Module II – Management and Organization

 Management process – planning-Mission – objectives – goals – strategy – policies –

programmes – procedures
 Organizing, principles of organizing, organization structures
 Directing, Leadership
 Motivation, Controlling

FUNCTIONS OF MANAGEMENT
1. PLANNING:

Planning involves the formulation of what is to be done, how, when, where it is to be done,
who is to do it and how results are to be evaluated. It is the first essential which is to be
performed by a manager to determine what must be done by the member in order to accomplish
the work.

It is the most important step in the process of getting results. It enables the management to be
a step ahead of each activity, retain initiative to make use of any opportunity and anticipate
problems before they actually arise.

The process of planning involves:

a) Crystallization of determination of the corporate objectives:

It means that first of all, the targets to be achieved should be well defined. The top management
must lay down the objectives of the company as far as possible in quantified terms.

b) Collection and classification of information:

It means that relevant information relating to the objectives should be properly collected and
classified.

c) Development of the alternative courses of action:

Comparison of the alternatives in terms of objectives, feasibility and consequences.

d) Selection of the optimum course of action:

The manager is often faced with alternative courses of action to must adopt the one which has
the highest probability yielding the maximum benefit or gain for himself and the company, this
selection from alternative courses of action i8 sometimes referred to as the principle of
alternative planning.

e) Establishment of policies, procedures/ methods, schedule systems, standard and

budgets:

It means that the plans must be detailed and flexible so that they are capable of being readjusted
in case there is a change in the working conditions and/or objectives.
 2. ORGANIZING:

After the objectives and course and make up of action have been determined, the next step is
to distribute or allocate the necessary component activities among the members of the group.
The work of task allocation, authority delegation and relationship establishing by the manager
is known as organizing.

The process of organizing involves:

1. Division of the work in to component activities;

2. Assigning people to tasks;
3. Defining responsibilities;
4. Delegation of authority; and
5. Establishment of structural relationships to secure coordination.

3. STAFFING:

Success of any organisation depends upon the ability» qualification & experience of its
employees. So, in managing the affairs smoothly, the role of recruitment à selection is very
important. For doing this work, the superior has to do man power planning i.e., the planning
for how many persons are required and what should be the qualities they possess. On this basis,
persons are selected and after that they are trained. Staffing function involves the following
activities:

1. Forecasting of the number of personnel required.

2. Decide their qualification which is required.
3. Recruitment & selection.
4. Training & development of employees.
5. Performance evaluation of employees.
6. Take the decision relating to the issues like promotion, transfer, demotion etc.
7. Prepare a compensation package plan.
8. Maintaining personnel accounts.

4. DIRECTING:

To carry out physically the activities resulting from the planning & organizing steps, it is
necessary for the manager to take measures that will start and continue action as long as they
are needed in order to accomplish the tasks by the members of the group.

The process of directing involves:

1. Providing effective leadership.

2. Integrating people and tasks and convincing them to assist in the achievement of the
overall objectives.
3. Effective communication, and
4. Providing climate for subordinates' development.
5. CONTROLLING:

Controlling involves checking the performance by comparing it with the desired results to see
how much has been achieved or whether we are going in right direction or not. Controlling is
an exercise of intro-inspection.

Controlling involves the following activities:

1. Continuous observation and study of periodic results performance in order to identify

potential problems;
2. Selection of the best of the mode of control;
3. Comparison of the performance with the range of standards established beforehand;
4. Pinpointing significant deviations;
5. Assertion their exact causes; and
6. Initiation and implementation of the corrective action.
MANAGEMENT PROCESS
Management is a process which brings the scarce human and material resources together and
motivates people for the achievement of objectives of the organization. Management is not a
onetime act but an on-going series of interrelated activities. The sum total of these activities is
known as management process. It consists of a set of interrelated operations or functions
necessary to achieve desired organizational goals. A process is a systematic way of doing
things. It is concerned with conversion of inputs into outputs. An analysis of management
process will enable us to know the functions which managers perform.

MANAGEMENT PLANNING

Planning is a major and primary function of management that involves setting objectives and
determining a course of action for achieving those objectives. Planning requires that managers
be aware of environmental conditions facing their organization and forecast future conditions.
It also requires that managers be good decision makers.

No organisation can operate properly without planning. Planning is a preparatory step for
action. It means systematized pre-thinking for determining a course of action to achieve some
desired result. Planning is essentially a process of deciding in advance what is to be done, when
and where it is to be done, and how it is to be done, and by whom. To plan is to look ahead and
chalk out the future course of operations of an enterprise.

Through planning, the manager fixes the objectives of the organisation as a whole and, in the
light of this, the goals of its various departments. Then he proceeds to prepare a kind of
'blueprint' mapping out the ways of attaining these objectives.

Therefore, planning may be defined as follows:

Planning is the process by which the managers of an organisation set objectives, make an
overall assessment of the future, and chart the courses of action with a view to achieving the
organisational goals.

From this definition it follows that the planning process involves:

(i) The determination of appropriate goals and objectives,

(ii) The specification of the actions needed to reach the established objectives; and
(iii) The optimum period of time for achieving them.
STEPS IN PLANNING

A plan is essentially today's design for tomorrow's action and an outline of the steps to be taken
in future. A good plan must be simple, balanced and flexible, and make utmost use of the
existing resources. It must be based on clearly defined objectives.

Planning is a process consisting of several steps. The process begins with environmental
scanning which simply means that planners must be aware of the critical contingencies facing
their organization in terms of economic conditions, their competitors, and their customers.
Planners must then attempt to forecast future conditions. These forecasts form the basis for
planning.

Planners must establish objectives, which are statements of what needs to be achieved and
when. Planners must then identify alternative courses of action for achieving objectives. After
evaluating the various alternatives, planners must make decisions about the best courses of
action for achieving objectives. They must then formulate necessary steps and ensure effective
implementation of plans. Finally, planners must constantly evaluate the success of their plans
and take corrective action when necessary.

For preparation of such a plan, a definite process involving the following steps has to be
followed:

1. Perception of the Opportunities:

The manager must first identify the opportunity that calls f0 planning and action. This is very
important for the planning process because it leads to formulation of plans by providing clue
as to whether opportunities exist for taking up particular plans.

Perception of opportunities includes a preliminary look at possible opportunities and the ability
to see them clearly and completely, an understanding of why the organisation wants to solve
the uncertainties and a vision what it expects to gain. This provides an opportunity to set the
objectives in real sense.

2. Establishment of the Objectives:

The next step in the planning process lies in the setting up of objectives to be achieved by the
enterprise in the clearest possible terms keeping in view its strength and limitation. Objectives
specify the results expected in measurable terms and indicate the end points of what is to be
done; where the primary emphasis is to be placed, and what is to be accomplished by various
types of plans. Enterprises start with a general objective.

From this are developed subordinate goals that contribute to the attainment of the general
objective. These, in turn, are supported by the specific objectives for the departments. In this
process a hierarchy of objectives is created. The plans at each level of the organisation are
made for the attainment of the appropriate objectives in the hierarchy. This hierarchy can be
built up by coordinating the plans of different departments.

3. Building the Planning Premises:

After determination of the organisational goals, it is necessary to establish planning premises,

that is, the conditions under which planning activities will be undertaken. This involves
collection of facts and figures necessary for planning the future course of the enterprise.
'Planning Premises' are planning assumptions relating to the expected environmental and
internal conditions.

So, planning premises are of two types - external and internal. External premises include total
factors in the environment like social, political, technological, competitors' plans and actions,
government policies, etc. Internal factors include the organisation's policies, resources of
various types, and the ability of the organisation to withstand the environmental pressure. The
plans are formulated in the light of both external and internal factors.

4. Identifying the Alternatives:

The next step in planning process is to search for various alternative courses of action based
on the organisational objectives and planning premises. A particular objective can be achieved
through various actions. For example, if an organisation has set its objective to grow further, it
can be achieved in several ways like expanding the field of business or product line, joining
with other organisations, or taking over another organisation, and so on. Within each category,
there may be several alternatives.

Since all alternatives cannot be considered for further analysis, it is necessary for the planner
to reduce in preliminary examination the number of alternatives that do not meet the minimum
preliminary criteria. Preliminary criteria can be defined in several ways— minimum
investment required, matching with the present business of the organisation, control by the
government, etc.

5. Evaluation of the Alternatives:

Various alternative courses that are considered feasible in terms of preliminary criteria have to
be taken for detailed evaluation. Alternative courses of action can be evaluated against the
criteria of cost, risks, benefit and organisational facilities. The strong and weak points of every
alternative should be analysed carefully.
Since there are so many complex variables connected with each goal and each possible plan,
the process of comparative evaluation is extremely difficult. For example, one alternative may
be the most profitable but requires heavy investment; another may be less profitable but also
involves less risk.

Moreover, there is no certainty about the outcome of any alternative course because it is related
with future which is not certain. Ultimately, the choice will depend upon what is determined
as the most critical factor from the point of view of the objectives of the enterprise.

6. Choice of the Course of Action:

After the evaluation of various alternatives, the most appropriate one is selected as the plan.
Sometimes evaluation shows that more than one alternative are equally good. In such a case,
the manager may choose more than one alternative at the same time. There is another reason
for choosing more than one alternative. Alternative course of action may be required to be
undertaken in future in changed situations. So, the planner must also be ready with alternative
—normally known as contingency plan- that can help coping up with the changed situation.

7. Formulation of Supporting or Derivative Plans:

After the best alternative is decided upon, the next step is to derive various plans for different
departments or sections of the organisation to support the main plan. In an organisation, there
can be various derivative plans like planning for buying raw materials and equipment,
developing new product, recruiting and training the personnel, etc.

These derivative plans are formulated out of the main plan and so they support it. The break-
down of the master plan into departmental and sectional plans provides a realistic picture of
the actions to be taken in future.

8. Establishing the Sequence of Activities:

After formulating the basic and derivative plans, the sequence of activities is determined so
that the plans are put into action. Based on the plans at various levels, it can be decided who
will do what and at what time. Budgets for various periods can be prepared to make plans more
concrete for implementation.

9. Securing Participation:

Plans must be communicated in greater details to the subordinates to increase their

understanding of the proposed action and for enlisting their co-operations in the execution of
plans. It will, thus, add to the quality of planning through the knowledge of additional facts,
new visions and revealing situations.

10. Providing for Future Evaluation:

For ensuring that the selected plans are proceeding with the right lines, it is of paramount
importance to devise a system of continuous evaluation and appraisal of the plan. It will help
in detecting the shortcomings and pitfalls of the plans and taking remedial actions well in time.
All the steps in the process of planning must be linked and co-ordinated with each other. For
successful implementation of a plan, it must be communicated to all levels of the organisation.

TYPES OF PLANNING

Planning may be of different types. According to the nature of planning, some of its important
types may be discussed as below:

i. Financial or Non-Financial Planning:

Every plan has a monetary side. In fact, planning has no significance if proper attention is not
given to the monetary resources of the concern. Financial plans relate to the monetary side of
a concern. They help a lot in bringing to light not only the financial position of a concern, but
also the resources where from money can be borrowed. Plans relating to the physical resources
of a concern may be termed as non-financial or non-cash plans. These are equally important
for the smooth running of an enterprise.

ii. Formal and Informal Planning:

Mere thinking is informal planning. But when the plans are reduced to black and white, they
become formal. Formal plans are more than just talk put on paper. For the success of an
enterprise, it is advisable that the planning should be formal and not informal. Formal planning
facilitates adequate control and pinpoints the weaknesses, if any.

iii. Specific or Routine Planning:

Any plan for a particular purpose is known as 'specific planning', but that which is mechanical
may be termed as 'routine planning.' In routine planning, the methods adopted for
accomplishing a particular object, and during a particular period, are the same without any
major change. Methods are merely repeated under a planned programmed. Routing does not
require any ingenuity or creativity on the part of the planners.

iv. Profit Planning:

The principal object of every business is to earn profit. Thus, specific efforts in this regard may
relate to 'profit planning. Profit planning is generally based on forecast, and therefore, to ret
profit, certain steps must be taken, duties must be assigned and the future forecasted in such a
way as to get the object fulfilled. Profit planning helps the management in attaining higher
level of profit.

Under this plan, different activities are integrated and hence people do not feel that they are
serving merely for earning profit. Like other plans, profit plans provide intermediate check
points enabling the management to appraise the progress made towards pre-determined goals.

v. Short and Long-Range Planning:

The definition of long-range and short- range planning depends on the manager's level in the
organisational hierarchy, on the type of business, the kind of industry in which the firm is
engaged, the production cycle, the quality of managerial practices and many other factors.

Ordinarily, short- range planning can be defined as planning which covers a period from six to
twelve months. Long-range planning usually involves time interval of three to five years.

In recent years, however, there has been an increasing trend for many firms to plan for five, ten
or even twenty years ahead. Thus, planning anywhere from one to five years is often considered
planning for an intermediate period, whereas anything from five years upward is properly
considered as long-range planning. It is necessary that long-range planning and short-range
planning be integrated and co-ordinated.

vi. Hierarchical Plans

Strategic planning involves analyzing competitive opportunities and threats, as well as the
strengths and weaknesses of the organization, and then determining how to position the
organization to compete effectively in their environment. Strategic planning has a long time
frame, often three years or more. Strategic planning generally includes the entire organization
and includes formulation of objectives. Strategic planning is often based on the organization’s
mission, which is its fundamental reason for existence. An organization’s top management
most often conducts strategic planning.

Tactical planning is intermediate-range (one to three years) planning that is designed to

develop relatively concrete and specific means to implement the strategic plan. Middle-level
managers often engage in tactical planning.

Operational planning generally assumes the existence of organization-wide or subunit goals

and objectives and specifies ways to achieve them. Operational planning is short-range (less
than a year) planning that is designed to develop specific action steps that support the strategic
and tactical plans.

vii. Organizational Scope Plans

 Business/divisional-level plans—focus on one of the organization's businesses (or
divisions) and its competitive position.
 Unit/functional-level plans—focus on the day-to-day operations of lower-level
organization units; marketing, human resources, accounting, and operations plans
(production).
 Tactical plans—division-level or unit-level plans designed to help an organization
accomplish its strategic plans.
viii. Contingency Plans
 Plans created to deal with events that might come to confront the organization (e.g.,
natural disasters, terrorist threats); alternative courses of action that are to be
implemented if events disrupt a planned course of action.
ORGANIZING

Organising means designing the organisation structure. Organizing is the function of

management that involves developing an organizational structure and allocating human
resources to ensure the accomplishment of objectives. The structure of the organization is the
framework within which effort is coordinated.

In performing the organising function, the manager differentiates and integrates the activities
of his organisation. By differentiation is meant the process of departmentalisation or
segmentation of activities on the basis of some homogeneity. Integration is the process of
achieving unity of effort among the various departments (segments or subsystems).

Organising is that managerial process which seeks to define the role of each individual
(manager and operator) towards the attainment of enterprise objectives. The term organising"
refers to the process of identifying and grouping of activities to be performed and dividing
them work and tasks is a key part of programme manage the work is more closely aligned to
the organization's ongoing strategy, rather than specific deliverables.

The structure is usually represented by an organization chart, which provides a graphic

representation of the chain of command within an organization. Decisions made about the
structure of an organization are generally referred to as organizational design decisions.

Organizing also involves the design of individual jobs within the organization. Decisions must
be made about the duties and responsibilities of individual jobs, as well as the manner in which
the duties should be carried out. Decisions made about the nature of jobs within the
organization are generally called “job design” decisions.

Importance of Organizing in an Organisation

1. Benefits of Specialization

Under organising, the whole work is systematically allocated and divided into different parts.
Right man is put at the right job. It increases the efficiency of workers and motivates them to
put their best into the work. Repetitive performance of a specific job on a regular basis helps a
worker gain experience and gets specialized in that job. As a result, organising leads to
specialization.

2. Clarity in Working Relationships

Organising helps in establishing working relationship and clearly defines the lines of
communication and also specifies who is to report to whom. This further helps in fixation of
responsibility and also specifies the dimensions of authority which an individual can exercise.

3. Optimum Utilization of Resources

Organising provides fuller and efficient use of all human, physical and financial resources.
Proper allocation of jobs helps in avoiding overlapping of work and ensures optimum use of
resources without any wastage.
 4. Adaptation to Changes

Organising helps business enterprises to adjust to the environmental changes. In order to ensure
smooth functioning of the enterprise, organising suitably modifies the organisational structure
and various inter-relationships existing in the enterprise. Moreover, it also provides stability in
the enterprise so that it continues to grow and survive inspite of changes.

5. Effective Administration

Organising helps in bringing about administrative efficiency because

(i) It leads to specialization which brings effectiveness in administration

(ii) It clarifies centres of authority & power and thus results in proper execution of
work.
(iii) It provides a clear description of jobs and related duties which results in avoiding
duplication of work.
6. Development of Personnel

Organising creates structure of an organisation. That structure provides a basis or framework

for assigning and performing various functions efficiently.

7. Expansion and Growth

Organising promotes growth and diversification of an enterprise. It enables the enterprise to

take up new challenges e.g. more job positions, departments, new product lines and also new
geographical territories etc. for increasing sales and profit.

DELEGATION

The process of delegation starts from the chief executive of an organisation who has the total
responsibility for the achievement of goals. In order to share the responsibility of
accomplishing goals, he further delegates the work to his subordinates.

These subordinates, finding the work assigned to them by their superior exceeds their "Span of
Control" assign a portion of their works to their own subordinates. This process continues till
all the tasks and activities are assigned to those who have the appropriate physical,
psychological and professional abilities to do it.

Elements of Delegation

The following three elements are in the scheme of delegation:

1. Assignment of duties or tasks.

2. Delegation of authority.
3. Accountability for performance of duties and exercise of authority.

1. Assignment of Duties or Tasks:

A manager has to assign a part of his duties to others under him or her because he cannot
himself perform all the work. So, when assigning duties he should ensure that the subordinates,
to whom work is assigned, perform their tasks sincerely and competently. Even after that a
manager assigns duties and tasks to his subordinates; he continues to be ultimately responsible
for the proper performance of these duties and tasks.

2. Delegation of Authority:

While the duties and tasks are entrusted to the subordinates by the superior, the authority should
be granted them to perform those duties and tasks well. It is called as "delegation of authority".
This delegation of authority is considered as an essential to take all actions, which lead to
accomplish their duties successfully, and the organisational goals.

3. Accountability for Performance of Duties and Exercise of Authority:

The person to whom any responsibility is assigned and authority is delegated should also be
made accountable or answerable for the proper performance of the assigned responsibility and
for proper exercise of the delegated authority.

SPAN OF CONTROL

The term "span of control" or "span of management is defines "the number of subordinates
who are working under one manager."

It indicates the number of subordinates who report directly to a manager.

"span of control implies that no single executive should have more people looking to him for
guidance and leadership than he can reasonably expected to serve."

There will be many subordinates who report to their manager in a wider span of control, while
a manager has fewer subordinates in a narrow span of control.
It must be decided that how many subordinates a superior can manage. Students of
Management have found that this number is usually four to eight subordinates at the upper
levels of organisation and eight to fifteen or more at the lower levels.

Importance of span of control

1. Span of control affects the efficient utilisation of managers and the effective performance
of their subordinates. Too wide a span may mean that managers are overstraining
themselves and that their subordinates are receiving too little guidance or control. Too
narrow a span of management may mean that managers are underutilised and that their
subordinates are over controlled.
2. There is a relationship between span of control and organisation structure. A narrow span
of management results in a “tall” organisation with many levels of supervision between top
management and the lowest organisational levels. This creates more communication and
cost problems. There is also the problem of finding trained managerial personnel. On the
other hand, a wide span for the same number of employees, means a “flat” organisation
with fewer management levels between top and bottom.

ORGANISATION STRUCTURES

Organisation structure is the pattern of organisational hierarchy based on authority

responsibility relationship.

According to Lounsbury Fish, "Organisation Structure is more than a chart. It is mechanism

through which management directs co-ordinates and controls the business. It is the foundation
of management."

Different Organisation Structures

1. Line Organisation

It is also known as scalar organization, military organization, vertical organization etc. This is
the simplest and oldest form of structure. The main characteristic of this type is superior
subordinate relationship. Authority flows vertically from top level person to all the persons
responsible for the execution of work. Everybody is responsible for his work and is accountable
to his boss. Since authority and responsibility flow in an unbroken straight line, it is called line
organization.
 Fig 2.4 Line Organisation

Advantages of Line Organization:

a. The line organization structure is very simple to understand and simple to operate.
b. Communication is fast and easy and feedback can be acted upon faster.
c. Responsibility is fixed and unified at each level and authority and accountability are clear-
cut, hence each individual knows to whom he is responsible and who is or in truth
responsible to him.
d. Since it is especially useful when the company is small in size, it provides for greater
control and discipline in the organization.
e. It makes rapid decisions and effective coordination possible. So it is economic and
effective.
f. The people in line type of organization get to know each other better and tend to feel close
to each other.
g. The system is capable of adjusting itself to changing conditions for the simple reason that
each executive has sole responsibility in his own sphere.

Disadvantages of Line Organization:

i. It is a rigid and inflexible form of organization.

ii. There is a tendency for line authority to become dictatorial.
iii. It overloads the executive with pressing activities so that long-range planning and policy
formulation are often neglected.,
iv. There is no provision for specialists and specialization, which is essential for growth and
optimisation.
v. Different departments may be much interested m their self-interests, rather than overall
organizational interests and welfare.
vi. It is likely to encourage nepotism.
vii. It does not provide any means by which a good worker may be rewarded and a bad one
punished.

2. Line and Staff Organisation

This type of organization structure is in large enterprises. The functional specialists are added
to the line in line and staff organization. Mere, staff is basically advisory in nature and usually
does not possess any command authority over line managers. Allen has defined line and staff
organization as follows.

"Line functions are those which have direct responsibility for accomplishing the objectives of
the enterprises and staff refers to those elements of the organization that help the line to work
most effectively in accomplishing the primary objectives of the enterprises."

In the line and staff organisation, staffs assist the line managers in their duties in order to
achieve the high performance. So, in an organization which has the production of textiles, the
production manager, marketing manager and the finance manager may be treated as line
executives, and the department headed by them may be called line departments

On the other hand, the personnel manager who deal with the recruitment, training and
placement of workers, the quality control manager who ensure the quality of products and the
public relations manager are the executives who perform staff functions.

Advantages of Line and Staff Organisation:

a. Line officers can concentrate mainly on the doing function as the work of planning and
investigation is performed by the staff. Specialisation provides for experts’ advice and
efficiency in management.
b. Since the organisation comprises line and staff functions, decisions can be taken easily.
c. The staff officers supply complete factual data to the line officers covering activity within
and without their own units. This will help to greater co-ordination.
d. It provides an adequate opportunity for the advancement of workers.
e. The staff services provides a training ground for the different positions.
f. Adequate organisation a balance among the various activities can be attained easily.
g. The system is flexible for new activities may be undertake by the staff without forcing early
adjustments of line arrangements.
h. Staff specialists are conceptually oriented towards looking ahead and have the time to do
programme and strategic planning and analyse the possible effects of expected future
events.

Disadvantages of Line and Staff Organisation:

a. Confusion and conflict may arise between line and staff. Because the allocation of authority
and responsibility is not clear and members of the lower levels may be confused by various
line orders and staff advices.
b. Staff generally advise to the lines, but line decides and acts. Therefore the staffs often feel
powerless.
c. Too much reliance on staff officers may not be beneficial to the business because line
officials may lose much of their judgment and imitative.
d. Normally, staff employees have specialised knowledge and expert. Line makes the final
decisions, even though staff give their suggestions. Staff officers, therefore, may be
resented.
e. Staff officers are much educated so their ideas may be more theoretical and academic rather
than practical.
f. Although expert advice is available it reaches the workers through the managers. Here it is
liable to create a greater deal of misunderstanding and misinterpretation.
g. Since staff specialists demand higher payments, it is expensive.
h. The staff are unable to carry out its plan or recommendations because of lack of authority.
So they become ineffective sometimes, it will make them careless and indifferent towards
their jobs.
i. Since the line arc performed, with the advice provided by the staff, if things go right then
the staff takes the credit and if things go wrong then the line get the blame for it.

3. Functional Organisation

The line organization suffers from a number of drawbacks. The expansion of business and
large-scale production has necessitated the use of experts in different fields. As the name
implies, under functional authority relationships, the whole task of management is divided
according to the type of work involved.

The normal operations to be performed in a business house are production, research and
development, personnel, purchasing, finance, etc., these activities are assigned to various
departments and functional experts are appointed to look after those activities.

F. W. Taylor, Father of scientific management, developed the concept of functional

organization. He recommended functional organization even at the shop level where workers
have to produce goods. He suggested the substitution of line authority by functional
foremanship at the lower level of the organization structure.
Features of Functional Organisation:

a. Each worker receives instructions not only from one superior, but also from a group of
specialists.
b. Three types of authority relationships are in the functional organisation such as line
authority, staff authority and functional authority.
c. Staff specialists are given the authority to decide and do things in a limited way.
d. The scope of the work is kept limited but the area of authority is left unlimited.
e. There is a grouping of activities of the enterprise into certain major functional departments.

Advantages of Functional Organisation:

a. Each manager is an expert in his field. He has to perform a limited number of functions.
So complete specialisation will be in functional organisation.
b. The greater degree of specialisation leads the improvement in the quality of product.
c. Since the job requirements are definite and tangible, organisation can achieve the
intensive utilisation of the principle of specialisation of labour at the managerial level.
d. Specialisation will lead for mass production and standardisation.
e. Since experts get sufficient time for creative thinking, planning and supervision are
made efficient.
f. It increases the work satisfaction for specialists who presumably do what they like to
do.

Disadvantages of Functional Organisation:

a. Since there is no direct boss or controller of the workers, coordination is hard to achieve.
b. Since workers are under different bosses, discipline is hard to achieve. As results there
will be low morale on the part of the workers.
c. The non-supervisory employees are uncertain as to whom they should turn for advice
and aid when problem call for analysis.
d. Due to that control is divided, action cannot be taken immediately.
e. Since there will be many foreman of equal rank in the same department, the conflicts
of leadership may arise.
f. It reduces the opportunities for the training of all-round executives to assume further
leadership in the firm.

4. Project Organisation

This organisational structure are temporarily formed for specific projects for a specific period
of time, for the project of achieving the goal of developing new product, the specialists from
different functional departments such as production, engineering, quality control, marketing
research etc., will be drawn to work together. These specialists go back to their respective
duties as soon as the project is completed. Really, the project organisation is set-up with the
object of overcoming the major weakness of the functional organisation, such as absence of
unity of command, delay in decision, making, and lack of coordination.

Advantages of Project Organization

1. All project team members are directly responsible to the Project Manager. There are no
functional specialists whose permission must be sought or whose advice must be
heeded before making final technical decisions. The Project Manager is truly the project
director.
2. Project Manager communicates directly with senior corporate management. The
shortened communication lines result in faster information sharing with minimal
failures.
3. Where there are several successive projects of a similar kind, the structure can maintain
a more or less permanent cadre of experts who develop considerable skills in specific
technologies. Indeed, the existence of suck skill pools can easily attract customers to
the parent organization.
4. Project team members are more committed to the project. Motivation is high and acts
to foster the task orientation.
5. Decisions are made much faster due centralized authority. The entire project
organization can react more rapidly to the requirements of the client and needs of senior
corporate management.
6. There is solid unity of command. There is little doubt that the quality of life of
subordinates is enhanced when each subordinate has one, and only one, boss.
7. This structure is simple and flexible, which makes it relatively easy to understand and
to implement.
8. The structure supports holistic approach to the project. The dangers of focusing on and
optimizing the projects subsystems rather than the total project are often a major cause
of technical failure in projects.

Disadvantages

1. Risk of overstaffing as such staff are not shared across other projects or parent
organizational activities.
2. Equipment and technical assistance are stockpiled in order to be certain that they will be
available when needed. Personnel with critical technical skills may be hired by the project
when they are available rather than when they are needed. Such staff also tend be
maintained on the project longer than needed, just in case.
3. Risk of technological changes rendering usefulness of some of the skills outlived. Though
individuals engaged with the project activities develop considerable depth in the technology
of the project, they tend to fall behind in other areas of their technical expertise in projects
characterized as high technology.
4. Inconsistency in the way in which policies and procedures are carried out is fostered. There
is tendency of not understanding problems due to easy excuse for ignoring dicta from the
head office.
5. The project takes a life of its own. Team members tend to form strong attachments to the
project and to each other. Friendly rivalry may become bitter competition and political
infighting between projects is common.
6. Risk of worry about life after the project ends. Typically, there is considerable uncertainty
about what will happen when the project is completed, whether project team members will
be laid off or assigned to low-prestige work or break up altogether and this leads to the fear
of unknown.

5. Matrix Organisation

A matrix structure is a type of departmentalization that superimposes a horizontal set of

divisional reporting relationship onto a hierarchical functional structure. This organization is
also called is a grid organization. The main feature of this organization is that functional or
project or product patterns of Departmentation are combined in the some organization
structure. Thus, a matrix structure can be termed to the both functional and divisional at the
same time. A matrix structure has two chains of command- Vertical and horizontal.
Advantages of Matrix Organisation:

1. Since there is both vertical and horizontal communication it increases the coordination
and this coordination leads to greater and more effective control over operations.
2. Since the matrix organisation is handling a number of projects, available resources will
be used fully.
3. It focuses the organisational resources on the specified projects, thus enabling better
planning and control.
4. It is highly flexible as regards adherence to rules, procedures etc. Here experience is
the best guide to establishing rules and procedures.
5. As any department or division has to harness its effort towards accomplishment of a
single project, employees are effectively motivated.

Disadvantages of Matrix Organisation:

1. Since, there is more than one supervisor for each worker, it causes confusion and
conflicts and reduce effective control.
2. There is continuous communication both vertically as well horizontally, which
increases paper work and costs.
3. It is difficult to achieve a balance below on the projects technical and administrative
aspects.