Organisation Structures: An Overview Video Lecture | Business Studies (BST) Class 12 - Commerce

organization structures we know how a
business enterprise organizes its
activities and establishes Authority
relationships among its employees the
process of organization culminates into
an organization structure organization
structure is the framework within which
managerial and operating tasks are
performed it specifies the relationships
between people work and resources
organization structure allows
correlation and coordination among human
physical and financial resources and
this enables a business enterprise to
accomplish desired goals types of
organization structure based on the
nature and types of activities performed
by an organization an organizational
structure can be classified under two
categories one functional structure
and to divisional structure functional
structure an organization structure
formed by grouping together all
activities into functional departments
and putting each department under one
coordinating head is called functional
structure for example the functions like
engineering products sales legal and
finance constitute the separate
departments of the enterprise these
departments may be further divided into
sections for example the products
department may be subdivided into
product management use experience
marketing to name a few functional
structure is well suited for large sized
organizations having diversified
activities and operations that require a
high degree of specialization advantages
of functional structure the functional
structure has many advantages to offer
let us have a look on the same e
specialization functional structure
results in occupational specialization
as a particular Department is only
concerned with one aspect of activities
and workers receive the expert guidance
of specialists
this promotes efficiency in utilization
of manpower as employees perform similar
tasks within a department and are able
to improve performance be control and
coordination functional structure
promotes control and coordination within
a department because of similarity in
the tasks being performed
see efficiency
functional structure helps in increasing
managerial and operational efficiency
which results in increased profit
d duplication of efforts functional
structure minimizes duplication of
efforts which results in economies of
scale and slow costs e training
functional structure makes training of
employees easier as the focus is only on
a limited range of skills F flexibility
expansion and contraction is very easy
under functional organization as the
functions can be added or removed as per
the expansion plans of an enterprise
disadvantages of functional structure
the functional structure has certain
disadvantages which an organization must
take into consideration before it adopts
it II neglected company's objectives in
functional structure the overall
objectives of an enterprise get
neglected as all the functions get
separated from each other each
functional head concentrates on the
effective performance of the function
allocated to its own unit only be lack
of coordination functional structure may
lead to problems in coordination as
information has to be exchanged across
functionally differentiated departments
see conflict of interests functional
departments operate with considerable
independence in an enterprise and they
often have clashes in their interest
with the interest of specialists of
other departments on the same rank this
leads to frequent conflicts among the
specialists d in flexibility functional
structure may lead to inflexibility as
people with same skills and knowledge
base may develop a narrow perspective
and thus have difficulty in appreciating
any other point of view divisional
structure divisional structure is formed
by grouping activities and people on the
basis of different products manufactured
or different territories or markets each
division is multifunctional
because within each division functions
like research & development
manufacturing accounting or finance
marketing and so on are performed
together to achieve a common goal
each unit has a divisional manager
responsible for performance and who has
authority over the unit divisional
structure is suitable for business
enterprises which manufacture a large
variety of products using different
productive resources advantages of
divisional structure the divisional
structure offers many benefits a quick
look on the same
II varied skills
product specialization helps in the
development of varied skills in a
divisional head and this prepares him
for higher positions the divisional head
gains experience in all functions
related to a particular product B
facilitates performance measurement the
performance of individual products or
groups can be accessed easily and
objectively in divisional structured
organization as the focus is made on
individual products line C flexibility
and initiative divisional structure
promotes flexibility and initiative in
an enterprise as each division functions
as an autonomous unit which leads to
faster decision making
D expansion and growth divisional form
of organization structure facilitates
expansion and growth as new divisions
can be opened without disturbing the
existing ones by merely adding another
divisional head and staff for the new
product line disadvantages of divisional
structure the divisional structure has
certain disadvantages let us understand
the same in detail a conflict in
divisional structure conflict may arise
among different divisions with reference
to allocation of funds moreover a
particular division may seek to maximize
its profits at the cost of other
divisions B duplication of activities
divisional organizational structure is
quite costly due to duplication of
activities across products each division
with separate set of similar functions
increases expenditure of a business
enterprise
see self-centred in a divisional
structure every division becomes
self-centered and concentrates on its
own profits only and sometimes at the
cost of the profits of other divisions
this may hamper the overall performance
of an organization types of
organizations on the basis of
relationships we can classify
organizations into two types one formal
organization and two informal
organization let us learn about these
types in detail formal organization
formal organization refers to the
organization structure which is designed
by management to accomplish a particular
task
formal organization clearly specifies
the boundaries of authority and
responsibilities and there is a
systematic coordination among various
activities to achieve organizational
goals the structure in a formal
organization can be functional or
divisional
features of formal organization the
features of a formal organization are as
follows a Authority and responsibilities
formal organization specifies the
relationships among various job
positions and the nature of their
interrelationship B rules and procedures
formal organization lays down rules and
procedures essential for the achievement
of objectives specified in plans C
integration formal organization
coordinates interlinks and integrates
the efforts of various departments
d smooth functioning top management
deliberately designs form an
organization in order to facilitate
smooth functioning of an enterprise
II preference to work formal
organization gives more emphasis on work
to be performed than interpersonal
relationships among employees advantages
of formal organization formal
organization offers many advantages let
us understand these advantages a fixing
of responsibilities in a formal
organization it is easier to fix
responsibilities due to clearly defined
mutual relationships be avoids
duplication of efforts formal
organizations help in avoiding
duplication of efforts due to clarity in
the role and duties of each member
see unity of command through formal
organization top management established
chain of command in order to maintain
unity of command
d achievement of objectives formal
organization leads to effective
accomplishment of goals through
systematic allocation of duties and
responsibilities to each employee e
stability formal organization provides
stability to an organization a business
enterprise can keep operating in spite
of changes in workforce limitations of
formal organization the formal
organization suffers from the following
limitations a delay in decision making
the formal communication may lead to
procedural delays due to established
chain of command each person needs to
follow chain to communicate which
increases the time taken for decision
making
be inadequate recognition for
organization practices may not provide
adequate recognition to creative talent
since it does not allow any deviations
from rigidly laid down policies
see emphasis on structure and work
formal organization places more emphasis
on structure and work rather than human
relationships
d reduced initiatives formal
organizations involve mechanical
functions that lead to the reduction in
initiatives of persons working in an
enterprise informal organization
informal organization refers to the
relationship between people in an
enterprise based on personal attitudes
emotions prejudices likes and dislikes
and so on examples of such groups formed
with common interest may be those who
take part in cricket matches on some
days meet in cafeteria for coffee are
interested in dramatics etc informal
organization has no written rules and
does not have fixed lines of
communication
features of informal organization a
quick look on the features of informal
organization a formation informal
organization is not established by any
formal Authority it arises from the
personal and social relations amongst
people working in an enterprise B
behavior
the standards of behavior in an informal
organization evolved from group norms
and are not based on rules regulations
and procedures see channel of
communication in case of informal
organization people cut across formal
channels of communication and
communicate amongst themselves without
specified direction of flow of
information d unplanned informal
organization is not established by any
formal Authority it is unplanned and
emerges spontaneously II no definite
structure in formal organization has no
definite structure or form as it is a
complex network of social relationships
among members
advantages of informal organization the
informal organization offers many
benefits a quick look at the same a
spread of information an informal
organization leads to faster spread of
information as well as quick feedback
due to the absence of prescribed lines
of communication
be social needs informal organization
acts as a means by which employees of an
enterprise achieve a sense of security
and belongingness this enhances their
job satisfaction to group members
see psychological satisfaction
in formal organization give
psychological satisfaction to employees
of an enterprise informal organization
acts as a safety valve for the emotional
problems and frustrations of workers of
an enterprise
D organization objectives informal
organization contributes towards
fulfillment of organizational objectives
by compensating for inadequacies in the
formal organization for example
employees reactions towards plans and
policies can be tested through the
informal Network disadvantages of
informal organization the informal
organization has certain disadvantages
some of them are as follows e rumors
informal organization may work against
the interests of a formal organization
as the former is very much affected by
rumors the original story gets filtered
and becomes distorted when people add
details of their own interest to the
message being resistance to change
in formal organization has its own
culture and traditions hence sometimes
these groups oppose changes proposed by
management such resistance to change may
delay or restrict growth see clash and
interests informal organization
pressurizes members to conform to group
expectations this can be harmful to an
organization if the norms set by an
informal group are against
organizational interests to conclude an
organization structure is the framework
within which managerial and operating
tasks are performed it specifies the
relationships between people work and
resources an organizational structure
can be classified into two categories on
the basis of nature and types of
activities one functional structure and
two divisional structure
functional organization structure groups
activities on the basis of functions the
advantages of such a structure are
specialization better control and
coordination managerial and operational
efficiency minimizes duplication of
efforts ease in training employees and
ease in expansion and contraction the
disadvantages are neglected company's
objectives lack of coordination conflict
of interest and in flexibility
divisional organization structure group
activities on the basis of products the
advantages of such an organizational
structure are
varied skills ease and performance
measurement flexibility expansion and
growth the disadvantages are
departmental conflicts duplication of
activities self-centered on the basis of
relationships organizations may be
classified into two times formal
organizations and informal organization
formal organization is designed by the
management to achieve organizational
goals his advantages are fixation of
responsibility prevents duplication of
efforts unity of command achievement of
objectives and stability the
disadvantages of formal organization are
procedural delays inadequate recognition
of creativity emphasis on structure and
work reduced initiatives in formal
organization arises out of interaction
amongst people at work the advantages of
an informal organization are spread of
information fulfillment of social needs
psychological satisfaction
organizational objectives its
disadvantages are Roma's resistance to
change and clashing interests
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