Organizing Part-1 Meaning:

“organization is system of cooperative activities of two or more persons”

Characteristics:

1. It is an objective-oriented activity

2. Division in to department

3. Delegation of authority and responsibility

4. It is depend on Planning

5. It is flexible

6. It is a cooperative activity

7. Its give importance to human factor

8. It established authority relationship

Organizing Part-1 Importance / Advantages

1. Facilitates Administration

2. Specialization is made possible

3. Clarifies authority and responsibilities

4. Maximum use of scare resources

5. Facilitates growth and diversification

6. Encourages creativity and Initiative

7. It Facilitates new Technology

8. Achievements of Goal Limitations

1. Too much division

2. Lack of balance between authority and responsibility

3. Rigidity

4. Unclear inter-relationship

5. Too many Procedures

6. Ignoring Informal Organization

Organizing Part-1 Characteristics

1. Simplicity

2. Definiteness

3. Stability

4. Flexibility

5. Efficiency

6. Balance

7. Co-ordination

8. Specialization

9. Proper Allocation of authority and responsibility

10. Facility for development

11. Significance of Human Element

Organizing Part-1 Guiding Principles of Organisation

1. Principle Unity of objectives

2. Principle Efficiency

3. Principle of Span of Control

4. Scalar Principle

5. Principle of Delegation

6. Principle of Parity of authority and Responsibility

7. Principle of Absolute Responsibility

8. Principle of the level of authority

9. Principle of unity of Command

10. Principle of Departmentation

11. Principle of Balance

12. Principle of Flexibility

13. Principle of Continuity

14. Principle of Leadership Facilitation

Organizing Part-1Determining the Objectives

Preparing the List of Activities

Grouping of Activities or Division of Activities

Determining the Position

Delegation of Authority and Responsibility

Establishing of Interrelationship

Delegation of Authority Meaning:

According to F.G.Moore, “Delegation mean assigning of work to others and giving them authority to do it”

Elements or Process of Delegation

DelegationOf

Authority

Responsibility AccountabilityAuthority

Delegation of AuthorityImportance

1. Reduce Burden of work

2. For getting benefit of Specialization

3. Necessary due to Geographical Expansion

4. Development of Managers

5. Motivating tool

6. Art of Securing Best ResultsLimitation

1.

Centralization Meaning of Centralization When all the power of decision making are concentrated in top management,

it is called centralization

Factors Affecting Centralization

(Factors making Centralization Necessary)

1. Leadership

2. Need for Integration

3. Uniformity of action

4. Emergencies

5. Scarcity of managerial manpower

6. Expensive and important decision

7. External factors

Centralization Advantages of Centralization

1. Quick Decision

2. Effective control

3. Preserving secrets

4. Continuity of Policy

5. Evaluation of Departmental Activity

6. To Provide Personal Leadership

7. Market Advantage

Limitation of Centralization

1. Autocracy

2. Absence of Specialization

3. Increased burden on the top Executive

4. Improper Decision

5. Instability

6. Neglect of Human Elements

7. Corruption

Decentralization Meaning

“Decentralization refers to delegation of authority to the employees at different levels in the organization on the context of the duties assigned to them”

Factors affecting Decentralization

1. Burden of top Executives

2. Need for diversification

3. Need to Preserving the grip on the Market

4. Need for development of managers

5. Need to improve Motivation

Decentralization Advantages

1. Reduce burden of top Executives

2. Development of Initiative and Responsibility

3. Improves Motivation

4. Boosts Morale

5. Simplifies Division of work

6. Development of leadership

7. Effective control and supervision

8. Stability and continuity

9. Flexibility

10. Develops Harmony

Limitation

1. Difficulties of Coordination

2. Loss in staff service

3. Harmful in Emergency

4. Problem of Control

5. Increased Administrative costs

Centralization and DecentralizationDifference

Points Centralization Decentralization

Meaning When all the power of decision making are concentrated in top management, it is called centralization

When authority to take decision is delegated to all levels of management it is called decentralization

Importance of Subordinates

Reduces the importance of subordinates

Give importance of subordinates

Decision making power

Top level only All level of management

Delegation of authority

No delegation of authority Delegated to all levels

Burden on superiors

Increase Reduces

Centralization and Decentralization

Development of Leaders

There is no environment for development of leaders

As managers at all levels take decisions, leaders are prepared

Difficulty in coordination

Little difficulty Arise difficulty

Size of organization Structure

Small Size Big size

Rigidity Centralized structure is Rigid

Decentralized structure is frequently change

Where appropriate

Small organization Large organization

Departmentation Meaning

Departmentation defined as “the process of dividing activities of an organization into different administrative units”

Objectives of Departmentation

1. Facilitates Expansion

2. To obtain the advantage of specialization

3. To facilitate control

4. Comparative data on profit and loss

5. Better services to the customers

Departmentation METHODS OR BASES OF DEPARTMENTATION

A. Functional Departmentation The grouping the activities accordance with the functions of enterprise The organization under this method gets divided into three major functions:

Production, Marketing and Finance. Almost all enterprise are engaged in the production of goods and services.

They are engaged also in the sales of these goods and services. The production and sales of goods and services require a definite amount of finance also. That’s why Production, Marketing and finance are considered to be the basic functions.

Production activity subdivided into purchase of raw materials, production control and maintenance of machinery.

Marketing activity is subdivided into publicity, sales promotion and transportation

Financial activity is subdivided into cash control, budgeting, accounting etc.

Departmentation

Shareholders

Production Finance Marketing Human Resources

Board of Directors

Departmentation Advantage of Functional Department

1. It facilitates coordination among different department

2. It raises efficiency

3. It help of appointment and training of employees

4. Uniformity of Direction

Disadvantage of Functional Department

5. Every functional manager may concentrate only on the progress of his own department.

6. Does not get opportunity of training himself for promotion to higher level of management

7. Other method is more important compare to this one

DepartmentationB. Territorial Departmentation Territorial departmentation becomes necessary when the business is

running on large scale and its activities are dispersed over a wide area in the country.

Territorial departmentation is proper when its purpose is to take advantage of certain economies of localized operations.

The managers being well- informed of the requirements of the local people can easily provide them with appropriate goods and services.

Immediate delivery can be made.General Manager

Production Finance Marketing Human Resources

Mumbai Factory Delhi Factory

Chennai Factory

Departmentation Advantage

1. Enterprise can earn prestige among local population

2. Better coordination and control

3. Minimize transportation cost

4. Identified need of localized is easily

Disadvantage

1. Increase overhead expenses

2. It leads to duplication of functions

3. It create problem of coordination among different local branches of an enterprise

DepartmentationC. DEPARTMENTATION BY PRODUCTS Under this system an organization is divided on the basis of product or group

of closely related products. Its important for large scale organization

General Manager

Finance Marketing R&D Human Resources Legal

Soap Tooth past Ghee

Finance Marketing R&D Human Resources Legal

Departmentation ADVANTAGE

1. It use specialized knowledge

2. Better customer service can be provided

3. Coordination of all activity

4. Flexibility of organization is possible

DISADVANTAGE

1. Some time coordination is difficult

2. Difficult to control all the production department

DepartmentationD. Customer Department When customer of an enterprise can be clearly divided into different groups

and when it seems necessary to provide them a special service to satisfy them. Departmentation on the basis of customers is most appropriate Sometimes, customers are classified on the basis of age or income. For Example: there may be different departments in a garment company such

as children’s garments department, men’s garments department and women’s garments department.

Marketing Manager

Dept. of the Male Adult’s garments

Dept. of the Women’s garments

Dept. of the Children’s garments

Departmentation ADVANTAGES

1. Special requirements of each group of customers can be satisfied through it

2. Efforts at sales promotion can be planned more scientifically

3. This method is most suitable when a product is to be sold through several channels of distribution

DISADVANTAGES

1. Managerial Expenses increase

2. The facilities created for the satisfaction of the needs of a particular group of customers only remain unutilized sometimes.

DepartmentationE. PROCESS OR EQUIPMENT DEPARTMENTATION In manufacturing establishment, the activities of enterprise are grouped on the

basis of processes or costly equipment of special categories. The main objectives here is to achieve certain economic advantages. This method is adopted only by manufacturing units

Manufacturing Department

Grinding Process Refining Process Finishing Process

Departmentation ADVANTAGES

1. The process wise departmentation facilitates coordination

2. Skill can be effectively utilized

3. The responsibility of each of the processes can be easily located

4. It is simplest method

5. It helps reduced cost of production

DISADVANTAGES

1. Sometime coordination is difficult

2. It cause wastage and inefficiency through duplication of specific equipments of common use

3. The responsibility of profit cannot be entrusted to process department

Departmentation Departmentation by Numbers in the past, when there was not much difference in the skills of different

employees in an enterprise, its organization used to be divided on the basis of simple numbers.

“Useful at lowest level of the organization structure. As soon as any other factor besides pure manpower becomes important, the simple numbers basis of departmentation fails to produce good results”

For Example: Military, Textiles Industry.

Merit of Departmentation

1. Specialization

2. Facility of Growth

3. Opportunity of Progress

4. Better service to Customer

5. Reduction in cost of production

6. Economy

Departmentation Demerits of Departmentation

1. Expensive

2. Difficulties of Control and Coordination

3. Risk of Untimely Introduction

Factors affecting the choice of the method of Departmentation

1. Ease of Controlling

2. Ease of Coordination

3. Economy

4. Interest in activities

5. Specialization

6. Human Consideration

7. Cost element

8. Effective Planning

9. Key Areas