designing organisational structures
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UNIT II
DESIGNING
ORGANIZATIONAL
STRUCTURES
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BASIC CONCEPTS RELATED TO
ORGANIZATION
The term organization is used in thefollowing ways:
Organization as Entity Organization as Group of people Organization as Structure
Organization as process
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DEPARTMENTATION
The first real task in designing anorganization structure is the
identification of activities and groupthem properly.
The process of grouping activities iscommonly known as Departmentation.
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NEED for DEPARTMENTATION
The basic need for departmentationarises because of specialization of workand the limitation on the number ofsubordinates that can be directly
controlled by a supervisor.
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IMPORTANCE OF
DEPARTMENTATION
1. Advantages of Specialization
2. Fixation of Responsibility3. Development of Managers
4. Facility in Appraisal
5. Feeling of Autonomy
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BASES OF DEPARTMENTATION
The most commonly used bases are:
1. Function2. Product
3. Territory
4. Process
5. Customer
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FUNCTIONAL DEPARTMENTATION
Board of Directors
MANAGING DIRECTOR
PRODUCTION MARKETING FINANCE PERSONNEL
MARKET RESEARCH ADVERTISING SALES
NEWS PAPERS
MAGAZINES
RADIO
TV
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PRODUCT DEPARTMENTATION
Chief Executive
Car Division Truck Division Bus Division
MARKETINGPRODUCTION FINANCE PERSONNEL
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TERRITORIAL
DEPARTMENTATION
Head Office
EASTERNZONE
CENTRALZONE
NORTHERNZONE
SOUTHERN
ZONE
WESTERN
ZONE
DIVISION 1 DIVISION 2 DIVISION 3 DIVISION 4
BRANCH 1 BRANCH 2
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PROCESS DEPARTMENTATION
MANAGER
(Production)
SPINNING DYEING WEAVING FINISHING
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CUSTOMER DEPARTMENTATION
MANAGER
(Production)
MARKETING
MANAGER
Whole Sale Retail Hire
PurchaseExport
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DECENTRALIZATION
Decentralization applies to thesystematic delegation of authority in an
organization-wide context.
Decentralization is used to denote
dispersal of physical facilities place-wiseor function-wise.
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FACTORS DETERMINING DEGREE
OF DECENTRALIZATION
Size of Organization History of Organization
Management Philosophy Availability of Managers Pattern of Planning Control Techniques
Decentralized Activities Rate of change in organization Environmental Influences
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LINE ORGANIZATION
Line Organization structure is alsoknown as scalar, military or vertical
organization and perhaps is the oldestform.
This concept holds that in anyorganization or hierarchy derived from ascalar process, there must be a singlehead who commands it.
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LINE ORGANIZATION (contd)
Line Organization can be designed in two ways:
1. Pure Line Organization: Similar activities areperformed at a particular level.
2. Departmental Line Organization: Entireactivities are divided into different
departments on the basis of similarity ofactivities.
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PURE LINE ORGANIZATION
Chief ExecutiveChief Executive
FOREMAN A FOREMAN B FOREMAN C
Workers Workers Workers
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DEPARTMENTAL LINE
ORGANIZATION
Production
Manager
Foreman
(Spinning)
Foreman
(Weaving)
Foreman
(Dyeing)
Foreman
(Finishing)
WorkersWorkersWorkers Workers
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CHARACTERISTICS OF LINE
ORGANIZATION
Lines of authority and instructions arevertical.
The unity of command is maintained in astraight and unbroken line. All persons of the same organization are
independent of each other.
This structure specifies responsibility andauthority for all positions limiting the area ofaction by a particular position holder.
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MERITS OF LINE ORGANIZATION
Simplicity
Discipline
Prompt Decision Orderly communication
Easy supervision and control
Economical Overall development of Managers
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DE MERITS OF LINE
ORGANIZATION
X Lack of Specialization
X Absence of Conceptual ThinkingX Autocratic Approach
X Problems of Coordination
X Lack of Ground work for subordinatesTraining
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LINE AND STAFF ORGANIZATION
It refers to a pattern in which staffspecialists advise line managers toperform their duties.
In actual practice, sometimes it is
difficult to determine which departmentsare line or staff.
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LINE AND STAFF ORGANIZATION
The problem can usually be solved byclassifying activities within an
organization in two ways:
1. That which is substantive (direct) in itscontribution Line activities
2. That which is objective (indirect) in itscontribution Staff activities
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LINE AND STAFF ORGANIZATION
GENRAL MANAGER Public Relations
OfficerSecretary
Manager (Finance) Manager (personnel)
Manager - Production Manager - Marketing
Production Engineer Production Engineer
Workers Workers
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MERITS & DEMERITS OF LINE AND
STAFF ORGANIZATION
MERITS: Planned Specialization
Quality Decisions
Prospect for Personal Growth Training Ground for Personnel
DEMERITS:
X Lack of well defined Authority
X Line and Staff conflicts
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FUNCTIONAL ORGANIZATION
It is created by grouping the activities on the basis
of functions required for the achievement oforganizational objectives.
CHARACTERISTICS:
1. Specialization by functions
2. Emphasis on sub-goals
3. Pyramidal growth of Organization
4. Line and staff division5. Limited span of management
6. Functional authority relationships among departments
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FUNCTIONAL ORGANIZATION
Head Quarters
Production Marketing Finance Personnel
Plant 1 Plant 2 Plant 3
P M F P P PM MF FP P
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COMMITTEE ORGANIZATION
It can be defined as a body of personsappointed to meet on an organized basis forthe discussion and dealing of matters brought
before it.
FEATURES:
1. Group of persons
2. Can deliberate only on matters that arebrought before it
3. Members of the committee draw authoritythrough delegation.
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MATRIX ORGANIZATION
Matrix Organization is the realization
of two-dimensional structure whichemanates directly from two dimensionsof authority.
1. Pure project structure
2. Functional structure
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VIRTUAL ORGANIZATION
Virtual Organization is a temporary networkof independent companies suppliers,customers, even erstwhile rivals linked byinformation technology to share skills, costsand access to one anothers markets.
It will have neither central office nor
organization chart. It will have no hierarchy, novertical integration.
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CELLULAR ORGANIZATION
It is a form of organization consisting of acollection of self-managing firms or cells held
together by mutual interest. A cellularorganization is built on the principles of self-organization, member ownership, andentrepreneurship.
Each cell within the organization sharescommon features and purposes with its sistercells but is also able to function independently.
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TEAM STRUCTURE
A Team is a group of people in theorganization constituted for completing
certain assignments.TYPES:
1. Lead Team
2. Cross-functional Team
3. Problem-solving Team
4. Self-managing Team
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BOUNDARYLESS ORGANIZATION
It is a model that views organizations as havingpermeable boundaries. An organization hasexternal boundaries that separate it from its
suppliers and customers, and internalboundaries that provide demarcation todepartments.
This rigidity is removed in boundaryless
organizations, where the goal is to developgreater flexibility and responsiveness to changeand to facilitate the free exchange ofinformation and ideas.
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BOUNDARYLESS ORGANIZATION
The concept was developed at
General Electric and described in thebook The Boundaryless Organization:Breaking the Chains of OrganizationalStructure by Ron Ashkenas and others,
which was published in 1995.
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FLAT ORGANIZATION
Flat structure is that which reducesthe levels of management, widens spanof control of managers at various levelsof the organization, and is often moredecentralized with regard to decision
making autonomy.
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