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Organizational MANAGEMENT
CH.3. Organizational MANAGEMENT
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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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CHARACTERISTICS OF ORGANIZATION:
Task Functions Structure Management Working people Technology Rules ®ulations Departments Aims & objectives
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STEPS IN ORGANIZATION:
Find goals and objectives Formulate supporting policy and plans Identify the needed activities and classify them Best grouping of these activities Assignment of duties to staff Horizontal and vertical relationship of authority and responsibility
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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.
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Structure of organization
Goals & objectives Resources available Functions Relationship among tasks & activites Type of production & production Span of control Communication No. of employees
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TYPES OF ORGANIZATION:
LINE organization FUNCTIONAL organization LINE & STAFF organization PROJECT organization
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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.
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Examples: Small business, military, automated industries like textile, paper etc.
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ADVANTAGES & DISADVANTAGES OF LINE ORGANIZATION
Simplicity 1. Lack of specification 2. Division of authority and responsibility 2. Over loading 3. Unity of control 3. Lack of initiative 4. Speedy action 4. Scope for favoritism 5. Discipline 5. Dictatorial 6. Economical 6. Limited communication 7. Co-ordination 7. Wastage of material and man-hours 8. Direct communication 8. Subjective approach 9. Flexible structure 9. Instability 10. Lack of co-ordination
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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.
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FUNCTIONAL ORGANIZATION
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ADVANTAGES AND DISADVANTAGES OF FUNCTIONAL ORGANIZATION
Benefit of specialization Application of expert knowledge Reducing the work load Efficiency Adequate supervision Relief to line executive Co-operation Economy Flexibility Mass production Complex relationship Discipline Over specialization Ineffective co-ordination Speed of action Centralization Lack of responsibility Increasing the overhead expenses Poor administration Suitability of functional organization
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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.
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ADVANTAGES AND DISADVANTAGES OF LINE & STAFF ORGANIZATION
Advantages of line and staff organization Disadvantages of line and staff organization Facilitates to work faster and better If powers are not defined then get confusion Specialization is attained Line officers may reject advice Enables to utilize experience and advice Staff officers are not responsible if favorable results are not obtained. Officers can take sound advice Difference between line and staff officers will defeat the very purpose of specialization New technology or procedure can be introduced without any dislocation Line officers blame staff officers for unfavorable results Promotes efficient functioning of line officers Very good opportunity is made available to young person to get training
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PROJECT ORGANIZATION
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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
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ADVANTAGES No interference to parent organization.
Result oriented activities are carried out. Team work culture is developed.
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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.
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DEPARTMENTATION
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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.
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TYPES OF DEPARTMENTATION
Grouping of activities according to products. Applicable to large scale companies. All depts., carry functions of design, manufacturing ,marketing and sales More manpower required BY PRODUCT Most popular method of departmentation. The grouping of common & homogeneous activities to form an organizational unit. basic function can be divided into sub-function Each department have a head with the title departmental manager BY FUNCTION Based on process required to manufacture product.. Sub divisions based on various processes. BY PROCESS
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Process Departmentation:
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PRINCIPLES OF ORGANIZATION
AUTHORITY AND RESPONSIBILITY SPAN OF CONTROL EFFECTIVE DELEGATION BALANCE,STABILITY AND FLEXIBILITY COMMUNICATION CENTRALISATION & DECENTRALISATION
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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
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AUTHORITY AND RESPONSIBILITY
Responsibility-the other side of coin. Accountability for result. Higher authorities have higher responsibilities. Can be delegated but not be shared.
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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”.
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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.
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BALANCE,STABILITY AND FLEXIBILITY
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.
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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.
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COMMUNICATION
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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.
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TYPES OF COMMUNICATION
ORAL Face to face communication Speaker says something and listener listens to it. Eg.Meetings, Telephonic conversation,discussions,debates WRITTEN Information is shared in written format Eg.: notices ,letters, s, reports,etc. NON VERBAL Communication withour words. Done by body language, facial expressions and physical movements. Anger,fear,surprise,etc.
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TYPES OF COMMUNICATION
UPWARD Communication with higher authorities Eg.Complaints,feedback,requests,etc. DOWNWARD Communication with subordinates Eg.: Instructions,orders,etc. HORIZONTAL Communication with colleagues an similar cadre people Eg.Discussions,sharing of knowledge,etc
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TYPES OF COMMUNICATION
FORMAL Communication related to official work E.g. Notices, Meetings, orders ,etc. INFORMAL Off record communication , friendly communication , communication other than work. Eg.Discussions,chichat,communication through social networking
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BARRIERS IN COMMUNICATION
Language problem Wrong timing Cultural barriers Network breakdown Lack of feedback Poor media Wrong channel of information
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CENTRALISATION & DECENTRALISATION
Concentration of authority at the centre. Few seniors or heads will retain important responsibilities. DECENTRALISATION: Responsibilities distributed to subordinates Responsibilities are spread across organization.
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FACTORS IN SELECTION OF OWNERSHIP
Size of business Type of product Capital inflow Govt. policy Motive of business Type of business Life of business
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TYPES OF OWNERSHIPS: Proprietorship Partnership General Limited Joint
stock company Private ltd. Public ltd. Co-operative society Govnt. sector Govnt.dept Public corporation Public/Govnt. company
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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
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SOLE PROPRIETORSHIP ADVANTAGES DISADVANTAGES Easy to establish
Start up costs Owner takes all the profit Responsible for all the functions Makes decision on his own Unlimited liability
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PARTNERSHIP Most important type of ownership
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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,hospitalsservice centers,software companies,etc Examples: Flipkart
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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
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SAMPLE OF A PARTNERSHIP AGREEMENT
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TYPES OF PARTNERSHIPS GENERAL LIMITED All partners have same status
Success & failures shared by all equally. More interference. GENERAL Limited liability Few attend meetings Less interference LIMITED
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TYPES OF PARTNERS
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: TYPES OF PARTNERS Active General Dormant/Sleeping Nominal Secret
Called as “working partners” Active in day to day activities and management Active All partners in partnership are called as general partners. General Don’t participate in business activities. Also called “silent partners.” Investment is the only contribution : share profit and loss Dormant/Sleeping Allow to use their name – Status, reputation and brand name Nor participate in business activities neither invest in organization. Nominal Opposite to nominal partner type Involve in “Functioning secretly” Names are confidential Secret Partners below 18 years Limited liability Consent of Non minor partners is important Minor
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JOINT STOCK COMPANIES Stock: “Investment done in terms of shares in any company.” Stock is finance available to company. Joint stock company: “Joint ownership by a no. of shareholders in a company” Joint stock company is an association of shareholders. Preferred for large scale organization. Examples: Bajaj Auto, Tata Motors
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TYPES OF JOINT STOCK COMPANIES
PRIVATE LTD. COMPANY Shareholders are private members. Min Members= 02 Max members = 50 Max no of Directors =02 Shares transferable only among the members Less documentation Audit and Financial budget is necessary Circulation of Balance sheet, Profit and loss account ,etc among members is must. PUBLIC LTD. COMPANY Shareholders are general public hence called so. Min Members= 07 Max members = unlimited Max no of Directors =03 Shares transferable among general public More documentation. General meeting each year is compulsory Documentation like Memorandum of association ,List of directors, etc is to be declared to public
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EXAMPLES OF PVT LTD. AND JOINT STOCK COMPANIES
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CO-OPERATIVE SOCIETY:
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CO-OPERATIVE SOCIETY:
A cooperative (also known as co-operative) is an association of people united voluntarily to meet their common economic needs and aspirations through a jointly owned business Form of private ownership and lies in hands of members. Service and not profit is the main motive. Min members = 10 & Max members = unlimited Election for various higher authorities takes place Cooperatives include non-profit community organizations and businesses Producers cooperative :eg. Sugar ,paper consumer cooperative : owned and managed by the people who use services worker cooperative : people who work in a common place housing cooperative : people who live there
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CO-OPERATIVE SOCIETY:
Mostly seen in rural areas Members are share holders ; they get profit periodically. Limited liability. Political interference is more. Slow decision making. Not all cooperatives are successful. The State of Maharashtra has a Cooperative society history since 1870 and has seen the most successful cooperative movements in history. Suger coopearive societies, Credit societies ,State cooperative banks,etc.
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GOVERNMENT SECTOR Also called “Public Sector” or “State Enterprises”
As the govnt is representation of public : this type of ownership is called as public sector. Govnt. Is involved partially or completely. Capital needed provided by govnt and profit generated is given to govnt.
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GOVERNMENT SECTOR Central or state govnt have privilege in ownership.
Basic aim: providing service to society ; earning profit is not the priority. Development of nation. Employment opportunities. Balanced regional growth. Rapid economic and industrialdevelopment.
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TYPES OF GOVERNMENT SECTOR
GOVERNMENT DEPT PUBLIC CORPORATION GOVNT./PUBLIC COMPANY
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GOVERNMENT DEPT
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GOVERNMENT DEPT Government departments are organizations working under the Parliament / state assembly in India policymaking and working guidelines is done by govnt itself (Parliament / state assembly) ; cabinet and state ministers do this. Funds are provided by govnt. Service is the only motive. Administration heads are Civil servants like IAS ,IRS officers. ISRO,DRDO,Indian Railways,PWD,etc.
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PUBLIC CORPORATION
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PUBLIC CORPORATION Government -owned corporation
Public company i.e. a limited liability company that offers its securities (shares) for sale to the general public. Service with profit is the motive Its status varies from being a part of the government to being stock companies with the state as a regular stockholder Also termed as Public Sector Undertaking(PSU) or a Central Public Sector Enterprise (CPSE) More professional approach than govnt departments. Long term rules and policies are done after discussion in Parliament or State Assembly.
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GOVNT./PUBLIC COMPANY
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GOVNT./PUBLIC COMPANY Major shares are with govnt.
Earning profit and service are the motives. Basic policies and mission-vision decided by parliament. Except few higher posts all the recruitment is done by private agencies. High level of professionalism than govnt department. More efficiency. Revenue generated strengthens government economy
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Comparison between all types of Govt Sector
Sr.No. Parameter Govnt. Department Public Corporation Govnt. /Public Company 1 Govnt Control Highest Medium Minimum 2 Freedom in decision making 3 Recruitment by govnt. All posts Many posts Few posts 4 Efficiency Less Average Good 5 Motive Service Service and profit Profit and service
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