Imst 2

Industrial Management & Smart Technologies, EC-501
ORGANISATION STRUCTURE AND

ORGANISATIONAL BEHAVIOUR 2UNIT
Weightage: 1 Short Question + 1½ Essay Question = 18 Marks
ORGANIZATION STRUCTURE & BEHAVIOUR

Organization:
It is defined as the systematic arrangement of the resources of the attainment of the
objectives of the industry is called organization.
Organization is a form of management which aims at increasing the wealth by
producing goods and services to satisfy human wants
Factors to be consider for selecting the organization:

1. Nature of the business
2. Capital investment
3. Sharing of profits
4. Expected life span of business
5. Degree of risk
6. Scale of business
7. Govt. policies
8. Technical factors
ORGANIZATION STRUCTURE
Organization structure is defined as the systematic arrangement of the people
working in order to achieve the pre decided goals.
1. The organization structure is designed by the management to achieve specific goals.
2. Fix the responsibilities by department wise and section wise or individual for
completing the work on time
3. It promote division of work and leads to specialization
4. Organization structure defines the positions and units within the organization.
5. Organization structure facilities decision making one level to another level
https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 1

Types of organization
1) Line organization
2) Line and staff organization
3) Functional organization or Staff Organization
Line Organization:
General Manager
Marketing Manager Production Manager Finance Manager
Foremen
Workmen
 It is simplest form of organization Structure

 The immediate superior gives order to subordinates to assign duties
 Any enterprise that starts with the line type organization
Advantages:
1. It is easy to start and easy to operate and understand
2. It is flexible
3. It makes clear division of authority
4. There is a clear channel of communication between superior and his subordinates
ie., from top level to lower level
5. It encourages speed of action
Disadvantages:
1. It requires a high type of supervisors in the absence of specialists to meet the
challenges
2. It is limited and very small
3. It required lack of co-ordination
4. It required Lack of specialization because one man has to take decisions on various
matters
5. There is no communication from lower level to top level

Line and Staff Organization:
Board of Directors
R & D Staff General Manager Public Relations

Officer
Marketing Production
Finance Manager
Manager Manager
Foreman
Line Organization
Staff Organization
Workmen
Line and staff management has two separate Characteristics.

Line organization it is defined as “Departments are revenue generators
(manufacturing, selling), and their managers are responsible for achieving the
organization's main objectives.
Staff Organization it is defined as “Departments are revenue consumers, and
their managers are responsible for activities that support line functions (Such as
Accounting, maintenance)
 The line officers have authority to take decisions and implement them to achieve
the objectives of the organization
 The staff officers assist the line officers in the planning of business activity
Advantages:
1. There is a planned specialization.
2. There is a well-defined authority and responsibility. The line of command is
maintained.
3. Wastages are minimized and quality is improved.
4. It is possible to execute work effectively
5. Better discipline is possible due to maintenance of unity of command

Disadvantages
1. It is complicated system and increase cost of production
2. It may arise conflict between line personnel and staff personnel
3. There will be a lack of co-ordination between line and staff
4. They may be tendency to blame each other if anything goes wrong
5. Line executives are loose there efficiency as they have to depend on the staff
members
Functional Organization:
Functional organization is also a line type of organization. The main deference is
instead of one foreman there are eight foreman, four of them are located on the shop
and remaining are in the office. But everyone has equal authority over the workers
1) Route Clerk 5) Gang boss
2) Instruction Clerk 6) Speed boos
3) Time and cost Clerk 7) Repair boss
4) Disciplinarian 8) Inspector or inspector boss
Advantages:
1. Since foreman is responsible for one function, his duty may be better manner
2. Functional organization makes use of specialists to give expect advice to workers
3. Number of wastage and accidents reduces due to expect advice
4. Quality of work is improved
Disadvantages:
1. Co-ordination between foreman is difficult
2. It is difficult to fix responsible foreman if something goes wrong
3. Workers always remain confused about the authority and activity of each foreman
4. All round executives can’t be developed
DELEGATION AND DECENTRALIZATION
In an organization, it is not possible for one to solely perform all the tasks and take
all the decisions. Due to this, delegation and decentralization of authority came into
existence.
Delegation means the passing of authority by one person who is at a superior

position to someone else who is subordinate to him. It is the downward assignment of
authority, whereby the manager allocates work among subordinates.
Decentralization refers to the dispersal of powers by the top level management to

the other level management. It is the systematic transfer of powers and responsibility,
throughout the corporate ladder. It elucidates how the power to take decisions is
distributed in the organizational hierarchy.
These two terms are often used interchangeably, but they are not alike. So, here we have
compiled a detailed difference between delegation and decentralization of authority.
Delegation
The assignment of authority or decision-making power or duty of a person who is
at a higher level to an individual who is below his level is known as Delegation. It is a
requirement of the all the organization, for its growth and development.
A delegation of authority refers that the senior is handing over the decision-making
powers to his junior. Although, the senior cannot pass on an authority which he does not
possess. With the help of delegation, the workload can be divided to different individuals
as well as the responsibility is also shared among them. The person who delegates the
authority is known as Delegator while the person who is delegated the authority is known
as Delegate.
HTTPS://BHAGATH404.WEEBLY.COM/ ADITYA POLYTECHNIC COLLEGES 5

Decentralization
The transfer of authorities, functions, rights, duties, powers and accountability of
the top level management to the middle or low-level management is known as
Decentralization.
It is nothing but the delegation of authority, in the entire organization or it can be

said that decentralization is an improvement over delegation. When there is
decentralization, the considerable authority, responsibility and accountability are vested
to the lower levels of the organizational hierarchy.
Many organizations take decisions regarding the diffusion of authority from a higher
level to other levels of management like departments, divisions, units, centers, etc.
DIFFERENCE BETWEEN DELEGATION AND DECENTRALIZATION
S.No Delegation Decentralization

Decentralization is the final outcome
Delegation means handing over an
achieved, when the delegation of
1 authority from one person of high
authority is performed systematically
level to the person of low level.
and repeatedly to the lowest level.
Superiors are accountable for the acts Department heads are accountable for
2
done by subordinates. the acts of the concerned department.
It is an optional philosophy which
For all organization delegation of
3 may or may not be adopted by the
authority is very necessary.
organization.
It is a systematic act which takes place
The authority is granted by one
4 at all levels and at all functions in a
individual to another.
concern.
The overall control vests with top
The ultimate control is the hands of management and delegates’ authority
5
superior. for day to day control to
departmental heads.
Authority with responsibility is
6 Responsibility cannot be delegated
delegated to subordinates
7 Very little freedom to the subordinates Considerable freedom

MOTIVATION
“A conscious or unconscious driving force to make you feel more active and wants to
start doing action towards the achievement of a desired goal.”
Types of motivation:
There are two types of motivation
1. Positive Motivation
2. Negative Motivation
1. Positive Motivation
 Positive motivation means encouraging the sub-ordinates with some financial or
non-financial facilities. So that he/she may do good or more work with less
supervision
 To give more wages or incentives is financial motivation
 appraisal or encouragement of the worker’s work, promotions are non-financial
motivation
2. Negative Motivation
 It is based on punishment or fines for less work or for not doing work, the worker
must be punished or fined
 The punishment also may be financial or non-financial, a cut made in the wages
is a financial punishment and to reduce the facilities of leaves etc. are non-
financial punishments
THEORIES OF MOTIVATION
1. Maslow’s need Hierarchy
2. Mc Gregore Theories X&Y
3. Herzberg’s Motivation – Hygienes Theory
Maslow’s Need Hierarchy Theory
Self-actualization
Secondary Needs Esteem
Social
Safety
Primary Needs
Psychological Needs

A.H.Maslow a famous scientist has given an order of human needs while

developing his theory of motivation it is in the shape of a pyramid with the largest most
fundamental needs at the bottom and the need for self-actualization at the top.
He said that a person satisfies his primary needs, he tries to fulfill his secondary
needs.
Psychological Needs : Food, Clothing, shelter etc.
Safety Needs : Permanent employment, pension.
Social Needs : Span of control, authority
Esteem Needs : Recognition, satisfaction.
Self-Actualization : Control over environmental factors both physical & mental
LEADERSHIP
Leadership is the process of influencing the activities on an individual or a group
for goal achievement in a given situation
QUALITIES OF A GOOD LEADER
1. Decision making 8. Emotional stability
2. Executive ability 9. Mediating tackles
3. Planning skills 10.Communication skills
4. Expert knowledge 11. Forcefulness
5. External group representation 12.Self-confidence and self-control
6. Controller of internal relationships 13.Knowledge of labour problems.
7. Dynamic
Types of leadership
1. Autocratic or dictatorial types of leader
2. Democratic or participative type of leader
3. Laissez faire or free rein type of leader
Autocratic or dictatorial types of leader

 In this type of leadership the leader holds absolute power within the group.
 He determines objectives, policies and procedures. The sub ordinates are wholly
depends upon the leader
 This leader assumes that people are generally lazy, will avoid work and
responsibility.

 Hence the leader has to use fear, treat the and authority to make his sub ordinates
work properly
Advantages:
1. By using the arbitrary powers the leader gets things done through his subordinates
2. The lazy people are forced to give required work
3. When people are lazy, trying to avoid work and shirking responsibilities this type
of leader is effective.
Disadvantages:
1. Because of his fear the subordinates will not have the satisfaction
2. There will not be good morale among workers
3. Over use of authority may results in strike and generous
Democratic or participative type of leader
 This type of leadership the leader tries to lead mainly through the pressure on sub
ordinates rather than through the fear.
 He encourage the participation in decision making.
 He guide the sub ordinates by force
 He appreciates the good work from his sub ordinates
Advantages:
1. Encouragement of sub ordinates by the leader and satisfaction and good morale
among them
2. Absence of leader does not affect the work
3. Since the leader sets an example, the sub ordinates are following without any
difficulty
Disadvantages:
 Sometimes leader fails in achieving the organizational objectives because of the
people who are lazy and who avoid the work and who will shirk responsibility.
Laissez faire or free rein type of leader

 This type of leader ship leader in name only. He gives complete freedom for the
group to decide and perform activities.
 They allow to do as they please, the leader neither appreciates good work not
punishes people for their bad work

Disadvantages:
 This type of leadership will result in laziness and indiscipline among the sub
ordinates.
OWNERSHIPS
To start a business enterprise the most important thing required is capital. If the
capital is provided by a single individual it is known as Individual Ownership or Single
Ownership. If the capital is supplied by the two or more persons is called Partnership
Organization. If the capital is provided by many persons in the form of shares to an
institute with legal entry is called Joint Stock Company.
1. Single ownership
2. Partnership
3. Joint Stock Companies
a. Pvt. Ltd Joint Stock Company
b. Public Ltd. Joint Stock Company
4. Co-operative organization
5. Public sector organization
1. SINGLE OWNERSHIP
A business is owned by one man is called single ownership. The owner who run
the solo ownership is called Solo Trade.
Being one owner he only purchases the required material and equipment and selects
the manpower of his own choice and he face the problems in the organization.
Advantages:
1. Very easy to start the organization
2. It requires a little capital
3. Owner is free to make all decisions
4. The owner only enjoys all the profits and losses
5. Owner can keep secrets regarding business
Disadvantages:
1. Undivided risk
2. Single ownership is liable for all business transactions
3. Being single owner skills and ability and capital is limited
4. Single ownership firm has limited life. the firm may exist with the death of the
owner

5. All losses should be bared the owner only

2. PARTNERSHIP
“Partnership is an association of two or more persons to carry on as co-owners of
a business for profit”. A single owner may not be in position to do all the duties and
responsibilities for the growth of business, the individual owner may wish to associate
with more persons who have either capital to invest or possess special skills and
knowledge to make the existing business still more profitable.
TYPES OF PARTNERSHIP:
a) General partner
b) Active partner
c) Limited partner
d) Sleeping partner
e) Nominal partner
f) Minor partner
a) General Partner:
1. A general partnership involves two or more owners carrying out a business purpose.
General partners share equal rights and responsibilities in connection with
management of the business.
2. Each individual partner assumes full responsibility for all of the business debts and
obligations.
b) Active Partner (or) Managing Partner
1. He takes active part in the business and management affairs.
2. In addition of his share of profits he is paid some salary also for his activities in the
business
c) Limited Partner
He contributes his share of capital and his liabilities is limited of the business
d) Sleeping Partner (or) Dormant Partner

He does not take part in the business. He simply invest the money, share the profits
and contribute losses of the business
e) Nominal Partner
He doesn’t contribute any money and doesn’t take part in the business. They use
their reputed name as partner for the development of business.

f) Minor Partner
Whose age is less than maturity age i.e., less than 18 years he is called Minor. They
cannot enter directly into the partnership agreement. However they are admitted to the
benefits of partnership with the consent of other partner
Advantages of partnership
1. Large capital is available for the firm
2. Partners have full control of the business and possess full rights to all profits
3. Borrowing money from the banks is easy
4. There are more than one person to share the losses
5. There is a definite legal status of the firm
Disadvantages of partnership
1. Each partners has the unlimited liability for debts of the firm
2. Danger of disagreement and doubts among the partners
3. Partnership may dissolve if a partner dies
4. Secrets cannot be maintained
5. Decision taking will be delayed
6. All partners will suffer because of the any wrong steps taken by one partner
DIFFERENCE BETWEEN SOLE PROPRIETORSHIP AND PARTNERSHIP
S.No Sole Proprietorship Partnership

1 Only one person is owner Group of partners
2 Unlimited liability Limited
Capital is limited and it is suitable for Comparatively high and even suitable
3
small enterprise for medium enterprise
4 Quick decision making Delay decision
Proprietor is solely responsible for the Shared profits and losses in agreed
5
profits and losses. ratio
Business secrets are not open to any Business secrets are open to each and
6
person every partner

3. JOINT STOCK COMPANY

A joint stock company is an association of individuals called Shareholders. Who joined
together for the profit and agree to supply capital divided into shares that are transferable
for carrying on a specific business. Due to Various problems in sole partnership and
partnership organization switches to formation of joint stock companies.
Salient Features of a Joint Stock Company are as follows:
 Transferability of Share
 Separate Legal Status
 Publication of accounts
 Wide distribution of risk
 Limited liability
 Raising huge capital
 Experience management
 Compulsory incorporation
There are two types of joint stock companies
1) Joint stock private limited company
2) Joint stock public limited company
1) Joint Stock Private Limited Company
1. In this 2-10 members for banking and 2-50 members for non-banking.
2. The capital is collected from the private partners some of them may be active
partners while others being sleeping partners
3. Private limited companies are restricted the right to transfer the shares
4. Partners have limited liability.
5. The company register under the company ordinance.
6. The word Private Limited must be used at the end of the name of company.
Example: XYZ Pvt.Ltd
7. Accounts are to be audited.
8. It must have minimum two directors
9. This type of company is suitable for medium sized company, transportation
services, whole sale traders etc.,
2) Joint Stock Public Limited Company
1. The number of shareholders are not less than 7 members and there is no limit to
maximum numbers of share holders
2. The capital is collected from the public by issuing the shares.

3. It has to notify a prospectus to the public

4. Shares are transferable.
5. Only Limited should be added at the end of the name of the company, Examples:
Reliance industries limited, Wipro Ltd, Infosys Technologies Ltd etc.,
6. It must have at least 3 board of directors.
7. Accounts are to be audited by every year by the registered auditors.
8. This companies are suitable for Major industries Example: Steel Manufacturing,
dams Construction Company. Etc.,
DIFFERENCE BETWEEN PRIVATE LIMITED AND PUBLIC LIMITED

COMPANY
S.No Private Limited Company Public Limited Company
Number of members 2 and maximum Minimum number of members are 7
1 numbers of members are not exceed and no limit for the maximum
50 members
Required minimum 2 board of Required minimum 3 board of
2
directors directors
Deposits are accepted only from
3 Deposits are accepted from public
members and directors
Should Contain “Pvt. Ltd” at the end Should Contain “Limited” at the end
4
of the company name of the company name
Cannot invite public to subscribe for Can invite public to subscribe for
5
shares shares
6 Shares are not transfer Shares are transferable
7 It is not exist in Stock Exchange It is exist in stock exchange
DIFFERENCE BETWEEN PARTNERSHIP AND JOINT STOCK COMPANY

1. FORMATION:-
Partnership: It is formed by a written agreement.
Joint stock Company: It is formed under the company ordinance.
2. MEMBERS:-
Partnership: Minimum 2 and maximum 20 members in the partnership.
Joint stock Company: It has shareholders.
3. LIABILITY:-
Partnership: The liability of each partner is unlimited if it is not specified in the
agreement.
Joint stock Company: Shareholders liability is limited only to the value of the shares.

4. FINANCING:-
Partnership: Generally partners contribute the fund.
Joint stock Company: It issues ordinary paid up shares to collect the capital. It can also
borrow from banks.
5. TAX:-
Partnership: Each partner of the registered firm will pay tax individually.
Joint stock Company: The Company is subject to double taxation.
6. MANAGEMENT:-
Partnership: In this case managerial functions are shared by partners according their
mutual agreement.
Joint stock Company: Shareholders elect the board of directors and board appoints the
experts for each department.
7. CONTROL:-
Partnership: All the decisions are made with the consultation of all the members.
Joint stock Company: The board of directors controls the affairs of the business.
8. DISSOLUTION:-
Partnership: It can be dissolved with the mutual consent of the partners. It may be
dissolved if any partner dies retires or become insolvent.
Joint stock company: (1). It can be dissolved by court. (2). with the approval of
majority shareholders. (3). If corporate charter expires. (4).It can be dissolved by the
state due to misuse of powers
Co-operative Societies
Voluntary organization of persons of same working class united together with

collectively own funds in order to get the commodities of daily use.
The main objective co-operative societies is to eliminate profits and provide goods
and services to the members of co-operatives at lesser cost.
Advantages:
1. Easy to formation
2. It is a service motive
3. It benefits weaker sections, as daily necessities of life can be made available at low cost.
4. It has a limited liability

Disadvantages:
1. Conflicts may rise among the members on the issue of sharing responsibility and
authorities
2. Members who are in higher position may try to take personal advantages
3. Secrecy can’t be maintained
4. Capital is limited and so it is limited to small business only
Types of Co-operatives
1. Consumers co-operatives
2. Producers co-operatives
3. Co-operative farming
4. Co-operative housing
5. Co-operative credit society
Employees Participation in Management

Employee participation refers to the process of involving employees or employee
representatives at all levels of decision making. There are three groups of managerial
decisions
1. Social decision
2. Personal decision
3. Economical decision
Social decision related to working hours, welfare measurements, health, individual
employee’s safety etc.,
Personal decision it is related to recruitment and selection, promotional and transfers,
working distribution etc.,
Economical decision it refers to financial aspects the method of manufacturing,
automation, shut down, layoff etc.,
Necessity of Employee Participation
1. To develop internal motivation in the employees.
2. To archive industrial peace and harmony
3. To satisfy employees by making them feel that they have their voice in the
management
4. To give employees a better understanding of their role in the working of industry
5. To minimize industrial disputes
6. To make managing the subordinates easy

Cooperative social responsibility

The main aim of the cooperative social responsibility (CSR) is to increase long
term profits through positive public relations, higher ethical standards to reduce business
and legal risk.
1. Minimize the wastage of natural resources
2. Helping the society by means of preserving the environment
3. Helping the needful
4. Conducting educational camp
5. Recycling of products

IMPORTANT QUESTIONS
Short Answer Question:
1. Define the term organization
2. Factors to be consider for selecting the organization
3. List the different types of ownerships of organization
4. Different types of partners
5. Important requirements of organization
6. Features of organization
7. Define Delegation
8. Define decentralization
9. Principles of organization
10.Organization behavior
11. Difference between positive and negative motivation
12.Define leadership and qualities of a good leader
13. Define the term motivation and list out the different theories of motivation.
Essay Answer Questions:
1. Explain different types of organizations with advantages and disadvantages
2. Explain Maslow’s need Hierarchy theory
3. Explain following organizations With advantages and disadvantages
a. Line organization
b. Line and staff organization
c. Functional organization or Staff Organization
4. Explain following types of leaderships with advantages and disadvantages
a. Autocratic or dictatorial types of leader
b. Democratic or participative type of leader
c. Laissez faire or free rein type of leader
5. Explain the co-operative organization with advantages and disadvantages
6. Define Partnership and explain types of partnerships with advantages and
disadvantages
7. Difference between Single ownership and Partnership
8. Difference between Public Limited and Private Limited Companies
9. Difference between line organization and staff organization
10.Difference between partnership and joint stock companies
11. Difference between Delegation and decentralization

Imst 2

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Imst 2

Uploaded by

Copyright:

Available Formats

Industrial Management & Smart Technologies, EC-501

ORGANISATION STRUCTURE AND

ORGANIZATION STRUCTURE & BEHAVIOUR

Factors to be consider for selecting the organization:

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 1

Marketing Manager Production Manager Finance Manager

 It is simplest form of organization Structure

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 2

Line and Staff Organization:

R & D Staff General Manager Public Relations

Line and staff management has two separate Characteristics.

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 3

DELEGATION AND DECENTRALIZATION

Delegation means the passing of authority by one person who is at a superior

Decentralization refers to the dispersal of powers by the top level management to

HTTPS://BHAGATH404.WEEBLY.COM/ ADITYA POLYTECHNIC COLLEGES 5

It is nothing but the delegation of authority, in the entire organization or it can be

DIFFERENCE BETWEEN DELEGATION AND DECENTRALIZATION

S.No Delegation Decentralization

HTTPS://BHAGATH404.WEEBLY.COM/ ADITYA POLYTECHNIC COLLEGES 6

Maslow’s Need Hierarchy Theory

HTTPS://BHAGATH404.WEEBLY.COM/ ADITYA POLYTECHNIC COLLEGES 7

A.H.Maslow a famous scientist has given an order of human needs while

Autocratic or dictatorial types of leader

HTTPS://BHAGATH404.WEEBLY.COM/ ADITYA POLYTECHNIC COLLEGES 8

Laissez faire or free rein type of leader

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 9

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 10

5. All losses should be bared the owner only

d) Sleeping Partner (or) Dormant Partner

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 11

DIFFERENCE BETWEEN SOLE PROPRIETORSHIP AND PARTNERSHIP

S.No Sole Proprietorship Partnership

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 12

3. JOINT STOCK COMPANY

1) Joint Stock Private Limited Company

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 13

3. It has to notify a prospectus to the public

DIFFERENCE BETWEEN PRIVATE LIMITED AND PUBLIC LIMITED

DIFFERENCE BETWEEN PARTNERSHIP AND JOINT STOCK COMPANY

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 14

Voluntary organization of persons of same working class united together with

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 15

Employees Participation in Management

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 16

Cooperative social responsibility

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 17

https://bhagath404.weebly.com/ ADITYA POLYTECHNIC COLLEGES 18

You might also like