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Chapter_7.pptx
- 1. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Principles of Management, 6e
P C Tripathi & P N Reddy
Chapter 7
Organization
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- 2. Copyright © 2017 by McGraw Hill Education (India) Private Limited
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Learning Objectives
Examine the meaning, characteristics and typology of organizations
Learn the principles and process of organizing
Understand the meaning and significance of the span of management
and the factors governing it
Describe the advantages and disadvantages of different bases of
departmentalization
Analyse the advantages and disadvantages of two broad categories of
organisation structures
Present the newly emerging organisation concepts and the
international organization structures
- 3. Copyright © 2017 by McGraw Hill Education (India) Private Limited
What is an Organization?
Characteristics of an Organization - Every organization has:
a purpose, goal or goals
clear concept of the major duties or activities
classification of activities into jobs
establishment of relationships between these jobs
Typology of Organizations
Organizations which benefit their owners
Organizations which benefit their members
Organizations which benefit their clients
Organizations which benefit the whole society
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- 4. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Process of Organizing
Consideration of Objectives
Deciding Organisational Boundaries
Grouping of Activities into Departments
Deciding which Departments will be Key Departments
Determining Levels at which Various Types of Decisions are to be
Made
Determining the Span of Management
Setting up a Coordination Mechanism
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- 5. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Principals of Organizing
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Objectives
Specialization
Span of Control
Management by Exception
Principle
Scalar Principle
Unity of Command
Delegation
Responsibility
Authority
Efficiency
Simplicity
Flexibility
Balance
Unity of Direction
Personal Ability
Acceptability
- 6. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Span of Management
Meaning and Importance
Decreasing the span of management increases the number of levels
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- 7. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Span of Management
What is an Appropriate Span?
Direct one-to-one relationships
Direct group relationships
Cross-relationships
Graicunas’ formula:
It ignores the frequency and importance of relationships
The actual span of management is determined by a number of
factors which have not been taken into consideration while
framing the formula
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- 8. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Span of Management
Factors Governing the Span of Management (Contingency
Approach)
Ability of the Manager
Ability of the Employees
Type of Work
Well-defined Authority and Responsibility
Geographic Location
Sophisticated Information and Control System
Level of Management
Economic Considerations
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- 9. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Departmentalization
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Process Departmentalization
Simple form of grouping activities
Promotes excellence in
performance
Promotes economies of scale
Fosters sub-goal loyalties
Not a good training ground
Unsuitable for large organizations
Evoke conflicting interpretations
Organizational arthritis
“common pot” accounting
Efficient use of costly equipment
Follows the principle of
specialization
Suitable for organizations with many
processes
Feeling less responsible
Not a good training ground
Sequential technology
Difficult to compare
Devote extra attention
Business or Organizational Function
Technology
- 10. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Departmentalization
Purpose Departmentalization
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Products
Customers
Regions, Territory or Location
Division
Time
Combined Base
Choice of a Suitable Base
Specialization
Coordination
Economy
Whole Task
- 11. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Departmentalization
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President
Tractor
Department
Appliance
Department
Eastern
Plant
Southern
Plant
Western
Plant
Generator
Department
Finance
Production Sales
A Combined Base Organization
- 12. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Departmentalization
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A Typical Matrix Organization
- 13. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Departmentalization
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Parallel Departmentalization
When the organization of several retail outlets, branches and
plants doing similar work as the parent company use the same
departmental set-up as that of the parent company it is called
parallel departmentalization.
- 14. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Organization Structure
Organization Chart
Organization Manuals
Mechanistic and Organic
Structures
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Tall organization
Flat Organization
- 15. Copyright © 2017 by McGraw Hill Education (India) Private Limited
What Type of structure is Best
(Contingency View)
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Collateral Organizations: This concept says that a manager should develop a
collateral mode of functioning to which he should shift, to operate in tandem
with the problem without displacing the existing classical or behavioural formal
structure.
Environment
Culture and history
Task
Technology
Strategy
Span of Control
Form
Availability of Finance and
Personnel
Managerial Characteristics
Employee Characteristics
- 16. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Emerging Organization Structure
Network Organizations
Involves the blurring of boundaries
Coordination between various firms
Decision rights are pushed
Control is exercised by market mechanisms
Virtual Organizations
Technology
Opportunism
No borders
Trust
Excellence
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- 17. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Committees
A committee is a group of people who have been formally assigned some task
or some problem for their decision and/or implementation.
Suggestions for Making Committees Effective:
Number of members should not be very large
Authority should be carefully spelled out
Approximately equal formal status The linking pin
Precedence to organizational interests
Chairman should plan and conduct the meeting with firmness and fairness
Periodic review
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- 18. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Teams
A team is a small group of people with different backgrounds, skills
and knowledge, who are drawn from different functional areas of the
organisation, to work together on a specific and defined task.
Characteristics of a Team
Skill Diversity
A clear and sharply defined objective
Leadership is task oriented
As a whole is responsible for the task
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- 19. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Teams
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Receptive to experimentation
Best means available for overcoming functional
insulation and parochialism
Assumes responsibility of the whole task
No communication overload on the top executives
Accomplishes more than the sum total of what members
are capable of accomplishing individually
Demands continuous attention to its management
Social loafing
Sucker effect
- 20. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Teams
Difference between Traditional Formal Work Groups and Teams
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Formal Work Group Team
Is on the basis of hierarchy of superior
subordinate relationship and random skills
Is on the basis of complementarities of skill
Leadership and composition are more or less
permanent
Leadership and composition change as per the
situation
Management is by direction and control Management is by integration and self discipline
Communication is up and down between
superior and his subordinate
Communication is lateral
Members vie for each other for power,
prestige, recognition and personal autonomy
Members collaborate with each other since
rewards are dependant on team effort
Decision are taken on the basis of simple
majority
Decisions are taken unanimously
Purpose is same as the organization Purpose is specific
- 21. Copyright © 2017 by McGraw Hill Education (India) Private Limited
Teams
Types of Teams
Project Teams
Problem-solving Teams
Permanent Work Teams
Four-corners of the superordinate goal.
Establishes the quantity and the quality of its output.
The team makes its own internal distribution of tasks.
Decides its own membership.
Makes its own decision.
Decides how the work operations should be performed.
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- 22. Copyright © 2017 by McGraw Hill Education (India) Private Limited
International Organizational Structures
Important factors affecting an MNE’s choice of structure:
Strategy
Home and host country environments
Nature and size of its business
Nature and size of its business
The human resources available
Many companies, which had earlier established their footholds in the host
countries by creating subsidiaries, later on shifting to international division
structures to look after their foreign operations, international division
structures shifting to global functional structures, global functional
structures to global geographic structures, global geographic structures to
global product structures and global product structures to matrix structures.
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