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An organization structure defines how jobs and tasks are formally divided, grouped and co-ordinate. Six key elements are: Work specialization and specification. Departmentalization Chain of control Span of control Centralization and decentralization Formalization Work specialization: Example Henry Fords automobile assembly line. 1) Work can be performed more efficiently if persons are allowed to specialize. This is also known as division of labour. 2) Rather than the entire job, by one individual it is broken down into a number of steps, with each step being computed by a separate individual. Individuals specialize in doing a part of an activity. 3) Management saw this as a means of making the most efficient use of employee skills .They felt that if all workers had to do all activities. They would have had to be trained in all skills demanded by the job. The result is that except hen doing the most skilled or highly complex task, employees would be working beyond their skill level. They would have to be paid more as wages are determined by the highest level of skill. 4) Skill increases with repetition. Less time is spent in changing tasks, in putting away tools and equipments of one job and getting ready for another. Its easier and less costly to train workers to do highly repetitive work It increases productivity.

5. By the 1960s :- studies revealed that people suffered from boredom , fatigue, stress, low productivity , poor quality , increased absenteeism &high turnover. II Departmentalization:1. Once jobs have been divided as per speciation they are to be grouped together so that common tasks can be co-ordinated. This is called departmentalization .it is process of . 2. The major benefit is that it provides for efficiency by putting specialists together dividing the work of an organization into various departments 3. Jobs can be departmentalsed by the type of product .each product is departmentalized proctor & gambles. Cadburys. this leads to increased accountability for product performance. Since all activity are under the supervision of one manager. 4. It may be departmentalized by the service offered payroll - retirement, expense, taxes, etc. 5. Departmentalization can be done on the basis of geography or territory. Coal fields eastern/western, sales department. 6. Process departmentalization: - this is based on the process of production 7. Type of customers: - this helps to solve problem of customers because generally they tend to have similar type of problems & needs.

Chain of command : - authority & unity of command is spelt out. Choosing the basis for departmentalization : Each basis has its own advantages and limitation one basis may not beneficial for another.

It has,however been seen that a composite of several basis

Factors :1.Specialisation:- The organization is merely division of work .Fayol said that the more an organisation structure reflect the economic division of work in an enterprice through grouping of activitiesis a departmental form ,the more effective and efficient it is in attaining organization goals.This is called specialization.but if the work is over specialized ,there is a loss of motivation as well as accomplishment. 2.Co.ordination:- Every department has the same organization goal-there may be a difference in departments,the nature of jobs and skills required.Therefore,there must be coordination and cooperation.In order to make the best use,sometimes different jobs and skills are put under one manager for better coordination. 3.Control:- Control means to ensure that work is going on as per plan,and to locate the point of direction where there is adiscrepancy.Departmental bifurcation helps not only in physical control,but also control over production and ensure accountability. 4.Economy:- Departmentalisation costs more money.New departments require additional managerial personnel,equipments,manpower etc.After there is interpersonal departmental interaction which require extra time.This may put heavy burden on the organization. 5.Recognition of local condition:- Manpower and departments should be formed as per availability of member and skill of local people available.So that people get full-time work.

6. Adequate Attention: - There should be adequate attention for each department so that work goes on smoothly and no duplication of work .Future organization requirement should also be kept under consideration.

7. Human consideration: - All aspects need not be considered mechanically human aspects should also be paid to aspects like culture, tradition, value system, attitudes, etc. [III] Chain of command /span of control The span of control also decides the number of individuals to be employed. It has to be decided how many persons or departments can be placed under the span of control of one manager. A superior is responsible for all activities of persons working under him. The span of control determines the shape or configuration of the organization. It also determines the complexity of individuals managers jobs. Factors The number of relationships that can be managed by a superior. (a) Capacity of manager(physical & psychological fatigue)attitude,communication,decision-making.
(b) Capacity

of subordinates: - Efficient subordinates do not need much

supervision. (c) Nature of work 1. Similar work 2. Dissimilar work 3. Rate of change 4. Type of production-mass scale 5. Low rate of change over 6. Better technology

4. Degree of Decentralization:-

Higher the degree of decentralization, wider the span of management. Work delegated competently, leaves the manager with more time for supervision. But if there is not enough authority or there is ambiguity, frequent consultations are required. 5. Planning:If subordinates know their jobs & there is taken care well at planning stage they need to consult the supervisor less frequently. 6. Use of staff assistance:This helps to reduce the managers load and increases the span of management. 7. Communication Technique:If communication is moder and fast, much managerial time is saved. 8. Supervision from others:Optimum span is 5-10 Higher level is 8-10 Lower level depends on the technology

Centralization & Decentralization:1. Delegation is the authorization to act in a certain way. 2. Authority is delegated to subordinates, but still retains authority. 3. Authority delegated can be enhanced, reduced or withdrawn. 4. Manager cannot delegate authority which he himself does not possess or his entire authority. 5. Can be specific/general- written/unwritten.

6. It is an art. There are certain rules. Principles of Delegation:1. Functional definition- according to activities. 2. Delegation of result expected-authority should be adequate. 3. Party of authority & responsibility. 4. Unity of command- sub increases single superior. 5. Absoluteness of responsibility- responsibility cannot be delegated, only authority to do some work.

Factors of Delegators:1. Love for authority they want to influence others. 2. Democratic style/authoritarian. 3. Fear of being exposed because others can do better. 4. Want to continue making decisions for posts held earlier does not let go. 5. Unwilling to accept risks of blunders made by others so does it himself. 6. Managers feel subordinates are not capable. 7. Perception of superior & subordinates differ regarding the need of authority of the others. Factors of Delegants:1. Subordinates decide the degree of delegation some delegates have the capacity to assume more responsibility. 2. Competent subordinates can absorb the work and responsibility of their own as well as those of their weaker colleagues.

3. If the superior is weak, overburdened or absent, a strong subordinate taken over. Making delegation effective:1. Authority & responsibility of managers should be clearly defined: what is expected of him and limits of his authority. Prevent overlapping of authority and gaps. 2. Managers fear to delegate. This can be reduced by giving him some status symbol and making him feel an important part of the team. 3. Work climate free from fear and frustration should be established 4. Authority should not be delegated till the goals and plans for the organization are finished

Proper control techniques should be used to ensure that authority is being used properly

6. The delegants should be selected in the light of the job to be delegated persons should be trained 7. Free and open lines of communication.




Extent to which the authority is centralized or decentralized :Geographical decentralization = dispersion of the organization Authority = dispersion of authority Function = dispersion of functions

Centralisation is the systematic reservation of authority at central points with in an organization. Decentralization applies to the systematic delegation of authority in an organization wide context ----- Louis M. Allen

These terms are not absolute terms

Difference :-

Decentralization denotes dispersal of physical facilities place wise, functionwise. The authority may or may not be decentralized.

factors determining the degree of decentralization :-

1. Size of the organization 2. History of the organization 3. Management philosophy 4. Availability of managers 5. Pattern of planning 6. Control technique 7. Decentralized activities 8. Rate of change in organization 9. Environmental influence

Reasons for centralization :-

1. Provides opportunity for personal leadership 2. Integration of efforts 3. Quick decision making 4. Communication is easier 5. Reduces wastages in duplication 6. Uniformity of action

Reasons for decentralization :1. Reduces burden on top management 2. Facilitates growth and expansion 3. Motivates managers

Encourages horizontal growth and reduces number of levels

5. Pinpoints achievements and failures

EFFECTIVE DECENTRALIZATION 1. Centralized top policy and control:To be effective policy matter must be centralized. This enours unity as a whole. It should be an organization of centralized control with decentralized responsibility. This helps H.Q. to know what the units are doing.



Many a times to managers are happy to find so many people working under him and obeying his orders. Yet at the same time unit managers may feel that they are free to do whatever they like. This will create confusion. There is a need for developing a proper climate.unit manager must be given a free hand in operational matters and held responsible for final results.


DEVELOPMENT OF MANAGERS:Success of decentralization depends on the skill and quality of manager who hold various positions. This way manager are trained to assume responsibility.


Competition among unit:This should had to healthy competition.

DESIGNING ORGNISATION STRUCTURES Structure is the pattern in which various parts of components are interconnected -describes the various activeties. -describe the interpersonal relationship.

Structure is the arrangements of its subsystems and component at a given moment of time this includes the structure as well as process.

Design involves

-work division groups -the co-ordination required

Need:1. Facilitating management:- in both management & operation different departments are created. 2. Encouraging growth:- it is the framework with their which the organization this requires a flexible structure. 3. Optimal use of technical improvement it involves cost and producers results. 4. Encouraging human use of human beings:Provides psychological satisfactions to employees. 5. Stimulating creativity:- a sound organization well designed stimulates creativity.

Feature of good organization structure There is no best way. That design is good which meets the requirements, 1. Simplicity 2. Flexibility 3. Clear Line of Authority 4. Application of ultimate responsibility 5. Proper delegation of authority 6. Minimum possible managerial levels boll needs 7. Unity of direction and command

One plan , one man Work should be specifically allotted One person should receiver order from one .. 8. Proper Emphasis on staff

Mechanization for Designing structure:1.What should be the different units of the orgn . 2. What components should be joined and what should be kept apart.

3. What is the appropriate placement & relationship of different unit ? Different Approaches of Design:1.

Process Approach:- identifying the sequence of events and there deciding the various units of orgn Emphasizes on; All necessary activities are performed No unnecessary duplication of work All necessary activities are performed in ..manner Advantages:1. It brings about Knowledge of dynamics of operation and requirement of the .. 2. This way proper systems like communication denaturalization can be adopted. 3. Helps in improver cooed of function.

Limitations:Work well in comparatively smaller organization which consummates on fewer number of related process 2. Result Approach:Steps:1) Defining business on the basic of market opportunities 2) Establishing objectives to be achieved 3) Determining the requirement for success and function skills to meet them. 4) Determining the degree of authority and centralization.. 3) Decision Approach:Question are asked and answers invited: 1) What decision are needed for obtaining organization objectives ? 2) What is the nature of such decision ? 3) What is the level which such decision are to .taken ? 4) What are the activities involved or affected by the decision? The answers would determined this degree of authority in a position, it interaction with other positions and the placement of the position in the organization. There three approaches are integrated aspects of design. Process in Design:1) Identification of activities 2) Grouping of activities 3) Delegation in authority

FORMAL & INFORMAL ORGANIZATION I) FORMAL ORGANIZATION: Called Structure It is a deliberately designed organization built on 4 pillars: - division of labor - scalar & functional process - structure - span of control CHRACTERISTICS: 1. Designed by top management to attain organization goal. 2. Structure is based on principles of division of labor. 3. Stress in given for the performance of a job in totality. 4. Authority & Responsibility has to be adhere to 5. Procedures and guidelines fix the co-ordination

II) INFORMAL ORGANIZATION: They are natural grouping on the basis of some similarity. CHARACTERSTICS: 1. Natural outcome at the workplace. Not designed or planned. 2. Created on the basis of similarly amongst members 3. Membership is informal. A person may become members if more than on organization at a time. 4. Behavior is co-ordinate and controlled by group norms.

DIFFERENCE: 1. Origin 2. Purpose 3. Structure 4. Nature 5. Focus 6. Leadership 7. Source of power 8. Guidelines for Behavior 9. Source of control 10. Abolition

FORMAL Planned/ deliberate well set goals well structured official positions superior delegated rules &procedures

INFORMAL spontaneous social interaction unstructured unofficial persons any one given by group group norms

reward/punishment any time

sanctions difficult.

RESONS FOR INFORMAL ORGANISATION- There are inevitable. True picture of organization can be had only when both formed be informal groups are considered. Inadequacy of formal organization structure to needs of both members and organization. 1. Desire to socialize with others. 2. Psychological fatigue of routine tasks. 3. Hierarchical control and communication.

4. Various functions & informal organization to control to contribute to member interest.

Protecting their interests. Working as regulatory device. Protecting of cultural values. Exploitation and development of leadership potential. Filling gaps in managerial attributes. WORKING OF INFORMAL ORGANISATION 1. Authority structure no formal structure 2. Leadership through persuasion 3. Communication- develops its own media and channels mostly oralspeedier- grapevine DIFFICULTIES DUE TO INFORMAL ORGANISATION Informal organization produces both functional and disfunctional effects especially if it is not handle properly. 1. Resistance to change Every group promotes certain value and norms soon these become law to those groups. Any change is ehemeretly resisted. Modern organization requires many changes. 2. Generation of ramous - They usually are the basiss of release of tension. It may go against directives. 3. Role conflict Official and satisfaction of others. 4. Social conflict - Jokes, gossips, idle conversation at the cost organisationl time is costly. Managing Informal Organisation


Structural Approach:--Deals with the design of formal organization in such a way as to make room or foster informal organization in such a way that they are sympathetic to the formal organization. (a) Blocks or work centres can be created that allow the workers to actually see their contribution & feel a part of the organization. (b)Pepole with all skills necessary to complete a job should be placed together- It becomes independent & self-contained. (c) Units should be supplied with ful facts.


Behavioural Approach:--It can adopt a flexible & accommodating approach towards informal organization. (a) Managers must make the people feel that they are not against the informal groups be supportive. (b) When changes are invisaged, influence of informal organization should be taken into account. (c) No repressive action to be taken.

Need for formal organization:-(1) Facilitating

Management Action: There has be some sort of formal efficiency: Helps to bring about efficiency in work.

(2) Encouraging

(3) Communication:

PRINCIPLES OF ORGANIZATION DESIGN 1. The organization structure should direct management attention to the companies sources of competitive advantage.

The company should ask a. Which market should it compete in. b. How will it gain advantage over its competitor? The structure should distribute responsibilities in such a way that management attention is focused on targeted customers. If no particular unit has the responsibility of the target market, the organization structure should be revamped 2. The organization structure should enable the corporate parent to add value to the organization. The corporate head quarters have to do such functions as maintaining govt. relation, research, coordination between units. Each assignment must have a manager with specific assignments. 3. The structure reflects the strength, weakness and motivation of employees. The design should we such as to check whether organization structure provides appropriate responsibilities and reporting relationship for its manager requirement of highly skill staff should be identified changes bring about dissatisfaction. 4. The company considers all the constraint that may impede the implementation of the organization structure. While designing, legal aspect have to be taken into consideration the interest of the stock holders must also be taken care of. 5. The organization structure protects business units that need distinct cultures. In some organization there are departments like research, product development units which require specialist areas they should be insulted from other departments.

6. The organization structure provides coordinations solutions for unit to unit link.

It is important for different unit to coordinate with each other .this kind of coordination helps in total collaboration between units. 7. The organization structure does not have many parents level and units. Front line units should be allowed to take decision and these decisions should be put up to upper level for approval when those decision can add value unnecessary level should be removed. 8. Organization structure supports effective control Accountability for performance is important for decentralization of work there should be no blurred responsibility and fuzzy measures. 9. The organization structure facilitated development of new strategies and provides the flexibility to adopt to change. A good organization is fit for the present as well as flexible for future. CONTEMP . ORGANISATION TRENDS 1. Classical 2. Neo classical 3. Modern

1. Classical organization theorya. Pruitt on accounting model b. Maximizes neatness & control c. Emphasis on the detection of errors and their correction after they have happened. d. Classical embodiment of extra pair of hand theory. e. These theory considered man to be relatively homogenous and relatively unmodifiable

f. Stability (minimum change within the employees in a goal in the organization.) g. Behavior in centralization and centralization of authority and control.

There are two distract streams in the classical organization theories 1. Scientific management stream 2. Administrative

Scientific management: - tylors frank and Lillian gilbraith , henrey Gantt and Harrington Emersson Effective use of human beings in industrious have been investigated, especially in routine tasks. There jobs are usually performed on the work floor operative levels. 1. They are largely repetitive and cyclic in nature. 2. The task do not require complex problem-solving problem Tylor based on his studies in Midvale and Bethlehem perceived several new function of manager. a. Explain routine jobs with scientific determinants of each method. b. Scientific training of workmen. c. Co-operations of management and labor. Tylor have given various principles of scientific management as fallow Separation of planning from doing. Supervision of different areas by the some supervisors or job analysis used in time motion and fatigue. Standardization of task, period of work, working condition.

Scientific selection and training of worker Financial incentives to motivate workers. Critical analysis :1. The application was not broad. It limited itself to shop floss. 2. They emphasis the psychological variables offering human behavior more relevant to mechanization and automation technical aspects of efficiency rather than behavior in an organization Administrative management theory To Max weber , Henry fayol, L Gulick, Oliver Sheldon, J.D. nooney and A.C. Reiley. This theories views the central problem as being one where there must be identification of tasks necessary for achieving the general purpose of the organization and the grouping of people into department. Max weber has emphasized that autocratic organization is the most rational means of caring out total control over human being there most specialization hierarchy, authocity, impersonal relation in a bureaucracy Fayol classic theory:The organization functioning from managements point to view and found the activities of an organization to the divided into 6 group1. Technical 2. Financial 3. Accounting 4. Commercial 5. Security 6. Managerial

a. Planning b. Controlling c. Organizing d. Commanding e. controling

PRINCIPLES OF CLASSICAL THEORY:1. Division of work:- benefits of specialisation. 2. Authority and Responsibility. 3. Discipline:- obedience, application, energy, behaviour ,respect shown by employees. 4. Unity of command. 5. Unity of direction. 6. Subordination of individual to general interest. 7. Remuneration of personnel. 8. Centralisation. 9. Scalar Chain:- ranging from highest to lowest.flowing through each position in the line of authority. 10.Order:-There should be a place for every person and thing. 11.Equity:-Combination of justice and kindness. good sense, experience and good nature. 12.Stability of Tenure. 13.Initiative:-Thinking out and executing a plan.

14.Espirit de Corps:-Union is strength. Team work.

SUMMARY 1. Division of work. 2. Departmentalisation. 3. Coordination. 4. Human Behaviour in Organisation.

1. 2. 3.

Close-system Assumptions: no interaction with environment. Static-View of Organisation: rigid and static view. no need for adjust. Unrealistic about Human Behaviour: ignores socio-psychological and motivational aspects. Lack of Empirical Research: based only on personal experience. Lack of Universality: None of the principles are applicable in all circumstances.

4. 5.

Neo-Classical Theory:-

This has developed as a reaction to rationality and efficiency obsession of the classical theory because it disregarded th impact of human beings on an organization.This theory started from the findings of hawthorne Experiments.

Essence:1.Organisations started should be viewed not only as an organization of technical and economic existences, but also as a social organization. 2.It is important to understand the social process of group behaviour.

The main propositions are:1. The organization is a social system.


The social environment of the job affects people and also affects the department. It is not affected by management alone.

3. Both informal as well as formal organizations exist within the organization. 4. Human beings are not totally rational0-behaviour can be predicted in terms of social and psychological factors. 5. Human diverse motivational pattern and tries to fulfill different types of needs. 6. The integration between individuals and the organization is very important.Its importance increases especially when there is a conflict between individuals and organization.

7. Communication is necessary because it not only carries information necessary for the functioning of the organ, it also coveys the feelings and sentiments of the people. 8. Team -work is essention This does not come automatically, but through behavioural approach. Neo Classical thory & organisation design The organization should be designed in such a way that meets the basic postulates. The emphasis is on flat stretch and provision of informal organizations. there should be wide span of control. Essential factors:1. flat structure:- tall structures lead to increased difference between decision makers & implementers, lack of motivation ,also expensive because of too many levels.

. decentralisation:-

3.informal organization:- this help the limitation of the formal system to meet the members need. Especially the psychological needs. Appraisal of neo classical theory:Has given a new dimension to managed in an organization .the major problem are , 1.neo. Classical theory lack unified approach of organization theory this is merely a modification of classical theory. It suffers from the same problem. of the assumption on which the theoryis based are not true. It is not true that -it is always possible to find a solution that satisfies everybody. -there are sharp confuicts and difference among people

3.various structures and designs gives by the neo classical theory are not applicable to allsituations. Consideration on for the people working in an organization is important but it has the limitations .a suitable organization is which takes care of different variables and factor. people may by fast one of the factors. Modern organisation theory:This is a sophisticated and scientific way of explaining a complex organization. It is comparatively systematic and highly constructively .it has the system approach & contingencies approach. system approach:- an integrative system which deals with the organization is its totality .it studies and analysis the mutually dependent variables is the organization. It suggests 3 aspects of organization structure. 1.modern organization model:- this approach recognizes the problems involved in managing large and complex organization .it understands the need for flexibility and adaptability in organization structure. they use different models such as matrix task forces etc. they easily copy with the envero dynamics. 2:- lateral relationships:- emphasis is laid on the lateral approach and relationship among people. This is in contrast to vertical relationship emphasized by classical theory. And horizontal relationship of new- classic theory. Though both are important later relationship achieves co-ordination more effectively by eliminating heirarchial control 3. cybernetics:- means direction of involves communication and control. it is concerned with the flow of information in complex systems. It is applicable is not only mechanistic organization ,but also in social systems it regulates complex systems , it has become a model for thinking in regard to advanced information technology. That is why M.I.S system are adopted in modern organisation ORGANISATIONAL EFFECTIVENESS

This is also called organisation process or grwoth. It is called efficiency, productivity, profiatbility, organisation growth..

AMITAI ETZIONI: Effiectiveness may be defined as the degree to which an organisation realises its goal. JOHN KIMBERLY: Effectiveness of an organisation can be seen in terms survival of the organisation EPHRAM YERKHMAN: An organisation remains effective as long as it uses its resources in an effective as long as it uses its resources in an effeicient manner & contributes to the large system. JOHN P.CAMPBEL: Since an organization can be effective or non effective on a number of differnt facts that may be relatively fifferent from one another, OE has no operational definition.

EFFICIENCY EFFECTIVENESS: CHESTER I .BERNARD says that there are 3 types of situations: 1. An organisation may be efficient but not effective. 2. An organisation may be effective but not the efficient. 3. An organisation may be both effective as well as efficient.

1) Efficiency refers to the internal process. Effectiveness refers to external phenomenon. An organisation may be low cost producing but it is not able to get matching price LAMEBRETTA SCOOTER. 2) It may be inefficient but because of external enviornment it may earn profit & show effectiveness. 3) Both efficient & effectiveness. This is required for long term survival.

MEASUREMENT OF EFFECTIVENESS: REASONS: 1. Managemnet must know whether things are being done rightly. what else? 2. Organistions must satisfy the needs of people by measuring the volumes of satisfaction may be weighed. 4 TYPES OF APPROACHES TO MEASUREMENT:I.


Effectiveness is measurement in terms of goal achivement. This is the most widely accepted approach. Assumptions:- 1. Organisation have a goal towards which they are striving. 2. That the utlimate goal can be measured and identified empirically. a) They can be: --Profit maximisation. --Providing efficient service. --High productivity. --Good employee morale. Factors Quality Produtivity

Readiness Effciency Profit or return Morale Motivation Satisfaction


Multiple criteria:- Many managers follow many goals simultaneously.the fulfilment of these goals can be taken as the measure of effectiveness. In this method the degree of goal achivement may be compares over a period of time, say 10 years or with other organisation at a particular point of time.

Limitations:1. Different organisation have different goals. Comparision is difficult because of variable externals. 2. Goals as ideal states, do not offer the possibility of realistic assessment. 3. Goals often arise outside the organisation,as cultural entities. 4. It is difficult to identify organisation goals.



In this approach,organisation effectiveness is measured by taking intoaccount the behaviour of the people who make up the organisation. Assumptions:- 1. Individuals have one knid of goal & collectively. They have other goals. 2.Degree of organisation effectiveness depends on the degree of integration of organisation & individual Goals. Alternatives:

Low degree of goal integration:- Effectiveness is individual opposed to organisation goals. Moderate degree of goal organisation:- there is moderate degree of integration of organisation and individuals. High degree of goal interaction:-

Limitations:1. It doesnot really offer criteria for measuring effectiveness in an organisation. 2. It provides clues for achieving effectiveness & helps in assessing effectiveness.



INPUT THOROUGHPUT OUTPUT This model emphasises the distinctiveness of the organisationas an identifiable social structure or entity & it emphasises the interdependency of processes. This takes the form of INPUT OUTPUT transactions of various kinds relating to various things. These are scarce and valued resources. They are generally means or facilities that are potentially controlled by social organisations and are usuable in relationship between an organisation and its enviornment.organisation effectiveness is defined in terms of bargaining position, as reflected in the ability of the organisation, in either absolute or relative terms, to exploit its enviornment in the acquisition of scarce and valued resources. It excludes any specific goal as

the ultimate criterion of organisation to genearte its own resources. Specific goals may be incorporated in 2 ways:1. As a specification of the means or strategies employed by members towrds enhancing the bargaining position of the organisation. 2. As a specification of personal goals of certain members or classes of members within an organisation. Thus the better the bargaining position of the organisation. The more capable it is in obtaining its varied goals. It also becomes more capable of attaining the personal goals of its members. The mobilisation of resources is not a sufficient cause for organisation effectiveness.Effectiveness also includes the process and the output of the inputs.this must be compared with organisation in the external enviornment. To do this, the following steps must be taken:1. To make a list of all resources required (taxonomy) 2. Identify different types of resources that are required. 3. To determine their relative positions of the compared organisation. Limitations:1. Measurement of resources required to attain goals is difficult. 2. Movement towards achievment of goals is impossible to measure. 3. The goal is not greatly different from the goal approach.



This approach considers only relevant enviornment of the organisation iunder refrence and takes into account those factors which have impact on the operation of the organisation.

This pproach considers not only the inputs received from the enviornment, but also the exports tat are outputs to the enviornment. The organisation effectiveness depends on the degree to which the organisation is able to satisfy the constituences. 1. Identify the relevant 7 strategic constituences & their impact on the organisation. 2. Identify the expectations of the constituencies & the way to meet lose expectations.