Chapter 2

REVIEW OF RELATED LITERATURE

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REVIEW OF RELATED LITERATURE

Organization

2.1 Meaning

Organization is the structural framework of duties and responsibilities required of

personnel in performing various functions with a view to achieve business goals
through organization. Management tries to combine various business activities to
accomplish predetermined goals.

2.2 Definitions

Koontz and O’ Donnel. “The establishment of authority relationships with

provision for co-ordination between them, both vertically and horizontally in the
enterprise structure”.

George Terry. “Organizing is the establishing of effective authority relationships

among selected work, persons and work places in order for the group to work
together efficiently.

2.3 Concept of Organization

There are two concepts of organization

1. Static Concept

2. Dynamic Concept

1. Static Concept

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Under static concept the term ‘organization’ is used as a structure, an entity or a
network of specified relationship. In this sense, organization is a group of people
bound together in a formal relationship to achieve common objectives. It lays
emphasis on position and not individuals.

2. Dynamic Concept

Under dynamic concept, the term ‘organization’ is used as a process of an ongoing

activity. In this sense, organization is a process of organizing work, people and the
systems. It is concerned with process of determining activities which may be
necessary for achieving and arranging them in suitable groups so as to be assigned
to individuals. It considers organization as an open adoptive system and not as a
closed system. Dynamic concept lays emphasis on individuals and considers
organization as a continuous process.

2.4 Common Characteristics of Organization

1. Coordination of effort: multiplying individual contributions to

achieve results greater than those possible by individuals working alone.
2. Common goal or purpose: having a focus to strive for something of
mutual interest.
3. Division of labor: dividing tasks into specialized jobs that use human
resources efficiently.
4. Hierarchy of authority: using a chain of command to control and
direct the actions of others.

2.5 Importance of Organization

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Organization is the mechanism which determines the relationship of various
persons. With the help of a well defined organization management is able to
perform the functions of direction, co-ordination and control. Following are some
of the importance of a good organization.

1. Helps in Optimum Utilisation of Technological Innovations:

The technological improvements are taking place every time and management is
required to make use of them to exist in competitive world. The organization
should be flexible to incorporate all new requirements.

2. Helps in Administration:

An organization provides sound foundation for effective managerial control.

Various managerial functions will be effectively performed with the help of an
organization. The functions like co-ordination and control require a proper
division of various functions and their assignment to suitable persons.

3. Promotes Growth and Diversification:

A flexible organizational structure will enable the employment of more persons

without disturbing the working. Additional activities will not put any strain on
the management.

4. Easy Co-ordination:

A good organization will divide and sub-divide the activities in such a way that
the activities of different segments become complementary. This will bring an
automatic co-ordination in the business.

5. Training and Development of personal:

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A good organization offers an opportunity for the training and development of
personal. A clearly defined authority provides a scope for the use of talent. The
new entrants get sufficient training in their work. There are attached to experienced
persons who guide them on undertaking various jobs.

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