Organizing the Business

Enterprise

PRESENTED BY :
PANKAJ MALIK
OUTLINE:
 ORGANIZING
 STEPS
 DETERMINANTS
 ORGANIZATION STRUCTURE
 ORGANIZATION CHART
 FORMAL & INFORMAL
ORGANIZATION
WHAT IS ORGANIZING?

“Organizing is the process of identifying

and grouping the work to be performed,
defining and delegating responsibility
and authority and establishing
relationships for enabling the people to
work most effectively together in
accomplishing objectives.” – LOUIS. A.
ALLEN
ORGANIZING AS A PROCESS

According to Koontz and O’Donnell,

“Organizing involves the grouping of
activities necessary to accomplish goals
and plans, the assignment of these
activities to appropriate departments
and the provision for authority
delegation and coordination.”
STEPS IN ORGANIZING

 Determination of objectives
 Division of activities
 Fitting individuals into jobs
 Developing relationships
 Coordination of activities
 DETERMINANTS OF
ORGANIZATION

 Every business needs structure to operate.

Organizational structure varies according to a
firm’s mission, purpose, and strategy.
 Size, technology, and changes in environmental
circumstances also influence structure.

Although all organizations have the same basic

elements, each develops the structure that
contributes to the most efficient operations.
WHAT IS ORGANIZATIONAL
STRUCTURE?

Specification of the jobs to be done

within an organization and the
ways in which they relate to one
another. This allows the
organization to achieve its goals.
At some organizations the structure
is rigid, at other it is more flexible.
FACTORS OF ORGANIZATION
STRUCTURE

 Activityanalysis
 Decision analysis
 Relation analysis
 CHARACTERISTICS OF
ORGANIZATIONAL STRUCTURE

 Span of control
 Departmentation
 Delegation & Decentralization
 Forms of internal organization
ORGANIZATION CHART

TYPES:-
 Vertical chart: Top to Bottom
 Horizontal chart: Left to Right
 Circular chart: Concentric
 SPAN OF CONTROL

Typical Law Firm

Chief
Partner

Partners

Associate
s
Relatively wide span of control
 United States
General Army

Colonels

Majors

Captains
&
Lieutena
Warrant
nts
Officers
Relatively narrow span of
control.
Sergeant
s
At lower levels, where
tasks are similar and Corporal
simpler, span of control s
widens. Privates
5 - 12
 DEPARTMENTALIZATION

Departmentalization
Process of grouping jobs into logical units
Profit Center
Separate company unit responsible for its
own costs and profits
Cost Center
Some company operations do not generate
profits
 DEPARTMENTALIZATION

Geographic Departmentalization
Departmentalization according to areas served by a
business
Functional Departmentalization
Departmentalization according to groups’ functions
or activities
 MULTIPLE FORMS OF
DEPARTMENTALIZATION
President

Functional Departmentalization
Vice President Vice President Vice President
Marketing Production Finance

Geographical Departmentalization
Texas Plant Oregon Plant Florida Plant
Manager Manager Manager

Product Departmentalization
ConsumerIndustrial ConsumerIndustrial ConsumerIndustrial
Products Products Products Products Products Products
6 - 15
 DIFFERENT METHODS OF
DEPARTMENTALIZATION

Customer Departmentalization
Departmentalization according to types of
customers likely to buy a given product
Product Departmentalization
Departmentalization according to specific products
being created
Process Departmentalization
Departmentalization according to production
processes used to create a good or service
 DELEGATION &
DECENTRALIZATION

Delegation
Assignment of a task, responsibility, or
authority by a manager to a
subordinate Process of
delegation

Accountability
Responsibility Authority
Centralized Organization
Organization in which most decision-
making authority is held by upper-level
management

Decentralized Organization
Organization in which a great deal of
decision-making authority is delegated to
levels of management at points below the
top This is the current trend.
 FORMS OF INTERNAL
ORGANIZATIONS

 Line Organization
 Line & Staff Organization
 Functional Organization
 Project Organization
 Matrix Organization
 Virtual Organization
 International Organization
 Learning Organization
 LINE ORGANIZATION
GENERAL MANAGER

PLANT MANAGER

FOREMAN SHOP A FOREMAN SHOP B

WORKERS WORKERS
LINE AND STAFF ORGANIZATION—
LINE DO THE MAINLINE/STAFF ASSIST
Clark Equipment Corp.

Human
Staff Engineering
Resources
Managers Department
Department

Line Trucks Forks & Small Tools

Managers Division Earthmovers Division Division

Materials
Purchasing Fabrication Painting Assembly Sales Distribution
Handling

6 - 21
 FUNCTIONAL ORGANIZATION

Form of business organization in which

authority is determined by the relationships
between group functions and activities

Company Structured Around Basic Business Functio

Marketing Operations Finance

Department Department Department
PROJECT ORGANIZATION
 MATRIX ORGANIZATION
Organizational structure in which teams are formed and team
members report to two or more managers

 A matrix is a highly flexible form that is

readily adaptable to changing circumstances.
 Matrix structures rely heavily on committee
and team authority.
 Some companies use the matrix organization
as a temporary measure to complete a specific
project. The end of the project usually means
the end of the matrix.
 Matrix Organization at Stewart
Martha

Area Media Group Merchandising

Speciali Group
sts

Network/
Cable TV

Retailing
Magazin

Specialt
Internet

Newspa

Catalog
K-mart
Radio/
Books

Sears
Paint
Line

Line
per
es

y/
Cooking
Entertain
ment
Weddings

Crafts
Gardenin
g
Home

Holidays

Children
6 - 25
 VIRTUAL ORGANIZATION
Contracted Contracted
Manufacturing Administrative
in Asia Services

• Accounting
Core • Human
Organization Resources
• Finance
• Operations
• Management

Contracted Contracted
Sales & Distribution &
Marketing Logistics

6 - 26
 INTERNATIONAL
ORGANIZATION
Approaches to organizational structure developed in
response to the need to manufacture, purchase, and sell
in global markets

CEO

Retail Retail International

Division A Division B Division

Latin
Europe Asia
America
LEARNING ORGANIZATION- 5
PRINCIPLES

Systems Personal
Thinking Mastery

Team Mental
Learning Models
Shared
Vision
FORMAL & INFORMAL
ORGANIZATION
 The formal organization of a business is the part that
can be seen and represented in chart form.
 The informal organization within which people do
their jobs in different ways and interact with other
people in ways that do not follow formal lines of
communication.
 FORMAL versus INFORMAL
ORGANIZATIONAL SYSTEMS

Informal Groups
Groups of people who decide to
interact among themselves

Grapevine
Informal communication network that
runs through an organization