Module 1
CONCEPT OF ORGANISATION
Definition:
Organization can be defined as the process of
1. Identifying and grouping the work to be done,
2. Defining and delegating responsibility and authority and
3. Establishing relationships.
Need for Organization:
1. Contributes to the continuity and success of the enterprise.
2. Facilitates Administration
3. Facilitates Growth
4. Stimulates Creativity
5. Optimum use of resources
6. leads to specialization
7. minimizes corruption
8. prevents confusion
9. helps in training and management
Characteristics of organization
1. It is a group of people small or large
2. Works under a leadership
3. toll of management
4. leads to division of work and responsibility
5. defines rules and regulations
6. establishes relationships
Elements (components) of Organization
1. Objectives
2. Coordination of people
3. Division of labor
4. defined policies and procedures
5. Effective system of communication
Process of Organization (Managerial Functions)
1. Determination of Objectives
2. Deciding Various activities
3. Grouping of activities
4. Assignment of responsibilities
5. Delegation of authority
6. Providing physical facilities.
Organizational Theory
OT can be defined as the study of structure functioning performance of organization, behavior of groups and individuals working in the organization.
Different Org Theories
1. Classical (Not in syllabus)
2. Neo Classical (Not in syllabus)
3. Modern /Scientific Org Theory (Important).
Modern or Scientific Theory
- Developed in the sixties and flourished in the seventies
- Analytical base
- Empirical research
- Integrating nature.
Important questions answerd by this:
1. What are the strategic parts?
2. Nature of interdependency?
3. Process?
4. Goals?
1. Strategic Components or parts.
-individuals
-formal org
-informal org
-status and roles
-Physical Environment
2. Interdependency
-Interpart Interactions
-Intrapart Interactions
3. Linking Processes
-Communication
-Decision making
-Balance
5. Goals
-growth
-stability
-adaptability
Comparison between formal and informal Org:
Formal Or:
1. Pre Formatted structure for individuals to follow
2. Contains rules, regulations and policies.
Informal Org
1. Consists of relationships, sentiments etc.
2. Has it’s own separate goals
3. Satisfies some unsatisfied social needs.
Modern theory is appreciated on the basis that it is
- an open system
- importance of survival
- dynamic nature
- both macro and micro in nature
- Multi motivated
- Multi disciplinary.
Princilples of Organisation.
- General Truth or a rule applied to similar types , conditions of organization globally
1. Consideration of Objectives
2. Relationship b/w basic components
3. responsibility and authority
4. span of control
5. dividing and grouping work
6. effective delegation
7. communication
8. line and staff relationships
9. balance stability and flexibility
Responsibility and authority
1. Responsibility Means accountability and obligation
2. Authority means right to command
3. both must go hand in hand
4. When an employee is authorized to take up a job, he is responsible also for doing to rightly.
Span of Control:
- Refers to the number of subordinates who report to an executive.
- If large then it will be hard to handle
- If span is small then the executive will feel bossy
- Normally span is between 2 to 20.
Organizational Structure:
- Systematic arrangement
- Framework of job and people
Two tools used to design a structure are:
1. Org Chart = For simple and small enterprises
2. Org Manual- for large enterprises
For design of Organizational Structure Refer fig 3.1 in Op Khanna Text Book
Types of structure:
1. Line, Military or scalar
2. Functional Org – by FW Taylor-
3. Line and staff Structure
4. Project Organization
5. Matrix Organization
For types of Organizational Structure (above all), chart, manual etc refer figures in OP Khanna Text Book chapter 3.
1. Line Structure:
-Simple
- Scalar type or linear type
- Workers have just one Foreman or supervisor above them to report to.
- Diagram required
2. Functional
- Each section is specifically divided life clerical, shop floor etc
- Each section has individual foremen to whom the workers report to
- workers have to report to different foremen for different issues hence one worker has too many foreman to report to at a time
Because of it’s complexity it is now obsolete.
- Diagram required
3. Line and staff structure.
- Line activities refer to the primary activities
- Staff activities refer to the supporting activities
- Diagram required
-
4. Project Organization
- When and already existing organization has a specific problem a project org is formed
- It is temporary
- Division of problem into sub projects
- Specialists are brought together
- Diagram required
-
5. Combination of matrix Org or superimposing project org and functional org produces Matrix org.
- Diagram required
Delegation of authority??
Departmentation??
Committees??
Business Organization (forms of ownership, industrial ownership)
- Based on the Capital providing factor
- Ownership means- titled to, or the person who possesses the asset is the owner who invests and harvest.
Types:
1. Single Ownership
2. Partnership
3. Joint Stock
4. cooperative Org
5. Public Sector- state and central owned Org
1. Single Ownership:
Investmet and control by a single person.
Advantages:
- Easy to handle
- Profit can be single handedly handled
- Less legal formalities
- Simple nature
- Owner is free to modify
- Can be discontinued any time when needed by the ownere
Disadvantages:
- Owner is responsible for loss
- Gets only limited resources and money
- has limited life
Applictaion: small retail shops
2. Partnership:
When a small company grows owner canned handle it alone hence it is partnered by few.
Partnership: can be defined as the relationship between persons who agree to share the profit.
1. Active partners
2. Sleeping partners
Advantages:
1. Large capital available
2. Good legal structure
3. Can handle losses boldly
Disadvantage:
Danger of disagreement between the partners.
Types of partnership:
General partnership
Limited partnership.
Partnership is applied to medical clinics, law firms etc.
3.Joint Stock Company:
More people join to provide capital by means buying the shares of the company.
Larger type of partnership firm as the company grows.
Two Types:
1. Private Ltd
2. Public Ltd.
4.Cooperative Organizations:
- Same as a joint stock firm but mostly works for the public without a self centred profit for it self
- tries to work for the welfare of the people.
Eg : Cooperative Banks, Milk Societies etc.
4. Public Sector Enterprises:
State Govt Owned
Central Govt Owned
The bad effects of Capitalism (From Industrial Revolution) gave rise to socialism which is the basis of a Public Enterprise:
Owned by the State
Managed by the state
Owned and managed by the state
