Sinhgad Technical Education Society’s

Vadgaon (Bk),Sinhgad road Pune-4110041




2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Opening case-The HP WAY Introduction Process of organizing Organization design Departmentation Line and Staff Authority Mechanistic and Organic Organization Delegation of Authority Decentralization Span of Management Formal and Informal organization Coordination Trends in Organization. Bibliography

3. 4. 6. 8. 9. 14 16 20 22 25 30 32 35


Opening Case

Hewlett-Packard and Digital Revolution-THE HP WAY
Hewlett and Packard like many of leading companies , Began 1990s with the changing of the guard. The company announced that in July 1992 that Lewis Platt would be taking over the longtime CEO John Young. Unlike IBM and Digital 2

Equipment corporation (DEC), However HP was an organization that was not in need of reconstruction. In fact in terms of Profit, HP was excelling against nearly all competitors. It seems that Platt had to seat back and maintain course But during 26 years he spent with company, Platt had learned that success should not give way to complacency. While serving as Head of HP’s Computer system organization plat has witnessed the beginning of a revolution-a digital revolution. As computers communications and consumer electronics began to merge ,Platt saw that all type of media were being converted into digital form. Everything from TV programs to telephone calls was being translated into binary computer code so that it could be transmitted anywhere in the world that s digital network reached. Platt saw it lays a multibillion dollar market that were promise to open. The problem was that the companies place in the new industry was less clear. Hp was absent from the merger and joint venture; while IBM and Apple were approached by likes of Sony and Time Warner. Platt Knew that HP was not able to hop on to the digital bandwagon. The role of Hp in new arena was severely limited. Platt decided that HP was going to need entirely new line of products and consumers. By marshalling HP’s numerous technologies and cross breeding them Platt began to drive the HP full speed ahead into a new era. By reinventing and rejuvenating what already works, Platt moved to secure HP a future in the coming Digital revolutions. Platt setup three primary objective for 1993 and beyond. First Platt promised aggressive restructuring in an attempt to improve HP’s profitability even further. Second he encouraged customer satisfaction. The company has reputation of being difficult to deal with, Platt want to rectify finally Platt intends to increase HP’s emphasis on enlightened management in the company’s culture. Along with developing company’s strategy Platt must lead the decision making process to determine how to organize the company for implementation of the strategy. It is likely the collaboration among existing parts of HP organization, where knowledge strengths reside, will be necessary. And it is possible that HP managers and employee will need to cultivate relationship with new outsiders to develop new products.



An Organization is a pattern of relationships through which people , under direction of managers, pursue their common goals. Thegoals that managers develop trough the planning are typically ambitious, far reaching and open ended. Managers want to ensure that their organization need a stable, understandable framework within they work to achievethe Goals. The managerial process of Organising involves making decisions about creating this kind of framework so that organization can last from present well in future. Organization is a Social unit or human grouping deliberately structured for purpose of attaining specific goals. Organising is the process of coordinating and allocating a firm’s resources so that the firm can carry out its plans and achieve its goals At Hewlett and Packard Lewis Platt must decide on a pattern of relationships that will enable HP employees to capitalize on what they know and what they have learned in the past work. Platt does not start from zero. He walked into a preexisting organization. people relate to one another in certain way. So Platthas challenge is to build on this base as he develops a structure that will take HP in future.


Implementation of plans, Strategies. The plans are just intentions without the implementation. To implement the plans, the organizingis required. The well designed organization will have different functions which will work towards attaining the goals

To increase efficiency of work. Properly designed Organization assures that the work is done in most efficient and effective manner. The Work division, proper authority, and the persons with different skills are placed in most efferent manner which will work efficiently.

Personal Identity The Organization structure defines the role of each member of the enterprise. Thus every member knows where he and his department stands in the enterprise and in relation to other departments.


Determination of responsibility Organization structure fixes definite department and that of each member. responsibility of each

Determination of Authority Organization structure defines the authority of each member of organization who can delegate his responsibility but remains responsible for himself for the act of subordinates.

Coordination. Organization structure defines the activities and their sequences to be performed. This establishes the different stages through work will pass, person responsible and channel of communication. The management hierarchy, Rules and regulations, plans and goals provide the path for coordination.

Optimum staff use. Organization structure defines the activities and sequence to perform with the responsibility of the person. Due to this way it makes possible to secure the maximum output with the minimum effort.

Specialization. The clear picture of the work to be done at each work point, it becomes easy to find persons with the specialization in the concerned field to do it.

To study human behavior. Organization provide ideal setting for the study of human behavior. Research and study of organization leads to many important discoveries vital for continues well-being of our society.



Process of Organising


DEPARTMENTATION To have effective organizing process, the manager must identify the series of activities to be carried out in order to achieve the desired objectives. Manager has to take care that all main and connected activities are thought of and included. In identifyingHIERARCHY the activities the manager must keep in mind the objectives to be achieved. Divide the total workload into tasks that can be logically and comfortably be performed by individual groups. This is called as division of work. Adam Smiths’s Wealth of nation opens with a famous passage on DECENTRALIZATION the specialization of labour in ht manufacture of pins.” One man draws the wire, another straightens it, a third cuts it, a fourth points it, a fifth grinds it at top fro receiving the head.”Ten men working in this fashion made 48000 pins in one day, but if they are working separately they have produced only 20 pins a day.The great advantage is the breaking of total job down into small, simple, separate operation which different work could specialize which increases productivity.


Once all activities are identified then the related activities are grouped together. This is referred as Departmentation. For example the activities of manufacturing firm may be grouped according to their function as production marketing finance, HR etc. the activities of each department is further classified and placed under the charge of different sections.


After grouping the activities, the competent personnel/manpower who could carry out the activity is identified. This refers to staffing. The competence and acceptability of person for the process is very important. This can be also be referred as the creating hierarchy. Hierarchy is a pattern of multiple levels of an organization structure, at the top of which is the senior-ranking manager responsible for the operation of entire organization; other, lower-ranking managers are located down the various levels of organization.


Any position in the organization comes into existence only when the position are empowered to carry out the activities, for which the positions are designed. This means injecting the positions with the managerial authority. To carry out any activity, one must have enough authority. If no authority is there ; the person doing work cannot be held responsible. The managers should delegate the authority to their subordinates so as to have maximum effectiveness of the staff. The decentralization is the policy through which the top management gives more authority to different layers of organization.



Organizational design is the decision-making process by which managers choose an organizational structure appropriate for the strategy for organization and environment in which members of organization carry out that strategy.


The manner in which the components of an organization interrelate and interact influence the design of an organization. An organization structure defines how job tasks are formally divided, grouped and coordinated.

There are six important things that managers need to know while designing the proper organizational structure. They are:

1. 2. 3. 4. 5. 6.

Work specialization Departmentalization. Chain of command. Span of Control. Centralization, Decentralization and decision making authority. Formalization



Departmentalization by function organizes by the functions to be performed. The functions reflect the nature of the business. The advantage of this type of grouping is obtaining efficiencies from consolidating similar specialties and people with common skills, knowledge and orientations together in common units. 8

• • Clear career path within function • Development of expertise

Disadvantages • • De- emphasizes overall objective. Narrow view point of key persons

• Reduction in co-ordination. Departmentalization by product assembles all functions needed to Simplifies training make and market a particular product are placed under one executive. For • Responsibility of profit at Top • Furnishes means of Tight control at instance, major department stores are structured around product groups top. such as home accessories, appliances, women's clothing, men's clothing, • Slow adoption to changes. and children's clothing.


Advantages • • • • More focus on products

Disadvantages • Duplication of resources.

Easier to evaluate performance of product • Problems for customers purchasing across multiple Product responsiveness to market changes product groups Less burden on the top executive in making operating • Conflicts between product decisions group and corporate objectives • Conflict groups between product

Departmentalization by geographical regions groups jobs on the basis of territory or geography. For example, Merck, a major pharmaceutical company, has its domestic sales departmentalized by regions such as Northeast, Southeast, Midwest, Southwest, and Northwest.


Advantages • • • • • Responsibility at a lower level. Emphasis on local market & Problems. Improves co-ordination in a region. Better face to face communications. Take advantages of local economies.

Disadvantages • •

More persons with manager ability. Increases problem at top level. Tends to make maintenance of central services difficult.

Departmentalization by process groups jobs on the basis of product or customer flow. Each process requires particular skills and offers a basis for homogeneous categorizing of work activities. A patient preparing for an operation would first engage in preliminary diagnostic tests, then go through the admitting process, undergo a procedure in surgery, receive post operative care, be discharged and perhaps receive out-patient attention. These services are each administered by different departments.


Advantages • •

Disadvantages • •

More persons with manager ability. Increases problem at top level. Tends to make maintenance of central services difficult.

More persons with manager ability. Increases problem at top level. Tends to make maintenance of central services difficult.

Departmentalization by customer groups jobs on the basis of a common set of needs or problems of specific customers. For instance, a plumbing firm may group its work according to whether it is serving private sector, public sector, government, or not-for-profit organizations. A current departmentalization trend is to structure work according to customer, using cross-functional teams. This group is chosen from different functions to work together across various departments to interdependently create new products or services. For example, a crossfunctional team consisting of managers from accounting, finance, and marketing is created to prepare a technology plan.


Advantages • • Focus on Customer needs. Gives customer a feeling that they have an understanding supplier.. Develops expertness in customer area.

Advantages • May be difficult to coordinate operations between competing customer demands. Requires managers & staff expert in customer problems. Customer groups may not be always defined

• •



In many organizations, Managers uses authority by dividing it into line authority, staff authority, and functional authority. These kinds of authority differ according to the kinds of Power on which they are based.

Managers with Line Authority are those people in organization who are directly responsible for achieving organizational goals. Line authority is represented by standard chain of command, starting with board of directors and extending through the various levels in hierarchy to the point where the basic activities of organization carried out. Line authority is based primarily on Legitimate power.


Managers in manufacturing company may limit line functions to production and Sales, while in departmental store ,in which buying and selling are key functions, will consider Purchasing department and selling department as Line activities.

Staff authority belongs to those individuals or groups in organization who provide the services and advice to line managers. The concept of staff includes all elements of organization that are not classified as line. Advisory staffs have been used by decision makers from kings to dictators and parliaments over the course of recorded history. Staff provides managers with varied types of expert help and advice. Staff authority is primarily based on expert power. staff can also assist in policy implementation, monitoring and control; in legal and financial matters; and in the design and operation of data processing systems.


The role of staff members-to provide advice and service to line membersimplies that staff lacks independent, formal authority. In reality, staff departments, especially those responsible for audit functions, may have formal authority over line members within the limits of their function. The right to control activities of other departments as they relate to specific staff responsibilities is known as functional authority.



Through their Theory of Mechanistic and Organic Systems, Tom Burns and G.M. Stalker have provided a way to understand which organization forms fit to specific circumstances of change or stability. In their highly influential work "The Management of Innovation", they provide the following characteristics of Mechanic vs. Organic Systems:


Mechanistic Organization Form / Management System

Organic Organization Form / Management System

Appropriate Conditions



Distribution of tasks

Specialized differentiation of functional Contributive nature of special tasks into which the problems and tasks knowledge and experience to facing a concern as a whole are broken the common task of the concern down The abstract nature of each individual task, which is pursued with techniques and purposes more or less distinct from those of the concern as a whole: i.e., the functionaries tend to pursue the technical improvements of means, rather than the accomplishment of the ends of the concern

Nature of Individual task

The "realistic" nature of the individual task, which is seen as set by the total situation of the concern

Who (re)defines tasks

The reconciliation, for each level in the hierarchy, of these distinct performances The adjustment and continual by the immediate superiors, who are also, redefinition of individual tasks in turn, responsible for seeing that each is through interaction with others relevant in his own special part of the main task The shedding of "responsibility" as a limited The precise definition of rights and field of rights, obligations and obligations and technical methods methods (problems may not be attached to each functional role posted upwards, downwards or sideways as being someone else's responsibility) The translation of rights and obligations The spread of commitment to and methods into the responsibilities of a the concern beyond any functional position technical definition

Task scope

How is task conformance ensured

Structure of control, authority and communication

Hierarchic, Contractual

Network, Presumed Community of Interest Omniscience no longer imputed to the head of the concern; knowledge about the technical or commercial nature of the here and now may be located anywhere in the network

Locating of knowledge Communication between members of

Reinforcement of the hierarchic structure by the location of knowledge of actualities exclusively at the top of the hierarchy, where the final reconciliation of distinct tasks and assessment of relevance is made

Vertical; i.e., between superior and Lateral; i.e., between people of subordinate different rank, resembling

concern Governance for operations and working behavior

consultation command



Instructions and decisions issued by Information and advice rather superiors than instructions and decisions Commitment to the concern's task and to the "technological Insistence on loyalty to the concern and ethos" of material progress and obedience to superiors as a condition of expansion is more highly membership valued than loyalty and obedience Importance and prestige attach Greater importance and prestige to affiliations and expertise attaching to internal (local) than to valid in the industrial and general (cosmopolitan) knowledge, technical and commercial experience, and skill milieux external to the firm



Book: Tom Burns, G.M. Stalker – “The Management of Innovation”

In simplified form the characteristics can be shown as

Structure Characteristics
Job specialization Departmentalization Management hierarchy Span of control Decision making authority Chain of command

High Rigid Tall (many levels) Narrow Centralized Long Low Loose


Short (few levels) Wide Decentralized Short


Sometimes an organization needs to run according to what projects they have to do. In these situations people usually work together in a team to achieve their projects goals. A person working on a project would have two bosses, the boss of the department that they work in and the leader or manager of the 16

particular project that they are working on at the moment. A project may cover some or all of the organizations departmental areas.

For example in the aerospace industry (manufacture and development of aeroplanes and spacecraft) the government might ask for a space shuttle type aircraft to be developed and manufactured. Another government department might ask for a spacecraft to go to Mars. Obviously these craft would be very different. How could an organization set itself up to complete both projects? Well it might set up two project groups. The Mars group and the shuttle group, both of which would utilize resources, staff etc from all of the different departments in the organization. When the projects are completed, these project groups would be disbanded

Advantages – – teamwork efficient use of resources 17

– – – –

flexibility ability to balance conflicting objectives higher performance opportunities for personal and professional growth

Disadvantages – – – power struggles confusion among team members lack of cohesiveness



It is impractical for the supervisor to handle all of the work of the department directly. In order to meet the organization's goals, focus on objectives, and ensure that all work is accomplished, supervisors must delegate authority. Authority is the legitimate power of a supervisor to direct subordinates to take action within the scope of the supervisor's position. By extension, this power, or a part thereof, is delegated and used in the name of a supervisor. Delegation is the downward transfer of formal authority from superior to subordinate. The employee is empowered to act for the supervisor, while the 18

supervisor remains accountable for the outcome. Delegation of authority is a person-to-person relationship requiring trust, commitment, and contracting between the supervisor and the employee.

The organizational structure provides the framework for the formal distribution of authority. Formalization is the degree to which tasks are standardized and rules and regulations govern employee behavior. Authority is the legitimate power of a supervisor to direct subordinates to take action within the scope of the supervisor's position. Formal authority in the organization can be traced all the way back to the U.S. constitutional right to own property. The owner of the organization has the authority to make decisions. For example, entrepreneurial firms have an informal arrangement of employees and centralization of decision-making authority, the owner.

Power is the ability to exert influence in the organization beyond authority, which is derived from position. The supervisor's personal power could include job knowledge, personal influence, interpersonal skills, and ability to get results, empathetic ability, persuasive ability, and physical strength Legitimate power is a result of the position a person holds in the organization hierarchy. This position power is broader than the ability to reward and punish, as members need to accept the authority of the position. Coercive power is the threat of sanctions. It is dependent on fear and includes, but is not limited to the ability to dismiss, assign undesirable work, or restriction of movement. Reward power results in people doing what is asked because they desire positive benefits or rewards. Rewards can be anything a person values (praise, raises, and promotions). Expert power comes from expertise, skill, or knowledge. Referent power refers to a person who has desirable resources or personal traits. It results in admiration and the desire to emulate. Information power is based upon the persuasiveness or content of a communication and is independent of the influencing individual.

The process of delegation can be analyzed in three parts:

1. The first part is the assignment of responsibility or obligation to perform
the task as directed by superior. It is assumed that this step will also provide the subordinate with necessary assistance and training for the new assignment. 19

2. The second parts grants the subordinate the authority to get job done.

subordinate may require the authority to draw recourses for material , equipments ,suppliers, labour and so on. 3. Finally the third part, the manager creates subordinate accountability to proper accomplishment of the task.

The process of delegation should follow the authority and responsibility principle that delegated authority should equal the delegated responsibility. ADVANTAGES      Maximum effectiveness of Organization. Improvement of self confidence & high morale. willingness to take initiative. Better & Speedy decisions Simplifies problem of management succession


Centralization is the degree to which decision-making is concentrated in top management's hands. Decentralization is the extent to which decision-making authority is pushed down the organization structure and shared with many lower-level employees. Centralized organizations have more levels of management with narrow spans of control. Employees are not free to make decisions. Decentralized organizations have fewer levels of management with wide spans of control giving employees more freedom of action. All other things being equal, a wide span of control is more efficient because it requires fewer managers. However, it is important to recognize that, at some point, effectiveness will decline The current trend is toward broadening decentralization. As competition intensifies, the need for organizations to be responsive increases. This has made employees, usually those at the lower levels, who are closest to customers extremely important. They are an excellent source of knowledge and implement changes that directly impact 20

performance. Giving this group more input into certain decision-making activities can result in increased firm performance.

As the fig shows, judging the size of desk, the decentralization and centralization can be shown. The distribution of authority in this picture is illustrated by the size of desk.

HP’s founders Hewlett and Packard are always believed in decentralization. Therefore decentralization is history and philosophy of company. At Hackborn’s unit based in Idaho, due to decentralization, the hackborn and his managers makes number of decision quickly. They decided to market the laser printer to the entire PC market instead of designing it to be used with HP equipments only. Third they lined up an extensive network of retailers. Finally they put control on operation, making the production steady with low prices. Sales took off and got boost.

• History and Philosophy of organization The history and philosophy of organization are most important role in the decentralization policy. the history helps to create the organizational culture.The history of operations of company shows the environment in which company was operating, the philosophy of work is developed over a period of year. This philosophy shows the needs for decentralization or centralization. • Strategy and organizational environment. A strategic plan will influence the types of market, technological environment, and competition with which the organization must contend. These factors will in turn influence the degree of the decentralization. where markets are predictable production process is less dynamic competition is stable the centralized authority is the referable choice. • Availability of competent subordinates If the subordinates are competent and have ability to perform the certain work will be very useful for company in future. The company must take initiative to give them responsibility with authority to develop their confidence. 21

Dispersal of operations. If company operates from different regions ,then it becomes necessary to decentralize the authority to greater extent. the company division can’t wait for much time for any kind on decision in the competitive environment.

Size and growth of organization. As an organization grows in size complexity, decentralization tends to increase. The faster the rate of growth, the more likely it is that upper management, bearing the weight of ever increasing work load will be forced to accelerate the delegation of authority to lower levels.

Degree of diversification.

• • • • Problems of Co-Ordination. Increase in Administrative Cost. Scope of unhealthy Competition. Communication Gap between levels

BRAND MANAGEMENT AT PROCTER & GAMBLE. Since Proctor & Gamble (P & G) first use the concept way back in 1927 to manage Camay soap, Brand management has been almost synonymous with company. P& G can be viewed as practically a textbook case on how to run a consumer oriented company .but early 1980s P&G share in a number of important markets has begun to slip. Despite emphasis on brand management, P&G has maintained a fairly centralized approach to decision making. In beginning the approach works well. Over years excessive centralization began to bog down the company Gradually almost every decision is pushed at the top. (e.g.. Weather the company’s new decaffeinated instant coffee should have green or a gold cap was elevated all the way to CEO, He chose Gold!) The chief medium of decision making and symbol of growing centralization was one page memo. managers had to carefully summarize 22

any proposal in a single page which has written almost endless times as it made its way in hierarchy. Brand managers were frustrated because of lack of authority and had to answer to layers of management as well as staff areas such as legal department. These conditions effectively cancelled the coordination. P&G executives took the step to dismantle the overly bureaucratic practices .for one thing they substituted use of “talk sheet” for strict adherence to one page memo. The talk sheet is an informal outline that allows managers on several levels to develop and refine a proposal through discussions ,rather than paper only. Management began to decentralize decision making under new approach teams are often put together that include representatives from functional area who help develop the proposal itself. This system helps P&G cut costs ,get new products on shelves more quickly and greatly increase sales. Now, P&G continues to have reputation as a premier exploiter of brand management for competitive advantages

Span of management control is the number of people who report to one manager. If ten subordinates reports to one manager then ;the span of control of that manager is ten. The span of management is also called as “Span of Supervision” and the “Span of Control”. In simple words, it is the jurisdiction over which a person has control. When an executive is expected to govern or control the activities of individuals in a group ,the number of persons in a group indicates the span of control.

Span of control has three limitations: 1. Limited time -at the disposal of executive to undertake the activities. 2. Limited energy –has to depend upon others to supplement his energy. 3. Limited capacity-0to concentrate and attend subjects.

Theory of V. A. Graicunas Graicunas , a French management consultant, demonstrated by the mechanical calculations that as number of subordinates is increased 23

arithmetically geometrically.









The mathematical formula for calculating relationships is:

where, n= number of subordinates and r= number of relationships. For n=1, 1 relationship n=2, 6 relationships n=3, 18 relationships

An executive can manage effectively 222 relationships and therefore, the span of control is six subordinates. Thus, a limit of five to six is desirable at top level and a limit to 20 subordinates should be thereat bottom level.

Span of control depends on following factors.

Interaction requirements
If there is no need of high level of interaction between the manager and subordinates and also managers need not to explain the works to be done; then the span of control can be wide. This interaction levels may be depends on the work, ability of subordinates, teamwork ,faith in subordinates or clarity of work etc.

Ability of Subordinates.
If subordinates has ability and capability to perform the work in organization then the work can be easily carried out with the delegation of authority and responsibility. Therefore the span of control should be wider.

Nature of Work
If the nature of work is simple then the span can be wider; while if the work is complex ,then the manager has to give more time to explain and supervise the work therefore it demands for much more time and narrow span of control. 24

Degree of team work.
As the team work increases, the problem even if complex can be solved with the group discussion and mutual understandings of team mates. Team work also divides the work in smaller parts which makes it simple and can be easily performed. Therefore the span of control of manager is wider in this case.

Faith & trust in Subordinates
This is an important aspect. If Manager have faith and trust in subordinates then he can handle more employees. The span of control is wider here.


Consider an organization with span of control two and thirty one managers will create a rather tall organization with five layers of management.

The advantages of a narrow span of control are: A narrow span of control allows a manager to communicate quickly with the employees under them and control them more easily Feedback of ideas from the workers will be more effective It requires a higher level of management skill to control a greater number of employees, so there is less management skill required


If span of control is now increase to four then the levels of management drops down to only three. This creates shorter structure

The advantages of wide span of control are: There are less layers of management to pass a message through, so the message reaches more employees faster It costs less money to run a wider span of control because a business does not need to employ as many managers

TOTOTA SHEDS WITH MANAGEMENT LEVELS Faced with increased global competition, management at the TOYOTA undertook a restructuring aimed at eliminating 2 management levels. In keeping with Japanese tradition of attempting to avoid layoffs the company shifted a number of middle managers to “Hands on work” rather cutting jobs. Toyota’s primary aim in restructuring was to streamline decision making by reducing the number of layers through which decisions must travel. The changes affected 25000 of approx. 65000 Toyota employees including 1000 managers. Cost cutting is not major factor as company making admirable profits. Company was slow to take the competitive action than its smaller Japanese rivals. At Toyota there was “so many steps to reach top management that it took time to make a decision Toyota ”Further there was significant middle level managers whose main activity is “sit quietly without doing nothing” Not displaced managers will need to become involved in the process of creating and doing hands-on work. Hiroshi Okuda –first non family president of Toyota since 1967 has reduced management levels still further and continues to cut the size of work force through mandatory retirements and attrition. The company also aiming to hire 30% of its new workers as contract employees to reduce lifetime commitments

Current Trends in Spans

To increase the spans organizational levels)






Fig shows the importance of increasing the span of control of manager for four to eight, it shows that the managers are reduced from 1365 to 585 only. this also shows the trend of making the organization flat.


Results of Wider Spans 1. Significant reduction of administrative costs 2. More effective and efficient organization communication 3. Faster Decisions and closer interaction between levels

4. Requirement for more personnel training for all levels 5. Better leadership at all levels

Due to Competitive scenario Hp cant afford to wait decisions and long chain of command which will delay the decision implementations ;therefore there is need of Flat organization for HP-computers and scientific instruments each with own sales force.

FORMAL organization is one which is characterized by formal hierarchy of structure with the different levels of responsibility and authority. Every one knows his area of work ,responsibility, authority etc .in this organization the formal structure drives the people to do work rather than any other humanistic approach. Rules and regulation governs the work as well as coordination.


INFORMAL (Chess group ,tea group)

Informal organization is the network of connections and channels of communication based on the informal relationships of individuals inside an organization. It give employees more control over their work environment by delivering a continuous stream of company information, helping employees stay informed. It creates ownership to the company.

FUNCTION • • • Friendships and social contact Information and sense of control over their work environment Source of status and recognition

DISNEY’S DESIGN-Dream as Team. The Walt Disney Company is heralded as the world’s largest entertainment company. It has astonished reputation through tight control over the entire operation, control over open minded brainstorming that takes place 24 hours a day.; control over engineers who constructed the fabulous theme park rides, control over animators who create the designs of beloved characters to life. Although the control pervades the company it has not too strong grip. Employees are well aware of the objectives and parameters to meet that. But in conjunction with the predetermined responsibilities, managers at Disney encourages independent and innovative thinking. 28

People at the company has adopted the phrase “Dream as a Team” as a remainder that whimsical thoughts adventure ideas, and all out dreaming are at the core of the company philosophy. The overall control over each department is tempered by this concept. Disney managers strive to empower their employees by leaving room for their creative juices to flow. In fact managers do more than encourage innovation. They demand it. Project assigned to the staff “Imagineers” seem impossible at first glance. Doing the impossible means innovation. Teams of Imagineers gather together in a brainstorming session known as the “Blue Sky” an inhibited exchange of wild, ludicrous, outrageous ideas, both good and bad continues till solution is found and impossible is done. Disney drives employees to be creative. Disney leader Michael Eisner has established the “Dream as a Team” as concept. Eisner realized that the managers at Disney needed to let their employees brainstorm and create with support. As Disney president Frank Wells said that “If a good idea is there, you know it, you feel it, you do it, no matter where it comes from”

Coordination is the process of integrating the activities of separate departments in order to pursue organizational goals effectively. without coordination, people would lose sight of their roles within the total organization and to be tempted to pursue their individual departmental goals.


The extent of coordination depends on the nature of tasks performed and degree of interdependence of people in various unit. Coordination can also occur among people working in different languages. The mergers and acquisitions can also pose the problems of coordination in two organizations. Coordination involves brining people back together to ensure that work relationships between people with different but related jobs can contribute to organizational goals.

Communication is key to effective coordination. Coordination is directly depends on the acquisition, transmission and processing of information. The greater the uncertainty of tasks to be coordinated, greater the need of information.

Relatively modest coordination requirements can be often met with basic management techniques. one of them is chain of command. By specifying relationships in organization, the chain of command facilitates the flow of information. The other tool is the Rules and Regulations, procedures designed to let employee handle routine coordination. By specifying the role of each person from different departments to achieve the overall plans and goal for the organization. This creates the coordination automatically for achieving those common goals. the realization of plan goals will drive people together to achieve them with removal of their individual or departmental goals.


When number of contacts between departments increases dramatically, it may be best to create a permanent liaison between the departments. such a liaison is said to fill a boundary-spanning role. Effective boundary spanning employees understand the needs, responsibilities and concerns of both departments. and can help the departments to communicate. For example, the members of engineering and marketing departments can sometimes speak different languages. An effective boundary spanning employee is able to translate the customer oriented language of marketing into the product oriented languages of engineering, and vice versa. 30

When the need for coordination is so great that the methods given above are ineffective, the best approach may be to reduce the coordination Providing Slack (additional) recourses gives units leeway in meeting each other’s requirements. Suppose if Mercedes Benz managers anticipate that 10000 cars will be brought in given region of US over 3 month period beginning January 1. The management might establish a production quota of 12000 cars in case of demand is larger than anticipated. And a production deadline of october1 of previous year to give themselves 3 months safety margin if any problems arises. without this safety margin, the close coordination is required to produce the required quantity. Another way to reduce the coordination is to create independent units whose members can perform all the necessary aspects of task themselves rather than relying on other departments.

MBWA-management by Walking around. in this technique Managers take time to walk around various departments and production facilities. They observe operations and talk informally with employees. Lewis Platt has already held dozens of face to face meetings with HP employees. As HP is gearing for completion, Platt and his collogues have good reasons to use the boundary spanning approach. knowledge is quite widely distributed among engineers of HP which needs to be harnessed.


Virtual corporation
The virtual organization is temporary network of independent companiessuppliers, customers, even erstwhile rivals-linked by information technology to share skills, costs and access to one another’s markets. It will have neither central offices nor organization chart. It will have no hierarchy, no vertical integration.

Today’s joint ventures and strategic alliances may be an early glimpses of the business organization of future. the key attributes of this kind of organization are:

Technology: informational networks will help far flung companies to link up and work together from start to finish. It will also create the electronic contacts to keep lawyers away and speed the link ups. Opportunism: Partnerships will be less permanent, less formal and more opportunistic. Companies will band together to meet a specific market opportunity and more often than not fall apart once the need evaporates.

Excellence: because each partner brings its core competences to the effort. Each function and process could be world class something that no single company could achieve.

Trust: these relationships make companies far more reliant on each other and require far more trust than ever before. They will share a sense if co density meaning that the fate of each partner is dependent on each other

NO-Borders: this new corporate model redefines traditional boundaries of company. More cooperation amongst competitors, suppliers, customers makes it harder to determine where one company ends and another begins.


How much HP people can do themselves in enacting a strategy for the Digital era is a question Platt faces. Increasingly partnerships and virtual organizing process at company. HP formed a partnership with AT & T and Citizen Watch co. of Japan to accelerate the project on disk drives. Platt “ We cant do it all Ourselves.”

1. MANAGEMENT by James Stoner, R. Edward Freeman, Daniel Gilbert jr.(Prentice Hall of India) 2. MANAGEMENT by Kathryn M. Bartol & David C. Martin (McGraw Hill Publication) 3. Organizational Behavior and Principles and Practices of management by Mrs. Amruta Oke, Prof. Sunil Ujagare, Prof. Vilas Nandavadekar,Mrs. Gauri kulkarni. INTERNET INFORMATIONS 1. For Mechanistic and Organic organization-http://www.valuebasedmanagement.net/ Theory of Mechanistic and Organic Systems - Burns, Stalker.htm. 2. http://ollie.dcccd.edu/mgmt1374/book_contents/3organizing/pwr_auth/ Power and Authority.htm 3. opax.swin.edu.au/~388226/howto/it2/mstruct.htm 4. http://www.hp.com/hpinfo/newsroom/press/