Barani Institute of Information Technology

Fundamentals of Management

ORGANIZING : THE FORMAL ORGANIZATION

Organizing:

This process involves determining what work is needed, assigning those tasks, and arranging them in a
decision making framework (an organizing structure).

Organizing is the management function that establishes relationships between activity and authority. It
has four distinct activities.

1. It determines what work activities have to be done to accomplish organizational objectives.

2. It classifies the type of work needed and groups the work into manageable work units.
3. It assigns the work to individuals and delegates the appropriate authority.
4. It designs a hierarchy of decision making relationship.

Organization:

A whole consisting of unified parts acting in a harmony to execute tasks to achieve the goals both
effectively and efficiently.

Relationship b/w Planning and Organizing:

Organizing begins with and is governed by plans; and plans state where the organization is going and
how it will get there. An organization structure is a tool of management to achieve plans.

Organizing Process:-

 Importance of organizing process:-

The organizing process will make it possible to attain the purpose of the organization.

1. A classified working environment: Everyone should know what to do. The type and limits of
authority will have been determined.
2. A coordinated environment: The interrelationship of the various work units will have been
developed.
 Unity of direction: This principal calls for the establishment of one authority figure for
each designated task of the organization.
3. A formal decision making structure: The formal superior sub ordinate relationship have been
developed. This allows the orderly progression up through the hierarchy for decision making and
decision making communication.

Organizing Process:-

Step1: Consider plans and goals:-

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Fundamentals of Management

Plans dictate the purposes and activities that organization have or will have. For example, the business
will continue to seek a profit, and it will continue to employ people and other resources. But in time and
with new plans, the ways in which basic activites are carried out will change. Organizing will create the
new structure and relationships and modify the existing ones.

Step2: Determine the work activities necessary to accomplish objectives:

Once manger know what tasks must be done, they are ready to classify these activities into manageable
work units.

Step3: Classify and group activities:

1. Examine each activity identified to determine its general nature.

2. Group the activities into these related areas.

3. Establish the basic department design for the organization structure.

 Division of Labour: is the breaking down of the work into its basic components.

 Departmentation: the creation of groups, subdivisions or departments that will execute

and oversee the various tasks that management considers essential.

Step4: Assign work and delegate the appropriate authority:

The activities now must be assigned to individuals who are simultaneously given the appropriate
authority to accomplish the tasks. The nature, purpose, tasks and expectations dedicate the amount and
type of authority. Authority does not comes first; assignment of activities establishes the basis for
authority.

Step5: Design a hierarchy of relationships:

This step requires both the determination of vertical and horizontal relationships of the org as a whole.
Level of management are established from bottom to top in the organization. These levels create the
chain of command- the organizing principle concerned with the no of management positions in the
organization and their unbroken connection to its top position.

The horizontal structure has 2 imprtant effects

1. It defines the working relationship b/w the operating departments

2. It makes the final decision on the span of control(the number of subordinates under the direction)
of each manager.

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Fundamentals of Management

Span of control: The principle of organization that is concerned with the no of subordinate each
manger should have to direct.

Approaches to Organizing:-

The functional Approach:

It group activities under the major headings that nearly every business has in common – finance,
production, marketing and personnel. These are the functions of the business and the entire
organization would be divided into these major areas.

Following are the difficulties in this approach.

1. The narrowness of the view point can lead to tne communication difficulties and lack of
cooperation between the functional areas.

2. It does not develop generalists in management areas.

Chart of the functional approach:

President

Marketing Finance Personnel Production

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Geographic Approach:

Geographic patterns work best when different laws, currencies, languages and traditions exists and have
a direct impact on the ways in which business activities must be connected.

A limitation for management to consider in adopting that format is cost- the cost of personnel and
facilities. When a company makes a decision to expand geographically, it automatically incurs cost
through duplication of personnel positions and additional business sites.

President

Vice pres. Of Vice

Vice pres. Vice
north region pres. Of
Of south pres. Of
west
region east
region
region

Sales Mgr. Sales Mgr. Sales Mgr. Sales Mgr.

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The product line approach:

If each product requires a unique strategy or production process or distribution system or capital
sources. The major disadvantage is similar to that of the geographical structure cost through duplication
of business functions within each product line. Each needs marketing, finance, personnel and production
operations.

President

Manger Buick Manger Manger

Manger
division Oldsmobile Chevrolet
Cadillac
Division division
division

Engineering Manufacturing Personnel Distributio

n

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The customer approach:

The customers are distinct enough in their demands, preferences, and needs to justify it.

President

Vice president Vice

Consumer president
Vice president
products Industrial
Government
products
products

The matrix approach:

A matrix organization pattern is a design blending the functional organization structure wuth a project
team structure. The matrix approach utilizes the technical resources of an org. by efficiently allocating
the expertise where and when it is needed. These human skills are stressed in the constant interaction of
the team members and because of the need to work with the functional departments.

Drawbacks: This can create a strain on project members, the project manager, and the functional
departments.

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Authority:

there are different degree of authority on the bases of level of management theu occupy in the
organizational structure. Authority is a tool of manger. It can be described as the right to commit
resources or the legal right to commit orders.

Relationship of authority to power:

1. Legitimate or position power.

2. Power to reward or punish

3. Referent or charismatic power.

4. Expert power

Types of authority:
Line authority: defines the relationship between superior and subordinates. It is a direct supervisory
relationship. Line authority flows in the downward direction.

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Staff authority: it is advisory in nature. Advisory authority does not provide any basis for direct control
over the subordinates or activities of the department.

Functional authority:

Authority our specific activities which are undertaken by personnel in other departments.

Types of Departments:

Line department: headed by the line manager , are the departments established to meet the major
objectives of the organization.

Staff department: these assist all the departments in meeting the objectives of the organization, through
advice or technical assistance.

Unity of command:

This principle means that each person within the org. ahould take orders from and report only to one
person.

Delegation:

Delegation is a concept describing the passing of formal authority to another person.

1. Assignment of tasks

2. Delegation of authority

3. Acceptance of responsibilities

4. Creation of accountability(means giving answer to someone for your action).

Centralization and Decentralization:

Decentralized decision making generally means that the span of control should be wider for each
manger.

Centralized decision making should result in a narrower span of control and more levels of management.