UNIT - 5

ORGANISING

Business Studies - XII

TOPICS COVERED

 Organizing
 Concept as a Structure and as a Process
 Importance
 Steps in the process of Organizing
 Structure of Organization: Functional and Divisional
 Concept, Advantages, Disadvantages & Suitability
 Formal and Informal Organization
 Concept, Advantages & Disadvantages
 Delegation : Concept, Elements & Importance
 Decentralization : Concept & Importance
 Differentiate between Delegation & Decentralization
 “A poor organization
could Run a Good Product into the ground
And
that a Good organization which has comparatively poor product
could run a good product
out of the Market”
- Kenneth C. Towe
ORGANIZING

 Meaning of Organising :
It refers to the process of defining and grouping the activities of
an enterprise and establishing authority relationship among
them.
 Characteristics of Organising
 Division of Work
 Coordination
 Plurality of Persons
 Common Objectives
 Organization is a Machine of Management
IMPORTANCE OF ORGANIZING
 Benefits of Specialization
 Clarity in Working Relationship
 Optimum Utilization of Resources
 Adaption to Change
 Effective Administration
 Development of Personnel
 Expansion and Growth
 1. Identification and Division of Work
O
R
G P 2. Departmentalization
A R
N O
I C 3. Assignment of Duties
z E
I S
N S 4. Establishing Reporting Relations
G
FORMAL & INFORMAL ORGANIZATION

Meaning of Formal Organization :

It refers to the organization structure which is designed by the
management to accomplish a particular task.

Characteristics of Formal Organization :

 Defined Interrelationship

 Based on Rules and Procedures

 Based on Division of Work

 Deliberately Created

 Impersonal

 More Stable
FORMAL & INFORMAL ORGANIZATION

Advantages of Formal Organization :

 Easy to Fix Accountability

 No Overlapping of Work
 Unity of Command Possible
 Easy to Get Goals
 Stability in Organization
FORMAL & INFORMAL ORGANIZATION

Disadvantages of Formal Organization

 Delay in Work
 Lack of Initiative
 Mechanization of relations
FORMAL & INFORMAL ORGANIZATION

Meaning of Informal Organization :

It refers to the natural grouping of people in the work
situation to meet personal needs.
Characteristics of Informal Organization :
 Based on Formal Organization
 No written Rule and Procedure
 Not Deliberately Created
 Personal
 Lacks Stability
 No place on Organizational Chart
 Independent Channel of Communication
FORMAL & INFORMAL ORGANIZATION

Advantages of Informal Organization

 Faster speed
 Fulfils Social Needs
 Fulfils Organizational Objectives
FORMAL & INFORMAL ORGANIZATION

Disadvantages of Informal Organization

 Creates Rumors
 Resists Change
 Pressure of Group Norms
ORGANIZATIONAL STRUCTURE

“Specific pattern
of Relationship which is created
during
Organizing process”.
 “The Wrong
Organization Structure
will seriously impair Business Performance
and
may even destroy it”
- Peter F. Drucker
TYPES OF ORGANIZATION STRUCTURE

 Functional organization

 Divisional organization
FUNCTIONAL ORGANIZATION STRUCTURE
Meaning of Functional Organization :
It refers to the Division of the whole enterprise according to the
major activities to be performed by it.

Advantages: Disadvantages:
 Benefits of Specialization  Ignorance of organizational
 Coordination is Established Objective
 Managerial Efficiency is  Difficulty in inter-
departmental
Increased
Coordination
 Minimal Duplication of
 Conflict of Interest
Efforts
 Hurdle in Complete
 Training is Facilitated
Coordination
 Equal weightage to all functions
FUNCTIONAL ORGANIZATION STRUCTURE

Shareholders

Board of Directors

General
Manager/CEO

Production Marketing Finance Personnel

Department Department Department Department

Advertiseme Market
Sales
nt research
Department
Department Department
FUNCTIONAL ORGANIZATION STRUCTURE

Suitability of Functional Organization :

 1. Where the size of the business unit is large .

 2. Where specialization is required.

 3. Where decentralization of authority is needed.

 4. Where there is only product that is sold.

.

ORGANISING
DIVISIONAL ORGANIZATION STRUCTURE
Meaning of Divisional Organization :
It refers to the Division of the whole enterprise on the
basis of Products, Geographical Areas, Customer
Groups, etc.

Advantages:
Disadvantages:
 Development of Divisional Heads
 Conflicts between Divisional
 Divisional Results can be Heads
Assessed
 Duplicity of Functions
 Quick Decision Making
 Selfish Attitude
 Easy Expansion
DIVISIONAL ORGANIZATION STRUCTURE
Marketing

Finance
Plastic Division
Personnel

Production
Board of General
Shareholders
Directors Manager
Production

Marketing
Metal Division
Finance

Personnel
DIVISIONAL ORGANIZATION STRUCTURE

Suitability of Divisional Organization :

 1. Where the number of main products is more than one.

 2. Where different manufacturing technologies and marketing

methods are required.

 3. Where the size of the concern is really large.

ORGANISING
DELEGATION OF AUTHORITY

It refers to the process of entrusting responsibility and authority,

creating accountability of the person to whom work or
responsibility has been handed over.
ELEMENTS OF DELEGATION OF AUTHORITY

 Responsibility
 Assignment of job to a subordinate

 Authority
 The power to take decision

 Accountability
 Answerability of the subordinate to his superior for
his work performance
PROCESS OF DELEGATION OF AUTHORITY

Assigning Responsibility
Delegation of responsibility to subordinates

Granting Authority
Delegating authority to fulfill responsibility

Fixing Accountability
Demanding justification by the superior
IMPORTANCE OF DELEGATION OF AUTHORITY

 Effective Management
 Employee Development
 Motivation of Employees
 Facilitation of Growth
 Basis of Management Hierarchy
 Better Coordination
DECENTRALIZATION

It refers to the situation which exists as a result of the

systematic delegation of authority throughout the organization.
IMPORTANCE OF DECENTRALIZATION

 Develops Initiative among Subordinates

 Develops Managerial Talent for Future
 Quick Decision Making
 Relief to Top Management
 Facilitates Growth
 Better Growth
DIFFERENCE B/W DELEGATION OF AUTHORITY & DECENTRALIZATION

Basis Delegation of Authority Decentralisation

1. Nature Inevitable Not Necessary

2. Freedom in Action Less Freedom More Freedom

3. Status Result of Division of Work Result of Policies framed

by the higher officials

4. Scope Limited Distribution of Broader Distribution of

Authority Authority

5. Purpose Reduction of workload of an Expansion of the

officer authority in an
organization
UNIT- 5

THE END

Business Studies - XII