ORGANIZATIONAL

STRUCTURES
 INTRODUCTION TO ORGANIZATIONAL STRUCTURE

• Defines how certain activities are directed toward the

achievement of organizational aims. These activities
includes :

TASK ALLOCATION CO-ORDINATION SUPERVISION

• Put simply, the organizational structure lays out who does

what and under whose supervision so the company can
meet its objectives.

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DIFFERENT TYPES OF
ORGANIZATIONAL
STRUCTURES

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 DIVISIONAL

• The organisation structure comprises of

separate business units or divisions.
• Each unit has its own divisional
manager who is responsible for the
performance and has authority over
unit.
• This is suited to organisation which has
a variety of product to offer.
• Each division is multi-functional
because within each division functions
like production, marketing, finance etc
are performed together.

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 DEMERITS
MERITS
• Conflicts may arise among different divisions
• Product specialization helps in development of
regarding allocation of funds
various skills in a division head
• Leads to increase in cost since there can be
• It provides a proper basis for performance
duplications of activities across products.
measurement as different departments can be
• Sometimes it provides manager with authorities
easily identified
to supervise all the activities but if the manager
• Promotes flexibility and initiative, since each
is biased it will affect the working of division as
divisions functions as an autonomous unit
well as whole organization

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 LINE

• Under this method, authority flows

vertically from top to bottom.
• Each position in the structure having
authority over a lower position.
• Unlike other structures, specialized and
supportive services do not take place in
these organizations.
• Also known as Military form of
organization.

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 DEMERITS
MERITS
• There is concentration of authority at the top
• Simple to understand and easy to establish.
level. It leads to autocratic control.
• Provides unit of command.
• Communication flows from top to bottom. There
• Helps in taking quick and effective decisions.
is no participation of workers.
• Ensures personal contact between workers and
• It lacks specialization as a line manager is
manager
responsible for both planning and execution of
• Ensures discipline between the employees and
work.
employer
• Overburdens the top executives.

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 FUNCTIONAL

• It is based on the functional

foremanship.
• Under this method, the structure
of the enterprise is classified into
different functional areas.
• Each functional area is headed by
a specialist who has full control
of that function over the
organization and gives
instructions direct to the
personnel, rather than through
the chain of command.
• Each chief manager is in charge
of a particular activity

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 DEMERITS
MERITS
• Against the principle of unity of command as the
• Helps to reap the benefits of specialization.
subordinate is responsible to a number of superiors.
• Subordinates can make use of the expertise of
• The complex nature of functional organization with
functional experts.
its cross relationship creates a confusion among
• The burden of top executive is reduced as each
workers.
expert looks after only one function.
• The decision making is very slow.
• Leads to joint supervision by different experts.
• Scope of lack of coordination as each specialist
• Provides better scope for expansion and
thinks of only his function and choses to ignore
diversification.
other functions.

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 LINE AND STAFF

• Line and staff organization is a

combination of functional and line
structure.
• Line authority flows from top to bottom
and the line executive is directly
concerned with the accomplishment of
primary objectives.
• They are actual doers and generally do not
possess specialized knowledge to solve
complex problems.
• To provide specialized assistance to line
mangers, staff positions are created.

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 FEATURES

There are two major types of features in a line-staff organization. They include:
Line positions
• The employees that fulfill line positions make direct contributions to the mission of the
company.
• They handle the responsibilities to help the business run smoothly. Line positions can either
include managers or entry-level employees.
Staff positions
• Staff employees assist the line professionals in achieving organizational goals. There are also
managerial and lower-level employees who hold staff positions.
• The staff managers are experts in the industry, providing recommendations to line managers on
how to lead their departments to success.

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 MERITS DEMERITS

• This combination provides for specialized • It creates confusion as it is very difficult to define
knowledge where staff executives guide and the authority relationship between line and staff.
advise line executives. • Staff executives are not accountable and they
• It reduces the burden of line executives because may not take the tasks seriously.
staff carries on detailed investigation of each • There is always constant conflict between line
activity. and staff because the nature of their functions
• Better decisions are possible as expertise of the differs from each other.
staff is used.

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 MATRIX

• A matrix structure is a combination of two or

more types of organizational structures.
• It is a way of arranging your business so that
you set up reporting relationships as a grid, or
a matrix, rather than in the traditional
hierarchy.
• In the matrix structure, you share resources
and staff across teams and projects, as well as
within departments or functions.
• In this structure, employees usually have dual
reporting relationships

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 DEMERITS
MERITS
• Confusion regarding roles, responsibilities and
• Improve decision-making, since there are two
priorities
chains of command.
• Divided loyalties between project teams
• Help break down traditional 'silo' barriers.
• Blurred lines of accountability
• Improve communication across the business.
• Difficulties in coordinating tasks or functions
• Allow staff to apply their skills in different roles.

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 CIRCULAR

• A circular org chart is an alternative to

the standard hierarchical org chart, it
visualizes the organizational structure
of a business to show information like
who reports to whom and to which
department each employee belongs.
• Instead of visualizing the organization
from the top down in a pyramid-like
structure, the organization is drawn
from the center out.
• The center-most circle represents the
company’s highest-level officer. The
outermost circles represent entry-level
employees and individual contributors.

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 MERITS
• Provides strong, centralized leadership and
DEMERITS
vision.
• Supports communication and collaboration • May be confusing for those accustomed to
across divisions and encourages a spirit of shared traditional hierarchies.
purpose to improve resource sharing and decision • May require additional resources and training to
making. ensure optimal buy-in and performance.
• Self-sustaining; distribution of duties and strong
collaboration insulate against disruptions due to
staff changes.

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 A CASE STUDY :
A N E W LY D E V E LO P E D
S P I C E CO M PA N Y I N A
R U R A L S E T- U P

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PALAMPUR
PALAMPUR
1. Majority of the people engaged
in agriculture and related
activities

2. Two primary education schools

3. One higher secondary school

4. Few shops to meet basic needs

5. A small railway station

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 NATHU : shop vendor (having a
small all in one ration shop)
RAM
SETH KARODIMAL : money
lender ( a big name in Palampur)

RAM : a school teacher ( teaching

Hindi and the vernacular
language)
LACHHURAM
LACHHURAM : farmer
(engaged in the production of
wheat and rice)
NATHU
NATHU , RAM , SETH
KARODIMAL &
LACCHURAM decided to
start a spice factory in
SETH KARODIMAL Palampur.
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N.D.H ……… N.D.H !!! TYPICAL
CHARACTERISTICS OF
THE COMPANY :-

1. A small company
2. 4 spices –
• TURMERIC
• CHILLI POWDER
• GARAM MASALA
• CHILLY FLAKES
3. Basic functions of –
• PRODUCTION
• SALE
• ACCOUNTS
• DISTRIBUTION

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 NATHU : Beta, which organizational
BHAVESH structure should we implement?
BHAVESH (thinks……………)

BHAVESH is a graduate in MANAGEMENT .

He completed his PHD in management.

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 FUNCTIONAL ORGANISATIONAL STRUCTURE

BHAVESH suggest his father to opt for the functional organizational structure.
Reasons given by him were –
1. A SMALL ORGANISATION – The company opened decided to be started by them was in
its initial stage with nil or negligible level of diversification.
2. SPECIALISATION – Each member will focus on only one department thus gaining the
advantage of improved effectiveness and efficiency, subsequently leading to specialization.
• PRODUCTION - LACHHURAM
• SALE - NATHU
• ACCOUNTS – RAM
• DISTRIBUTION – SETH KARODIMAL
3. ACCOUNTABILITY – There are clear lines of management thus, accountability can be
established regarding each function.

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 THANK YOU

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