ORGAANIZATION

Definition
Components of an organization
Nature and variety of
organizations
 ORGANIZATION
 An Organization Structure defines how job
tasks are formally divided, grouped and
coordinated. Jobs are grouped into
departments, and departments are linked to
form the organizational structure.
Organizational structure is the formal pattern
of interactions and coordination designed by
management to link the tasks of individuals
and groups in achieving organizational goals.
 Components of an organization: consists of
four elements-
(i) Assignment of tasks and responsibilities that
define jobs of individuals and units.
 ORGANIZATION
 Clustering of individual positions into units and of
units into departments and larger units to form an
organization’s hierarchy.
 Various mechanisms required to facilitate vertical
coordination, such as the number of individuals
reporting to any given managerial position and the
degree of delegation of authority.
 Mechanisms needed to foster horizontal
coordination, such as task forces and
interdepartmental teams.
One aid to visualizing structure is the
organization chart. The chart indicates the chain
of command in terms of reporting relationship.
 ORGANIZATION
• The concept of chain of command stems from two
basic principles viz. Unity of command and Scalar
principle.
• Unity of command means that an individual
should have only one boss at a given point of
time. This results in clear line of authority.
• The Scalar Principle: The formal organizational
structure begins with the chief executive and
extends to least skilled employee and delimits the
reporting relationships in the organization. The
Scalar Principle states that there should be a
clear line of authority from the position of
ultimate authority at the top to every individual in
the organization.
• delimit= determine the limit or boundary.
 ORGANIZATION
• Nature and variety of organizations: There are
four varieties of organizational structure. These
are :
• Functional
• Divisional
• Hybrid
• Matrix
• Functional Departmentalization-groups employees
according to organization’s functions.eg. Banking
organization.
• Advantages
• Development of expertise
• Clear career path
• Efficient use of resources
• Economies of scale
• Technical advantage over competitors.
 ORGANIZATION
• Disadvantages:
• Slow response time on multifunctional problems
• Bottleneck due to sequential tasks
• Restricted view of organizational employees
• Narrow training for potential managers.
• Divisional Structure:
• Here positions are grouped according to
similarity of products, services or markets.
 Hybrid Structure: Adopts parts of both functional
and divisional structures. This kind of Structure
is used by organizations facing environmental
uncertainty that can be met through divisional
structure and functional expertise. e.g. IBM.
 ORGANIZATION
• Matrix Structure: Organizations overcome
limitations of product and divisional
departmentalization by combining them in a
matrix structure.
• Use of Matrix structure:
• When there is pressure from the environment that
calls for simultaneous and strong focus on both
functional and divisional dimensions.
• When demands placed on the organization are
changing and unpredictable making it important
to have a large capacity for processing
information and coordinating activities quickly.
• There is pressure for shared resources.
 ORGANIZATION
• Methods of vertical coordination:
• Formalization- Role is defined by formal documentation
• Span of management- The number of subordinates who directly
report to the specific manager.
• Centralization and Decentralization-(a) Top Managers take all
decisions. On the other extreme, decision making is pushed down to those
managers who are closer to action. The former is centralized. The latter is
decentralized.
• Delegation: Means grant or confer. The Manager confers on others
certain duties in the form of work and authority.
• Line and Staff position: Line position has authority and
responsibility for achieving major goals of the organization. Staff position
is providing specialized expertise and assistance to line position.