Unit 3

Organizing

Q1) Explain the concept of Organizing.

A1) Organizing Concept-

The working connections vertical and flat relationship among people and gatherings that exist inside an association influence how its exercises are refined and facilitated. Compelling getting sorted out relies upon the dominance of a few significant ideas: work specialization, levels of leadership, authority, assignment, length of control, and centralization versus decentralization. A large number of these ideas depend on the standards created by Henri Fayol .Degree to which hierarchical assignments are isolated into discrete positions. Representatives inside every division perform just the undertakings identified with their particular capacity.

Q2) Explain the nature of organizing.                                                 

A2) NATURE OF ORGANISING:

 The main characteristics of an organizing are as follows:

1)     Process: Organizing is a process undertaken to accomplish objectives. The process of organizing consists of the following steps:1) Defining goals/objectives of the organization 2) Identifying and grouping of activities 3) Defining and delegating authority and responsibility 4) Establishing relationships in the organization 5) Co-coordinating activities.

2)     Goal oriented: Every organization has its own objectives and goals. Organizing is the function employed to achieve the individual goals of the employees with overall objectives of the firm.

3)     Group of individual: Individuals form a group and the groups form an organization. Thus, organization is the composition of individuals and groups. Individuals are grouped into departments and their work is co-ordinate directed towards achievement of organization goals.

4)     Integration: The organization divides the entire work and assigns the tasks to individuals in order to achieve the organizational objectives. Each one has to perform a different tasks of one individual must be co-ordinated with the tasks of others. Collectively these tasks at the final stage are called integration.

5)     Continuity: An organization is a group of people in which they work together to achieve the goals of that organization. This relationship does not come to an end after completing the task. Organizing is a never ending process.

6)     Decision Making: Top management has a right and power to take decisions. It is a task of a manager to get the things done from the subordinates in the most efficient and effective manner.

7)     Common Targets: To level management set the overall goals for an organization. It is an integrated and collective effort from all the employees towards the achievement of common targets or goals setup by an organization.

8)     Authority: Authority is the power to take decisions and to get the work done from the subordinates. Every manager in the organization must be given adequate authority so that he can take the right decisions to get the work done.

9)     Responsibility: The manager who is provided with authority must made responsible. There must be a balance between authority and responsibility.

Q3: Explain the process of Organisation.

A3) PROCESS OF ORGANISATION:

Process of organization, for sake of clarity of discussion and a far better comprehension of those, are classified in the following manner:

 (I) Overall Principles:

Under this classification, a number of the very fundamental principles of organization are included i.e. principles which are absolutely essential for an efficient and logical functioning of the organization.

A brief explanation of the principles under this category is as follows:

(i) Principle of unity of objective:

Very simply stated, this principle requires that individual and departmental objectives throughout the enterprise must be perfectly harmonized; which all objectives must be mutually supportive and collectively contributing to overall common objectives.

(ii) Principle of simplicity:

The observance of this principle requires that the management must, as far as possible, design a simple organizational structure. a straightforward structure facilitates a far better understanding of superior- subordinate relationships; and provides background for better co-operation among people.

(iii) Principle of flexibility:

While designing the organizational structure, the management must provide for in-built devices within the structure itself; which might facilitate changes within the organizational structure to be effected as and when environmental factors-internal and/or external- so demand.

(II) Structural Principles:

Structural principles of organization relate to those aspects of the organization, which have an impact on the structuring (or the development) of the organization; its fundamental design and shape.

Some of the important principles, during this context, could be the subsequent ones:

(iv) Principle of division of work:

Since the total work of the enterprise can't be performed by just one person; it's imperative that such work must be suitably divided among variety of persons. In fact, the total managerial work need to be divided among variety of managers; and the total operational work being divided among variety of operating personnel.

(v) Principles of functional definition:

The above stated principle implies that the role (or job) of each individual and of every department of the enterprise must be suitably defined, in terms of the-work content, the authority and facilities required for job performance and the relationship of the job with those of others, within the enterprise.

(vi) Principle of optimum departmentation:

There are some ways and bases for creating departments within an organization. consistent with the principle of optimum departmentation, departments in an organization must be so created and maintained-as to facilitate the simplest attainment of the common objectives of the enterprise.

(vii) Principle of unity of direction:

The principle implies that every group of activities having the same objective must have just one overall head and just one overall or master plan.

As a principle of organization, this concept of unity of direction must be so embedded in designing the organizational structure that for every group of similar activities, there's a provision for only one overall head-having authority over all personnel performing a similar function, anywhere, in the organization.

(viii) Span of management principle:

The span of management principle is variously called as- the span of control or the span of supervision. However, the phrase ‘span of management’ is that the widest; including also the notions of span of control and span of supervision.

The span of management principle implies that there's a limit to the number of subordinates; whose work might be effectively managed (controlled or supervised) by a superior.

(III) Operational Principles:

Operational principles of organization can be suggested to be those which have a bearing on the running or functioning of the organization.

Some important principles, under this category, are as follows:

(ix) Principle of adequate delegation:

By the principle of adequate delegation, we mean that every managerial position be given adequate (or necessary or requisite) authority-to enable the holder of the position i.e. the manager to cope successfully with the wants of his job.

(x) Scalar chain principle:

Scalar chain implies a chain of superiors-ranging from the highest rank to the lowest rank-in a corporation . The scalar chain forms the base of authority-responsibility relationships among managers and subordinates, within the organisation; thus promoting mutual understanding among superiors and subordinates at different levels of the organization.

As a principle of organization, scalar chain principle requires its incorporation into the design of the organisation, for ensuring smooth running of the enterprise life.

(xi) Principle of unity of command:

The above-sated principle implies that an employee must receive orders and instructions, only from one superior, at a time. The observance of this principle is desirable for reasons of removing doubts and confusions from the mind of the employees; and for facilitating exact fixation of responsibility on individuals for the results expected of them.

(xii) Authority-level principle:

The authority-level principle implies that managers at particular levels within the management hierarchy must decide only those matters which fall within the purview of the authority vested in their managerial positions.

A natural extension of this principle is that if a manager at any level of the management hierarchy comes across a matter not covered by his authority; the matter must either be referred upwards within the hierarchy or pushed down the hierarchy at the acceptable level for decision.

Q4) Explain the significance of organizing.

A4) SIGNIFICANCE OF ORGANIZING

1) Ensures co-ordination: Due to good organization structure, co-ordination is possible in the organization. Co-ordination refers to interlinking of actions of the subordinates by the superior. The activities of the various individuals, and departments are combined together to accomplish company goals.

2) Optimum utilization of resources: Organization ensures optimum utilization of resources – human, financial and physical resources. The resources are put to best possible use.

3) Facilitates effective management: A properly designed organization facilitates effective management. It avoids confusion, delays and duplication of work. The work is systematically divided and grouped into several sections or units, so as to achieve desired results.

4) Motivates personnel: A sound organization avoids confusion, misunderstandings and overlapping of functions, and as such employees are motivated to produce better results. This is mainly because of good relations existing between the superiors and their subordinates in the organization.

5)  Facilitates delegation of authority: A good organization structure enables the superiors to delegate authority to the subordinates. The superiors are in a position to delegate the proper degree of authority to the right subordinates. Without proper delegation, it would not be possible to conduct the activities of the organization smoothly and quickly.

6)  Encourages initiative and innovation: Due to effective delegation of authority, there is freedom of self-expression. The subordinates are encouraged to show their initiative, which helps the organization to excel and grow.

7) Technological improvements: Sound organizations have contributed to the technological developments. Through research and development, the organizations come with new methods, new machines, and techniques, which can be effectively used for business activities.

8) Facilitates growth: Sound organizations achieve good success. This enables the organization to grow and diversify. Large progressive firms are the direct outcome of the success of effective organizing.

Q5) What is a Authority?

A5) Authority: Authority can be characterized as the force and right of an individual to utilize and assign the assets effectively, to take choices and to provide arranges to accomplish the hierarchical destinations. Authority must be all around characterized. All individuals who have the authority should realize what is the extent of their power is and they shouldn't misutilize it. Authority is the option to provide orders arranges and completes the things. The high level administration has most prominent position. Authority consistently moves start to finish. It clarifies how an unrivaled completes work from his subordinate by obviously clarifying what is anticipated from him and how he should go about it. Authority should be went with an equivalent measure of obligation. Appointing the position to another person doesn't infer getting away from responsibility. Responsibility actually rest with the individual having the most extreme position.

Q6) What is responsibility?

A6) Responsibility: Responsibility the obligation of the individual to finish the undertaking allocated to him. An individual who is given the duty ought to guarantee that he achieves the undertakings doled out to him. In the event that the undertakings for which he was considered capable are not finished, at that point he ought not to give clarifications or reasons. Duty without sufficient position prompts discontent and disappointment among the individual. Obligation streams from base to top. The center level and lower level administration holds greater duty. The individual considered liable for an occupation is responsible for it. In the event that he plays out the undertakings doled out true to form, he is headed for acclaims. While on the off chance that he doesn't achieve undertakings appointed true to form, at that point likewise he is responsible for that.

Q7) Write a note on Authority and responsibility relationship.

A7) Relationship between Authority and Responsibility

Authority is the lawful right of individual or better than order his subordinates while responsibility is the commitment of individual to do his obligations according to principles of execution Authority streams from the bosses to subordinates, in which requests and directions are given to subordinates to finish the undertaking. It is just through power, a director practices control. In a manner through practicing the control the predominant is requesting responsibility from subordinates .On the off chance that the promoting director coordinates the business administrator for 50 units of offer to be embraced in a month. On the off chance that the above norms are not refined, it is the promoting supervisor who will be responsible to the CEO. Along these lines, we can say that power streams through and through and obligation streams from base to top. Responsibility is an aftereffect of duty and obligation is consequence of power. In this way, for each position an equivalent responsibility is appended.

Responsibility without power is a typical issue in associations with lopsided, conflicting administration. People who end up with obligation without power will consistently think that it’s a lot harder to succeed and will wind up in a tough situation more as often as possible than those with a solid position presence. This is to a great extent because of the interconnectedness of power and obligation with regards to making an association effective in general. Legitimate power exists to appoint assignments possible to meet the authoritative targets. When there is no position, the requirement of obligations and errands tumbles to the wayside, and representative endeavors stray from the way towards progress. In the event that an individual is given some degree of duty without adequate authority upholding that, they are likely not going to perform as well as could be expected, and could even neglect to achieve the errand by any means.

Q8) What is Centralisation? What are its advantages and disadvantages?

A8) CENTRALIZATION:

Centralization of authority refers to the concentration of decision making power at the top level of management. All important decisions are taken at the top level. Everything which goes to reduce the importance of subordinate is called centralization.

 ‘Centralization is the systematic and consistent reservation of authority at central points within the organization.’ – Louis A. Allen.

Q9) What are advantages and disadvantages of centralisation?

A9) Advantages of Centralization (Importance of Centralization):

Top management may prefer to reserve maximum authority with itself because of the following advantages:

1. It facilitates greater uniformity of action throughout the organization

2. It provides better opportunities for development of personal leadership

3. It facilitates integration of efforts and unites total operations of an enterprise

4. It helps in quick decision making which in turn facilitates effective handling of emergency situations

5. It reduces wastages of efforts by avoiding duplication of work

6. It makes control easier

7. It allows flexibility and rapidity of adjustments to changing conditions

Disadvantages of Centralization:

(a) It increases the burden of the top executives with routine functions and hamper their development

 (b) It affects the initiative of the lower level management people

(c) It does not provide scope for employee participation in decision making

(d) There is no scope for specialization because an individual will have to look after many functions at a time.

Q10) What is Decentralisation?

A10) DECENTRALIZATION:

It refers to the dispersal of decision making power to the lower level of the organization.

 ‘Decentralization refers to the systematic effort to delegate to the lowest levels all authority except that which can only be exercised at central points’. – Louis A. Allen

‘When authority is dispersed decentralization is present.’ – George Terry.

In large organizations it is not always possible for all activities to be organized from the centre. Hence, a certain amount of decentralization becomes necessary.

Q11) What are the advantages and disadvantages of decentralisation?

A11) Advantages of Decentralization (Importance of Decentralization):

1. It is a good philosophy to motivate the mangers so that it results in better job satisfaction.

2. It increases the morale of lower level managers by satisfying their need for participation and independence.

3. It helps to meet the challenges and complexities of big enterprises and provides scope for growth and development.

4. It promotes quick decision making and avoids confusion

5. It provides training for future managers by giving them an opportunity to develop their skills.

6. It facilitates effective communication, because in decentralization set up span is wider with a few levels of organization.

7. It ensures effective control and supervision. As all activities are coordinated at the lower level, any sort of adjustment can be made at lower level itself. Thus, it gives complete freedom of action.

8. It gives a relief to the top management from concentrating on day-to-day affairs and permits them to concentrate on developmental activities.

Disadvantages of Decentralization:

a. It is costly because it requires competent people to be employed to accept authority. The success of a unit depends on the ability and capability of the head.

b. It may lead to inconsistencies, when every department or division does not adopt procedures uniformly.

c. It creates a problem of among various units or departments.

d. Differences of opinions of top management and unit head often lead to conflicts.

e. Among the departments hostility may be developed due to severe competition. This will hamper the sharing of knowledge and resources.

f. Economies of scale may not be realized as each unit becomes small and independent.

By and large, decentralization is suitable for large scale organizations operating in different geographical areas or dealing with multiple products.

Q12) Discuss different forms of Organizational Structure with their advantages and disadvantages.

A12) Organizational Structure – Top 3 Forms: Functional and Multidivisional, Geographical and Matrix Structure (With Advantages and Disadvantages)

1. Functional and Multidivisional Structure:

A functional structure consists of a CEO who is supported by functional managers belonging to production, marketing, purchase, finance, personnel, R&D, etc. This structure enables the achieve­ment of functional excellence, efficiency and specialisation, but suffers from problems, such as, lack of product focus, long channels of communication, coordination problems, lack of importance given to overall corporate missions and objectives, and excessive involvement of the CEO in integrat­ing decisions and actions across various functions.

As against this, the multidivisional structure (also called M – Form) consists of more than one operating division, each of which is a distinct business area. Here, the CEO delegates responsibilities for formulation and implementation of business-level strategies and managing day-to-day affairs to the respective divisional heads, thereby making the corporate office responsible for the development and implementation of the corporate-level strategy and for exercising strategic and financial controls.

Strategic control, as exercised by the corporate office, is defined as the process of target-setting and monitoring in relation to the key operating areas pertaining to each business division, which are otherwise autonomous. To do an effective job in this regard, the corporate office must have a proper understanding of the environment, strategy and operational issues relating to each distinct business area.

The financial controls, exercised by the corporate office ensure that each division achieves the target profit, cash-flows and ROI. Interdepend­ence between the operating divisions (a normal feature in a company which has grown through a related diversification strategy) makes it difficult to exercise financial control, since attributing finan­cial performance correctly to one or the other divisions may involve subjective discretion. This implies that there is a possibility of dilution of internal control when a firm pursues extensive product diversification using the resources of various divisions.

Of all the options available in the organizational structure, an M-Form is the one most used. Chandler identified this form of structure as an innovative response to problems of coordination and control which are normally faced in a functional structure. Other advantages include ease in evaluating business performance, less complexity in allocating financial resources, improved coordi­nation, and availability of more time to the top management for concentrating on long-term strate­gic issues.

For diversified businesses (both related and unrelated), the M-Form structure is more useful vis-a-vis the functional structure, which works well when the firm is implementing single or domi­nant business strategies. Once an M-Form structure is put in place, a firm’s potential to enter a large number of diversified businesses (related/unrelated) increases.

Johnson and Scholes have listed the following advantages and disadvantages of functional and multidivisional structures:

FUNCTIONAL STRUCTURE:

Advantages:

a. The CEO in touch with entire operations,

b. Reduction/Simplification of control mechanisms,

c. Clarity of roles and responsibilities,

d. Specialists at senior and middle management levels, and

e. Efficiency and specialization.

Disadvantages:

i. Senior management overburdened with operational matters,

ii. Lack of attention to strategic issues,

iii. Difficulty in coping with diversity,

iv. Coordination between different departments and functions become difficult, and

v. Inability to adapt to changes.

MULTIDIVISIONAL STRUCTURE:

Advantages:

a. Focus on each business area (product-market),

b. Ease of evaluation of unit performance,

c. Facilitates acquisition/divestment of units,

d. Helps in drawing attention of the senior management to strategic issues, and

e. Facilitates development of general management competencies.

Disadvantages:

i. Possible confusion with regard to the extent of centralisation and decentralization.

ii. Inter-divisional conflict and resulting sub-optimisation.

iii. Problems of setting transfer prices for inter-unit trading.

iv. Duplication of resources.

v. Difficulty in coordination if there are too many divisions.

GEOGRAPHICAL STRUCTURE:

In a geographical structure, a firm’s overall geographical spread is divided into a certain number of homogeneous regions or territories, each headed by a regional or territorial head responding to the CEO. Each region, which deals with all the products of the company, is made by and large indepen­dent with the required resource support and is expected to pursue region specific strategies. Some­times, a geographical structure is built-in within a functional or M-Form structure. For example, in cases where there are one or two centralised manufacturing facilities, the firm can have a functional structure below the CEO, but within the overall sales function, it can have a geographical structure.

MATRIX STRUCTURE:

A matrix structure is a combination of the structural options covered in (1) and (2) above. Such structures are chosen when there is a need for more than one consideration for designing the organizational structure (for example, there is no clear-cut preference for either functional specialisation or product-market focus or geographical thrust). Normally a matrix structure reflects the need to recognise the simultaneous importance of at least two dimensions, such as, (i) product focus as well as geographical thrust, or (ii) product focus as well as functional specialisation.

While there are certain advantages of a matrix structure, there are also certain disadvantages, as can be seen from the following:

Advantages:

a. Better quality of decision making since multiple perspectives are allowed to be built-in.

b. Face-To-Face contact helps in reducing the impact of bureaucracy.

c. Improved managerial motivation and development.

Disadvantages:

i. Dilution of priority, lack of ownership.

ii. Confused/unclear job and task responsibilities.

iii. Lack of focus in cost and profit responsibilities.

iv. Potential for conflict within the teams.

If managed well, by clearly spelling out which arm of the matrix should lead, and duly sup­ported by the right managerial mind set and competencies (for example, the managers should be capable of collaborating across the matrix and they should be comfortable to work under ambiguity), a matrix structure can deliver the desired results. It can improve the quality of decision making in situations where exclusive emphasis on one dimension (be it product, function or geographical) is likely to undermine the overall interest of the organization.

Combination of Structural Forms:

Very few companies adopt one or the other of the above alternatives in their pure form. Further, no organization adheres strictly to one particular type of structure for all times to come.

A host of factors, such as:

(i) The strategy the company wishes to follow,

(ii) Its history, tradition and culture,

(iii) The profile of people and their skill level,

(iv) Managerial competencies and motivation,

(v) Requirements of planning, evaluation and control,

(vi)The need for collaboration/liaison between various functional/product/geographical groups for optimum decision making, etc., determine what kind of structure will be appropriate for the firm.

Experience shows that in most cases, the organization structure chosen after taking into account the just mentioned factors tends to be a mixed one, reflecting the features of more than one of the three types of structure described before.