UNIT 3.

CONCEPT OF DECISION MAKING

AND NATURE OF ORGANIZING

ORGANIZATION AND MANAGEMENT (MGT-203-A)

Subject

STEVE N. DELA ROSA

Reporter
SEQUENCE OF PRESENTATION
DECISION MAKING PROCESS
NATURE OF ORGANIZING
ORGANIZATION LEVEL AND SPAN OF
MANAGEMENT
DIFFERENT TYPES OF ORGANIZATIONAL
STRUCTURE
ORGANIZATION THEORIES AND APPLICATION
DECISION MAKING
It involves the ability to collect, organize, and synthesize, information
into a useful form for identifying and evaluating alternate options.
• Putting knowledge into action.
• Risk taking.

Decision w/o risk is easy to make. Decision w/ risk requires the use of
good judgment, and it is learned through practice and experience. One
can certainly discuss decisions with the team, other managers, and
mentors to help lower risk, but must make the decision and help it to be
a successful decision. It is possible when there are two or more
alternatives to solve a single problem.
BASIC CHARACTERISTICS OF DECISION MAKING

 FUTURITY - How long will the decision commit the organization?

 REVERSIBILITY - How fast can a decision be reversed and its consequences resolved?
 IMPACT - There are other areas or activities affected by the decision?
 QUALITY - These are social, human, ethical, and other values involved in the decision?
 PERIODICITY - How often is the decision made?
DECISION MAKING PROCESS
Itis the process of analyzing the problem in stages until a
viable solution develops.
Itinvolved choosing the best alternative action after
defining the issue and identifying the desired outcome.
Itis by acting on the information learned during the
process of decision making.
 STEPS OF DECISION MAKING PROCESS
Identification Brainstorm
Principles for Select the
of the Information and analyze Evaluation of Execute the Evaluate the
judging the best
purpose of gathering the different alternatives decision results
alternatives alternative
the decision choices

STEP 1. Identification of the Purpose of the Decision

Useful Questions in Identifying the Purpose of Decision.

 What exactly is the problem?
 Why the problem should be solved?
 Who are the affected parties of the problem?
 Does the problem have a deadline or a specific timeline?
STEP 2. Information Gathering
STEP 3. Principles of Judging the Alternatives
STEP 4. Brainstorm and Analyze the Different Choices
STEP 5. Evaluation of Alternatives
STEP 6. Select the Best Alternative
STEP 7. Execute the Decision
STEP 8. Evaluate the Results
NATURE OF ORGANIZING
 What is an Organization?
It is a group of individual who works and interact each
other in a coordinated action to achieve a wide variety of goals
or objective.

 What is Organizing?
It may be defined as such a smooth process which is
made by a group of people for the purpose of achieving
specific or common goals.
TWO ESSENTIAL CONCEPTS REGARDING WITH ORGANIZING:
 Organization as a Process
a large number of events or activities are done under the
process of organizing with-a-view to accomplish the preset
goals in an appropriate way. In fact, organizing involves division
of works, determination of activities, grouping of activities,
delegation of authority and the establishment of proper
coordination and balance among various departments of
individuals towards the attainment of predetermined goals
 Organization as a Structure of Relationship
involvement of a large number of groups
CHARACTERISTICS OR FEATURES OF ORGANIZING OR
ORGANIZATION:
 Organization is a group of Individuals
 Organization is a process
 Organization is a ‘Means’ not an ‘End’
 Organization is an important Function of Management
 Organization is related to its Objectives
 Communication is the life of organization
STEPS IN PERFORMING ORGANIZING FUNCTIONS
1. Identification of activities
2. Departmentally organizing the activities
3. Classifying the authority
4. Co-ordination between authority and responsibility
ORGANIZATION LEVELS AND SPAN OF MANAGEMENT
Span of Management - refers to the number of subordinates who can
be managed efficiently by a superior. Simply, the manager having the
group of subordinates who report him directly is called as the “SPAN
OF MANAGEMENT”.
Span of Management is important for:
 Determining the complexity of an individual manager’s job.
 Determining shape and structure of the organization.
 Fewer the number of subordinate reporting to a manager, larger the
number of managers required – expensive for the company but yet very effective
in terms of supervision.
With more levels in the hierarchy, the communication suffers drastically. It
takes a lot of time to reach the appropriate points, and hence the actions get
delayed.
There will be more opportunity for promotion.
 The span is wide which leads to a more complex supervisory relationship
between the manager and the subordinate.
It will be very difficult for a superior to manage a large number of
subordinates at a time and also may not listen to all efficiently.
The number of managers gets reduced in the hierarchy, and thus, the
expense in terms of remuneration is saved.
The subordinates feel relaxed and develop their independent spirits in a
free work environment, where the strict supervision is absent.

Finally, it may best vary on how many subordinate a superior can manage
in relation with the justifiable reason for the cost.
IMPORTANCE OF ORGANIZING FUNCTION
1. Specialization
2. Well defined jobs
3. Clarifies authority
4. Co-ordination
5. Authority
6. Effective administration
7. Growth and diversification
8. Sense of security
9. Scope for new changes
TYPES OF ORGANIZATIONAL STRUCTURE
1. FUNCTIONAL STRUCTURE
Functional structure is set up so that each portion of the organization is grouped according
to its purpose. The functional structure works very well for small businesses in which each
department can rely on the talent and knowledge of its workers and support itself.
However, one of the drawbacks to a functional structure is that the coordination and
communication between departments can be restricted by the organizational boundaries of having
the various departments working separately.
TYPES OF ORGANIZATIONAL STRUCTURE
2. DIVISIONAL STRUCTURE
It has a separate smaller organization within the umbrella of the company/organization. It is
designed to focus on particular markets and product lines. There are identical categories below
each (marketing, sales, purchasing, and inventory). Needs can be met more rapidly and more
specific but communication between the organization is constrained because they are not working
together. Advantage of this structure is in terms of (accountability, team working, responsiveness
to external change, organizational structure, and leadership). Disadvantage will be on (small
organization, competition, related products, lack of communication, economies of scale).
TYPES OF ORGANIZATIONAL STRUCTURE
3. MATRIX
It is a hybrid of divisional and functional structure. Typically used in large multinational
companies, the matrix structure allows for the benefits of functional and divisional structures to
exist in one organization. This can create power struggles because most areas of the company
will have a dual management – a functional manager and a product or divisional manager working
at the same level and covering some of the same managerial territory.
ORGANIZATIONAL THEORIES AND APPLICATIONS
There are several theories which explain the organization and its structure.
1. CLASSICAL ORGANIZATION THEORY - The classical perspective of management originated during the
Industrial Revolution. It focuses primarily on efficiency and productivity and does not take into account
behavioral attributes of employees. Classical organizational theory combines aspects of scientific
management, bureaucratic theory and administrative theory. Scientific management involves obtaining
optimal equipment and personnel and then carefully scrutinizing each component of the production
process. Bureaucratic theory places importance on establishing a hierarchical structure of power.
Administrative theory strives to establish universal management principles relevant to all organizations.
 Scientific Management Approach
 Weber’s Bureaucratic Approach
 Administrative Theory

2. NEO-CLASSICAL THEORY - Neoclassical organizational theory is a reaction to the authoritarian structure of

classical theory. The neoclassical approach emphasizes the human needs of employees to be happy in the
workplace. This allows creativity, individual growth and motivation, which increases productivity and profits.
Managers utilizing the neoclassical approach manipulate the work environment to produce positive results.

1. MODERN ORGANIZATION THEORY- are based on the concept that an organization is an adoptive system
which has to adjust to changes in its environment. Discuss the important of the modern approach to
organization. Modern theories include the System Approach, Sociotechnical Approach, and the
Contingency of Situational Approach.