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CH.3. Organizational MANAGEMENT. ORGANIZATION:. Definition: Any group of persons united to achieve any constructive task Group of activities and resources to facilitate efforts to achieve common goals and objectives Examples: any company, govt. Department, business unit, institute, etc.
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CH.3. Organizational MANAGEMENT
ORGANIZATION: Definition: • Any group of persons united to achieve any constructive task • Group of activities and resources to facilitate efforts to achieve common goals and objectives • Examples: any company, govt. Department, business unit, institute, etc.
ORGANIZATION STRUCTURE: • Organization has a “definite structure”. • A formal fixed pattern of groups and relationship among them. • Represented by organization chart. • Structure is always stable. • Modified if required.
LINE ORGANIZATION • Also called “scalar organization” or “military organization”. • Oldest and simplest type of organization. • Chain of authorities one above the other. • A separate person will look after the activities of the department and he has full control over the department.. • Subordinate reports to immediate superior. • This type of organization is followed in the army on the same pattern. So, it is called military organization. • Under this type of organization, the line of authority flows from the top to bottom vertically. So it is called line organization. • This type of organization is suitable to small size business units where the activities are of routine nature or machine based.
Examples: Small business, military, automated industries like textile, paper etc.
FUNCTIONAL ORGANIZATION • Also called “Staff organization” or “Horizontal organization”. • Grouping of activities as per function. • Each group is assigned with a specific task. • Authority is given to a specialist to give orders and instructions in relation to specific function. • Functional authority has right and power to give command throughout the line with reference to his specified area.
LINE & STAFF ORGANIZATION • Combination of Line and Functional organization. • organization Structure is both horizontal and vertical. • Only successful if joint work of Managers and Executives is seen. • All large and medium scale industries employ this type. • Best suited for Manufacturing and automobile sector.
PROJECT organization • The project organization idea was developed after the second war. • Its an “inter-organizational team” pulled together for specific purpose. • Team member from organization’s functional units to perform specific task i.e. “Project”. • Purely temporary in nature. • The Success of the project organization depends upon the co-ordination of activities • There is a grouping of a activities for each project. It leads to the introduction of a new line of a authority
ADVANTAGES • No interference to parent organization. • Result oriented activities are carried out. • Team work culture is developed.
DISADVANTAGES • The professionals are deputed for the project ; there is an assurance of continuous work for the professional in a project organization. • The decision is taken in the project organization under pressure of the top controls the staff in an organization. • The top management does not extend its full co-operation for the effective functioning of the project organization. Some hindrance may be caused by the top management.
DEPARTMENTATION • The process of grouping the activities known as departmentation • Departmentation means the process by which similar activities of the business are grouped into units for the purpose of smooth administration at all levels. • Horizontal dimension of organization structure. • Better control and management.
PRINCIPLES OF ORGANIZATION • AUTHORITY AND RESPONSIBILITY • SPAN OF CONTROL • EFFECTIVE DELEGATION • BALANCE,STABILITY AND FLEXIBILITY • COMMUNICATION • CENTRALISATION & DECENTRALISATION
AUTHORITY AND RESPONSIBILITY • Position ,designation, seniority defines authority • Power to manage work • Types of authority: • Coercive :Use of punishment • Expert : Use of Skill • Reward: Use of reward. • Referent: use of influence
AUTHORITY AND RESPONSIBILITY • Responsibility-the other side of coin. • Accountability for result. • Higher authorities have higher responsibilities. • Can be delegated but not be shared.
SPAN OF CONTROL • Related to delegation • “It is the no of subordinates handled by one manager effectively. ” • Impossible to control a large no of subordinates ; controlling efficiency reduces when such happens. • Span of control gives rise to the concept of “levels of management”.
EFFECTIVE DELEGATION • Process that assigns work to others and offers sufficient authority to perform work. • Higher authority assigns duties and responsibilities to subordinates. • Also giving required authority to do work i.e. right to make decisions is available to subordinates due to delegation. • Morale of employees increases. • Better results are possible.
BALANCE,STABILITY AND FLEXIBILITY BALANCE : • Organization has a no of functional units ;all should be balanced. • All functions should be executed , developed and controlled in a balanced manner. • Any underdeveloped unit or department must be given attention for overall progress of organization.
STABILITY: Unstable organization is busy solving its problems. Stable organization is ground for new developments. Decision making is easier due to stability. FLEXIBILITY: Ability to adjust, bend , change and blend according to requirements without disturbing the basic structure is called flexibility. Flexibility is the reason to be update and in flow. Helps to work as per changes in environment i.e. technology, market requirements , laws competitors move s,etc.
COMMUNICATION • “Process by which a person or group transmits some information to other person or group.” • Following can be done by communication: • Forward instructions and orders • Share information • Motivate and appreciate subordinates • Get feedbacks.
BARRIERS IN COMMUNICATION • Language problem • Wrong timing • Cultural barriers • Network breakdown • Lack of feedback • Poor media • Wrong channel of information
CENTRALISATION & DECENTRALISATION CENTRALISATION: • Concentration of authority at the centre. • Few seniors or heads will retain important responsibilities. DECENTRALISATION: • Responsibilities distributed to subordinates • Responsibilities are spread across organization.
FACTORS IN SELECTION OF OWNERSHIP • Size of business • Type of product • Capital inflow • Govt. policy • Motive of business • Type of business • Life of business
SOLE PROPRIETORSHIP Oldest type of business. A business owned and managed by one individual. Whole and sole authority. All the functions such as designing , manufacturing, marketing,sales,etc. of the organization are done by single person. Small scale units, shops, construction business,etc Example : Facebook – Mark Zukerberg Paypal ,Tesla–Elon Musk
SOLE PROPRIETORSHIP ADVANTAGES Easy to establish Owner takes all the profit Makes decision on his own DISADVANTAGES Start up costs Responsible for all the functions Unlimited liability
PARTNERSHIP Most important type of ownership
PARTNERSHIP • An association of two or more people who co-own a business for the purpose of making a profit. • Combine skills and administrative abilities of a number of people • Members in partnership are called as partners. • Minimum Partners = 02 & Maximum Partners = 20 • Investment done is limited • Unlimited liability-Losses can be recovered from personal property of partners • Application: Medium scale industries,Malls,hospitalsservicecenters,softwarecompanies,etc • Examples: Flipkart
PARTNERSHIP • Partnership Deed or Partnership Agreement: “Document regarding terms and conditions in partnership” • Contents of Partnership Agreement: • Name of firm and partners • Investment share of each • Authority, Responsibilities & Signatures of all partners • Rules and regulations • Tenure of agreement • Share of profit and loss • Location of business
