ORGANIZATIONORGANIZATION

A formal intentional structure A formal intentional structure of positions, roles and of positions, roles and

functionsfunctions

ORGANIZATION STRUCTUREORGANIZATION STRUCTURE

A framework of an organization expressed A framework of an organization expressed by its degree of complexity, formalization by its degree of complexity, formalization and centralizationand centralization

ORGANIZATION DESIGNORGANIZATION DESIGN

The development or changing The development or changing of an organization structureof an organization structure

FORMALIZATIONFORMALIZATION

The degree to which an The degree to which an organization relies on rules and organization relies on rules and procedures to direct the behavior procedures to direct the behavior of its employeesof its employees

CENTERALIZATIOCENTERALIZATIONN

The concentration of decision –The concentration of decision –making authority in upper making authority in upper managementmanagement

DECENTERALIZATIONDECENTERALIZATION

The handing down of decision – The handing down of decision – making authority to lower levels in making authority to lower levels in an organizationan organization

PURPOSES OF ORGANIZINGPURPOSES OF ORGANIZING

Divide work to be done into specific jobs & departmentsDivide work to be done into specific jobs & departments

Assign tasks and responsibilities associated with Assign tasks and responsibilities associated with individual jobsindividual jobs

Coordinate diverse organizational tasks Coordinate diverse organizational tasks

Clusters jobs into unitsClusters jobs into units

Establish relationships among individuals , groups and Establish relationships among individuals , groups and departmentsdepartments

Establish formal lines of authority Establish formal lines of authority

Allocate and deploys organizational resources.Allocate and deploys organizational resources.

ORGANIZATION DIMENTIONSORGANIZATION DIMENTIONS

VerticalVertical

horizontalhorizontal

ASPECTS OF VERTICAL ASPECTS OF VERTICAL DIMENTIONDIMENTION

Unity of commandUnity of command

Authority & responsibilityAuthority & responsibility

ASPECTS OF HORIZONTAL ASPECTS OF HORIZONTAL DIMENSIONDIMENSION

DepartmentalizationDepartmentalization

Division of laborDivision of labor

UNITY OF COMMANDUNITY OF COMMAND

The principle that subordinate should have The principle that subordinate should have one and only one superior to whom he (or one and only one superior to whom he (or she) is directly responsible.she) is directly responsible.

CHAIN OF COMMANDCHAIN OF COMMAND

The flow of authority from the top to the The flow of authority from the top to the bottom of an organization bottom of an organization

DEPARTMENTALIZATIONDEPARTMENTALIZATION

The process of grouping individuals into The process of grouping individuals into separate units or departments to separate units or departments to accomplish organizational objectivesaccomplish organizational objectives

DEPARTMENDEPARTMENTT

Department designates a distinct area, Department designates a distinct area, division or branch of an organization over division or branch of an organization over which a manager has authority for the which a manager has authority for the performance of specified activities performance of specified activities

DIVISION OF LABOURDIVISION OF LABOUR

The break down of jobs in narrow, The break down of jobs in narrow, respective tasks.respective tasks.

PROCESS OF ORGANIZATIONPROCESS OF ORGANIZATION

STEPSSTEPS1.1. Establishing objectiveEstablishing objective2.2. Formulating supporting plans& policiesFormulating supporting plans& policies3.3. Identifying activities necessary to accomplish these Identifying activities necessary to accomplish these

(1&2 above)(1&2 above)4.4. Grouping these activities in the light of human and Grouping these activities in the light of human and

material resources available and to the best way of material resources available and to the best way of using themusing them

5.5. Delegating to the head of each group the authority Delegating to the head of each group the authority necessary to perform the activitiesnecessary to perform the activities

6.6. Tying the groups together vertically and horizontally Tying the groups together vertically and horizontally through chain of command and flow of communication through chain of command and flow of communication

SPAN OF MANAGEMENTSPAN OF MANAGEMENT

The number of subordinates a manager can The number of subordinates a manager can supervise effectively and efficientlysupervise effectively and efficiently

Narrow (or vertical)Narrow (or vertical)

Wide (or horizontal)Wide (or horizontal)

NARROW SPANNARROW SPAN

No of subordinates four or less than four

NARROW SPANNARROW SPAN

AdvantagesAdvantagesClose supervisionClose supervisionClose controlClose controlFast communicationFast communication

DisadvantagesDisadvantagesMany level of managementMany level of managementExcessive distance between the top &lowest levelExcessive distance between the top &lowest levelSuperior tend to get too involved in subordinates workSuperior tend to get too involved in subordinates workHigh cost due to many levelsHigh cost due to many levels

WIDE SPANWIDE SPAN

No of subordinate six or more than six

WIDE SPANWIDE SPAN

AdvantagesAdvantagesSuperiors are obliged to delegateSuperiors are obliged to delegate

Clear policies are madeClear policies are made

Subordinates are carefully selectedSubordinates are carefully selected

DisadvantagesDisadvantagesOverloaded superiors become decision Overloaded superiors become decision bottlenecksbottlenecks

Superiors may lose controlSuperiors may lose control

Require exceptional quality of managersRequire exceptional quality of managers

FACTORS AFFECTING FACTORS AFFECTING SPANSPAN

Training of subordinatesTraining of subordinates

Clarity of delegation of authorityClarity of delegation of authority

Clarity of plansClarity of plans

Use of objective standardsUse of objective standards

Rate of changeRate of change

Communication techniquesCommunication techniques

Amount of personal contact neededAmount of personal contact needed

DEPARTMENTATIONDEPARTMENTATION

The process of grouping individuals into The process of grouping individuals into separate units or departments to separate units or departments to accomplish organizational objectivesaccomplish organizational objectives

DEPARTMENTATIONDEPARTMENTATION

By timeBy time

By functionBy function

By territoryBy territory

By productBy product

By process of manufacturingBy process of manufacturing

By customer’s interestBy customer’s interest

Departmentation by TimeDepartmentation by Time

Grouping activities on the basis of time, Grouping activities on the basis of time, generally at lower levels.generally at lower levels.

Continuous round the clockContinuous round the clock

ShiftsShifts

AdvantagesAdvantages

Service available 24 / 7Service available 24 / 7

Processes work uninterruptedProcesses work uninterrupted

Utilization of equipmentUtilization of equipment

Helping people utilize available timeHelping people utilize available time

Lack of supervision especially at nightLack of supervision especially at night

Problem of coordination & communicationProblem of coordination & communication

Cost of overtimeCost of overtime

Fatigue factorFatigue factor

DisadvantagesDisadvantages

DEPARTMENTATION BY DEPARTMENTATION BY FUNCTIONFUNCTION

MD

MARKETING ENGINEERRING PRODUCTION FINANCE

MARKETING`

PLANNING

SALES

ADMIN

DESIGN

QULITYCONTROL

PLANNING

PURCHASING

GENPRODUCTION

PLANNING

BUDGETING

ACCOUNTING

AdvantagesAdvantagesIs Logical reflection of functionsIs Logical reflection of functionsMaintains power and prestige of major functionsMaintains power and prestige of major functionsFollows principle of occupational specializationFollows principle of occupational specializationSimplifies trainingSimplifies trainingFurnishes means of tight control at topFurnishes means of tight control at top

Deemphasis of overall company objectiveDeemphasis of overall company objectiveOverspecializes and narrows viewpoint of key personnelOverspecializes and narrows viewpoint of key personnelReduces coordination between functionsReduces coordination between functionsResponsibility for profits is at the top onlyResponsibility for profits is at the top onlySlow adaptation to changes in environmentSlow adaptation to changes in environmentLimits development of general managersLimits development of general managers

DisadvantagesDisadvantages

DEPARTMENTATION BY DEPARTMENTATION BY TERRITORYTERRITORY

MD

WESTERNREIGON

CENTERAL SOUTHERNNORTHERNESTERNREGION

(HQ)

AdvantagesAdvantagesPlaces responsibility at a lower levelPlaces responsibility at a lower levelPlaces emphasis on local markets and problemsPlaces emphasis on local markets and problemsImproves coordination in a regionImproves coordination in a regionTakes advantage of economies of local operationsTakes advantage of economies of local operationsBetter face-to-face communication with local interestsBetter face-to-face communication with local interestsFurnishes measurable training ground for general Furnishes measurable training ground for general managersmanagers

Requires more persons with general manager abilitiesRequires more persons with general manager abilitiesTend to make maintenance of economical central Tend to make maintenance of economical central services difficult and may require services such as services difficult and may require services such as personnel or purchasing at the regional levelpersonnel or purchasing at the regional levelIncreases problem of top management controlIncreases problem of top management control

DisadvantagesDisadvantages

DEPARTMENTATION BY DEPARTMENTATION BY PRODUCTPRODUCT

MD

HEAVY ELECTRICAL

TELEPHONE/MOBILE

KITCHENAPPLIANCE

RADIO/TV/VCR

AdvantagesAdvantagesPlaces attention and effort on product linePlaces attention and effort on product lineFacilitates use of specialized capital, facilities, skills, and Facilitates use of specialized capital, facilities, skills, and knowledgeknowledgePermits growth and diversity of products and servicesPermits growth and diversity of products and servicesImproves coordination of functional activitiesImproves coordination of functional activitiesPlaces responsibility for profits at the division levelPlaces responsibility for profits at the division levelFurnishes measurable training ground for general managersFurnishes measurable training ground for general managers

Requires more persons with general managers abilitiesRequires more persons with general managers abilitiesTends to make maintenance of economical central Tends to make maintenance of economical central services difficultservices difficultPresents increased problem of top management controlPresents increased problem of top management control

DisadvantagesDisadvantages

DEPARTMENTATION BY DEPARTMENTATION BY MANUFACTURING PROCESSMANUFACTURING PROCESS

MD

FOUNDRYNICKLE

PLATINGPAINTING

CASTING/FORGING

AdvantagesAdvantagesAchieves economic advantageAchieves economic advantageUses specialized technologyUses specialized technologyUtilizes special skillsUtilizes special skillsSimplifies trainingSimplifies training

Coordination of departments is difficultCoordination of departments is difficultResponsibility for profit is at the topResponsibility for profit is at the topIs unsuitable for developing general managersIs unsuitable for developing general managers

DisadvantagesDisadvantages

DEPARTMENTATION BY DEPARTMENTATION BY CUSTOMERSCUSTOMERS

MD

HIRE-PERCHASE HIGH END PRODUCTS

BOUTIQUEBUDGET ITEM

AdvantagesAdvantagesEncourages concentration on customer needsEncourages concentration on customer needsGives customers feeling that they have an understanding Gives customers feeling that they have an understanding suppliersupplierDevelops expertness in customer areaDevelops expertness in customer area

May be difficult to coordinate operations between May be difficult to coordinate operations between competing customer demandscompeting customer demandsRequires managers and staff expert in customers Requires managers and staff expert in customers problemsproblemsCustomer groups may not always be clearly defined (For Customer groups may not always be clearly defined (For Example, large corporate firms vs. other corporate Example, large corporate firms vs. other corporate businesses)businesses)

DisadvantagesDisadvantages

TYPES OF ORGANIZATIONSTYPES OF ORGANIZATIONS

Mechanistic ( or bureaucratic )Mechanistic ( or bureaucratic )

Organic ( or adhocracy)Organic ( or adhocracy)

Team-basedTeam-based

Boundary-lessBoundary-less

MatrixMatrix

MECHANISTIC ORGANIZATIONMECHANISTIC ORGANIZATION(Bureaucracy)(Bureaucracy)

A structure that is high in complexity, A structure that is high in complexity, formalization and centralizationformalization and centralization

PermanentPermanent

Shared responsibilityShared responsibility

Work by the bookWork by the book

ORGANIC ORGANIZATIONORGANIC ORGANIZATION (Adhocracy)(Adhocracy)

A structure that is low in complexity , A structure that is low in complexity , formalization and centralization .formalization and centralization .

TransientTransient

AdhocismAdhocism

creativecreative

TEAM-BASED ORGANIZATIONTEAM-BASED ORGANIZATION

An organization made of work groups or An organization made of work groups or teams that perform organization’s workteams that perform organization’s work

BOUNDARY – LESS BOUNDARY – LESS ORGANIZATIONORGANIZATION

An organization whose design is not defined An organization whose design is not defined or limited to the boundaries imposed by a or limited to the boundaries imposed by a pre-defined structurepre-defined structure

[ Also knows as Network org, modular ,or [ Also knows as Network org, modular ,or virtual corporation]virtual corporation]

MECHANISTIC Vrs ORGANIC MECHANISTIC Vrs ORGANIC ORGANIZATIONORGANIZATION

Rigid hierarchical Rigid hierarchical relationshiprelationship

Fixed dutiesFixed duties

High formalizationHigh formalization

Formalized Formalized communication communication channels channels

centralizedcentralized

Collaborative/flexible Collaborative/flexible (both vertical (both vertical horizontal)horizontal)

Adaptable dutiesAdaptable duties

low formalizationlow formalization

Informal Informal communicationcommunication

decentralized decentralized

MECHANISTICMECHANISTIC OrganicOrganic

MATRIX ORGANIZATIONMATRIX ORGANIZATION

An organization that assigns specialists from An organization that assigns specialists from different functional departments to work on different functional departments to work on one or more projects that are led by a one or more projects that are led by a project manager project manager

MATRIX ORGANIZATION MATRIX ORGANIZATION WORKINGWORKING

Define objectives of the project or taskDefine objectives of the project or taskClarify roles , authority and responsibility Clarify roles , authority and responsibility of managers and team members based of managers and team members based on knowledge &experience rather than on knowledge &experience rather than rankrankBalance power of functional and project Balance power of functional and project managersmanagersInstall appropriate cost , time and quality Install appropriate cost , time and quality controlcontrol

STRATEGIC BUSINESS UNITSTRATEGIC BUSINESS UNIT(SBU)(SBU)

A single business that is independent of main A single business that is independent of main organization and formulates its own strategy.organization and formulates its own strategy.

It will have its own:It will have its own:

Unique missionUnique mission

CompetitorsCompetitors

PlansPlans

Organization/setupOrganization/setup

recoursesrecourses