Prof.

DEBASISH DUTTA
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Prof. DEBASISH DUTTA

 There are basically two types of organisation
◦ Formal Organisation
◦ Informal Organisation

Prof. DEBASISH DUTTA

 It is prescribed structure of roles and
relationship consciously coordinated towards a
common objective.
 Its value goals and tasks are predominantly
oriented towards productivity, efficiency, growth
and so on.
 It is well defined in shape. Majority of formal
organizations are pyramid shaped. Ranks of
individuals are made clear by the use of titles.
Communication is simple. One can easily chart
all relationships.
 There is a prescribed, mostly written system of
rewards or punishment.
 This organization is usually very enduring and
may grow to any size.

Prof. DEBASISH DUTTA

 It is a natural and spontaneous structure arising
out of the social tendency of people to associate
and interact.
 Its values, goals and tasks predominantly center
on individual and group satisfaction, esteem,
affiliation etc.
 It is shapeless. There are number of
multidirectional, intricate relationships which
cannot be easily charted.
 There is an unwritten system of reward and
punishment.
 This organization is not very enduring, being
dependent on the sentiments of members, which
often change. It also tends to remain small.

Prof. DEBASISH DUTTA

 Organisation

Informal Formal

Prof. DEBASISH DUTTA

 Deliberately planned and created
 Concerned with the co-ordination of activities
 Hierarchically structured with stated objectives
 Based on certain principles such as the specification of
tasks
 Organization structure is laid down by the top
management to achieve organizational goals.
 Organization structure is based on division of labor
and specialization to achieve efficiency in the
operations.
 The authority and responsibility relationships created
by the organization structure are to be honored by
everyone.
 Developed through delegation of authority
 Organization structure concentrates on the jobs to be
performed and not the individuals who are to perform
jobs.
 The organization does not take into consideration the
sentiments of organizational members.

Prof. DEBASISH DUTTA

 The informal organisation is flexible and
loosely structured
 Relationships may be left undefined
 Membership is spontaneous and with
varying degrees of involvement
 Involves two or more people
 Informal relationships, groupings &
interactions
 Repeated contacts but without any
conscious joint purpose
 Involves the human need to socialize
 Includes both friendly and hostile
relationships and interactions

Prof. DEBASISH DUTTA

 ORGANISATION WITH NARROW SPAN

ADVANTAGES DISADVANTAGES
Close supervision  Superiors tend to get too involved in
Close control subordinate’s work
Fast communication  Many levels of management
between subordinate  High cost due to many levels
and superiors  Excessive distance between lowest level
and top level

Prof. DEBASISH DUTTA

 ORGANISATION WITH WIDE SPAN

ADVANTAGES
Superiors are forced to
delegate
Clear policies must be made
Subordinates must be
carefully selected
DISADVANTAGES
 Tendency of overloaded Superiors to
become decision bottlenecks
 Danger of superior’s loss of control
 Requires exceptional quality of
managers

Prof. DEBASISH DUTTA

 An organisational structure is a mostly
hierarchical concept of subordination
of entities that collaborate and
contribute to serve one common aim.
 Organisations are a variant of clustered
entities.
 The structure of an organisation is
usually set up in many a styles,
dependent on their objectives and
ambience.
 The structure of an organisation will
determine the modes in which it shall
operate and will perform.

Prof. DEBASISH DUTTA

 The word departmentation designates a distinct
area, division or branch of an organisation over
which a manager has authority for the performance
for specified period.

 The pattern of departmentation will depend on

given situations, and on what the managers believe
will yield the best result for them in the situation
they face.

Prof. DEBASISH DUTTA

 The simple numbers method of departmentation is by tolling
of persons who are to perform the same duties and putting
them under the supervision of a manager.
 The method was important in the organisation of army, tribal
etc. However it is rapidly falling into disuse in the modern
society because of advance technology has demanded
specialised and different skills and not on numbers. It is
useful only at lower level of the organisation.

Prof. DEBASISH DUTTA

 One of the oldest method of departmentation
where it is used commonly for the lower levels of
the organisation, this is group activities on the
basis of time.
 This refers to use of shifts which is very common in
manufacturing and service industry.

Prof. DEBASISH DUTTA

Advantages-
Services available round the clock
Good for process require a continuing cycle
Extensive use of machinery
Students can get a job

Disadvantages-
Lack of supervision during night shift
Fatigue factor prevails
Difficulty in coordination and control
Payment of overtime may increase cost

Prof. DEBASISH DUTTA

 It is grouping of activities into departments
such as engineering, manufacturing,
marketing, finance, etc.

Prof. DEBASISH DUTTA

Advantages-
Is logical reflections of functions
Maintains power and prestige of major functions
Follows principles of occupational specialization
Simplifies training
Furnishes means of tight control at top
Disadvantages-
Tend to deemphasize overall company objectives
Overspecialization, narrows viewpoints of key personnel
Reduces coordination between functions
Responsibility for profits at top only
Slow adaptation to changes in environment
Limits development of general mangers

Prof. DEBASISH DUTTA

 President

Asst. to
Secretary
President

MARKETING PORDUCTION FINANCE HR

Market Research Markt plg Prodn. plg Ind. Engg. Fin. Plg. Budgets Personnel Recruitment

Advt.promo Sales Admin. Prodn. Engg. Tooling Gen. Acctg. Cost. Acctg. Perfor. App. HRIS

A FUNCTIONAL ORGANISATION (MANUFACTURING COMPANY)

Prof. DEBASISH DUTTA

 This type of departmentation is attractive to
large scale firms whose activities are
physically or geographically dispersed.

Prof. DEBASISH DUTTA

Advantages-
 Places responsibility at lower level
 Place emphasis on local market and
problems
 Improve coordination in a region
 Takes advantage of economies of
local operations
 Better face to face communication
with local interests
 Furnishes measurable training
ground for general managers

Prof. DEBASISH DUTTA

Disadvantages-
 Requires more persons with

general manager abilities

 Tends to make maintenance of

economical central services and

may require service such as HR or
purchase at the regional level
 Increase problem of top

management control

Prof. DEBASISH DUTTA

 PRESIDENT

Marketing HRM Purchase Finance

Region 1 Region 2 Region 3 Region 4 Region 5

Engineering Production HRM Marketing Finance

A TERRITORIAL OR GEOGRAPHIC ORGANISATION

Prof. DEBASISH DUTTA

 Grouping activities so that they reflect a
primary interest in customers. This is
arrangement activities on the basis to cater to
requirements of clearly defined customer
groups.

Prof. DEBASISH DUTTA

Advantages-
 Encourages concentration on customer needs
 Gives customer feeling that they have an

understanding supplier
 Develops expertness in customer area

Prof. DEBASISH DUTTA

Disadvantages-
 May be difficult to coordinate operation

between competing customer demands

 Requires managers and staff experts in

customers’ problems
 Customer group may not be always clearly

defined

Prof. DEBASISH DUTTA

 PRESIDENT

Community Corporate Institutional Agriculture

Banking Banking Banking Banking

CUSTOMER DEPARTMENTATION BANKING SECTOR

Prof. DEBASISH DUTTA

 Manufacturing firms sometimes group
activities around a process or a type of
equipment.

Prof. DEBASISH DUTTA

 Advantages-
◦ Achieves economic advantage
◦ Uses specialized technology
◦ Utilizes special skills
◦ Simplifies training
 Disadvantages-
◦ Coordination of departments is difficult
◦ Responsibility for profit is at top
◦ Unsuitable for developing general managers

Prof. DEBASISH DUTTA

 PRESIDENT

Marketing Production Finance HRM

Welding Punch Process Electroplating

PROCESS OR EQUIPMENT DIVISION

Prof. DEBASISH DUTTA

 Large scale enterprises group activities on the basis
of products or product lines.
 Companies adopting this form of departmentation
were typically organized by enterprise function.
 With the growth that led to complexity in
managerial job and increase in number of
subordinates recognition of Product Division
became necessary.

Prof. DEBASISH DUTTA

Advantages-
 Places attention and effort on product line
 Facilitates use of specialised capital, facilities, skills, and
knowledge
 Permits growth and diversity of the products and services
 Improves coordination of functional activities
 Place responsibility for profits at divisional level
 Furnishes measurable training ground for general managers

Prof. DEBASISH DUTTA

Disadvantages-
 Requires more persons with general manager

abilities
 Tends to make maintenance of economical

central services difficult

 Presents increased problem of top

management control

Prof. DEBASISH DUTTA

 PRESIDENT

Marketing HRM Purchase Finance

Detergents Cosmetics Food Products Pharmacy FMCG

Engineering Production HRM Marketing Accounting

PRODUCT ORGANISATION

Prof. DEBASISH DUTTA