ORGANIZING

CHAPTER 3
 Learning Objectives
1. Define what organizing is..
2. Describe the concepts of responsibility and
authority
3. Contrast centralization and decentralization
4. Explain delegation
5. Cite various types of span of management
6. Distinguish between the different types of
departmentalization and power
 Definition & Introduction
 What is organizing?
Structure or arrange the relationship between
people, work to be done, and facilities so that
goals are achieved.
 Issues:-
 Determine what is to be done
 Assigning tasks
 Decide how to achieve coordination
 Decide on a span of management
 Decide how much authority you should designate
 Draw an organization chart
 Departmentalization Structures

 There are 5 types of Departmentalization

a. By function
b. By product
c. By territory
d. By customer
e. By Matrix other design
 By Function
 The common, logical and basic form of
departmentalization
 Use mainly by smaller firms that offer a
limited line of products
 Eliminate overlapping in execution of basic
business activities
 Useful in stable environments where technical
efficiency and quality are important
 Advantages

1. Makes supervision easier since each

manager expert in narrow range of skill
2. Easier to mobilize specialized skills and bring
them to bear where they are required
3. Requires little coordination and fewer
interpersonal skills
 Disadvantages
1. Difficult to get quick decisions or actions on
a problem
2. Difficult to determine accountability and
gauge performance in functional structure
3. Isolation for those in other department
4. Does not encourage innovation due to its
narrow perspective
5. Does not foster development of general
managers
 Departmentalization by
Function
President

Vice President Vice President Vice President

Human Resource
of Production Marketing Finance

Production Planning Customer Service Financial Planning Training

Product Engineering Research

 By Product
 Involves group activities and functions on the
basis of products manufactured by the
company.
 Here a sensible degree of specialization is
encouraged by departmentalization according
to department.
 Advantages
1. It places attention and focuses effort on
product.
2. It replaces responsibility for profits at the
division level.
3. It improves coordination of functional
activities.
4. If furnishes measurable training ground for
general managers.
5. It allows growth and diversity of products
and services.
 Disadvantages
1. Requires more personnel with the general
manager’s abilities to full up the division of
managerial positions.
2. Maintenance of central services becomes
difficult since each division manger wants
his own services.
3. Top management will face a difficulty in
controlling, since division managers are
fairly independent.
4. It is costly.
 Departmentalization By
Product

PRESIDENT

GENERAL MANAGER GENERAL MANAGER GENERAL MANAGER

Pharmaceutical Personal Care Product Cosmetic Product
 By Territory

 A company or part of it organized around the

places where operations are located.
 Commonly found in sales or manufacturing
operations.
 Advantages
 Offers better services at low cost
 Responsible for profits at a lower level
 It emphasis on local markets and problems
 It offers better face to face communication
with local interests.
 Disadvantages
 Requires more staff with general abilities
 Top management has less control of the since
regional managers since they are fairly
independent
 Departmentalization By
Territory

President

West Region East Region Southeast Region Central Region

 Departmentalization By
Customer
 Grouping of activities to reflect the interests
of different customers
Advantages

1. Encourages concentration on customer’s needs

2. It gives customers the feeling that they have an
understanding supplier
 Centralization and
Decentralization
1. Centralization (Concentration of Authority)
 Having responsibility and authority concentrated
in one place, so that major decisions are made
by the central controlling body and little
initiative is in the hands of those lower down the
management ladder.
 Leads to the situation where all management
decisions have to be approved by the chief
executive before they can be put into the
operation.
 Line and staff officers can be inhibited from
embarking on non-routine courses of actions
without prior approval from the top.
2. Decentralization (Dispersion of Authority)
 The degree to which lower level employees
provide input or actually make decisions
 Occurs when responsibility for various functions
and operations are taken away from the center
and rests at the point where operations occur
 Needs the services of high caliber managers
who are able to anticipate and provide for local
needs
 Advantages of Centralization

i. It provides absolute control over the

organization and ensures adherence to laid
down policies
ii. It is administratively convenient and the
focal point for each function is readily
discernible (perceive)
iii. It is possible to have common standards
throughout the organizations e.g salary and
wage scales can be standardized policies,
customer relations etc.
 Disadvantages of Centralization
 The control can become autocratic and inflexible
 It can lead to frustration where member staff, particularly
the manager and supervisors are unable to use their
discretion but are forced to operate according to inflexible
rules
 Bureaucratic control methods may be imported, resulting
in proliferation (to increase) of forms and rigid procedures
slowing down the operations of the organizations
 Managers may see themselves not as independent decision
makers but rather as order taking subordinates. This
become particularly frustrating when they feel that those
giving the orders are not sufficiently aware of what is
needed at operating level
 CENTRALIZATION
PRESIDENT

VP PRODUCTION VP SALES VP FINANCE

ADVERTISING SALES PERSONNEL PROMOTION MARKET

MGR MGR MGR RESEARCH MGR

MANAGER MANAGER MANAGER

DISTRICT A DISTRICT B DISTRICT C
 DECENTRALIZATION
1. Advantages
i. It provides flexibility to meet changing needs at
the local level because that is where control
resides
ii. It is rewarding to manager and staff because it
enables them to exercise their own judgments
and initiative. So it promotes job satisfaction.
iii. Administrative paperwork may be reduced to a
minimum at operating level though more
reporting to central control may be necessary
 2. Disadvantages

i. Central control is difficult because each

section may not be following the same
patter of procedures
ii. In consequences more reporting and
inspection may be needed than if the
control were centralized.