Informal Organisation<br />Merits : <br />Mental stress of employees is reduced because of personal interaction.<br />The authority of management is restrained because of employee groups.<br />This type of organisation complements the accomplishments of objectives of formal organisation.<br />It helps in communication.<br />Social restrictions on employees are imposed.<br />
  36. 36. Informal Organisation<br />Demerits : <br />Due to opposition by employees there is a possibility of resistance to changes by the management.<br />Indiscipline is likely to be encouraged.<br />In place of correct information there is a risk of rumors being spread.<br />There is also a risk of industrial peace being endangered due to negative leadership.<br />There is a possibility of obstacles being placed in management.<br />