Lecture Topics

Chapter No 7 (Organizing)
Introduction & Definition of Organising Organization structure & Chart Formal & Informal Organizations Span of Management Factors Advantages/ Disadvantages Structure & Process of Organizing

Organizing
Chapter

Chapter No 8 (Departmentation)
Definition of Departmentation Departmentation by (Functions/ Geography/ Customer Group/ Product) Matrix Organization

Purposes of Organizing
Divide work to be done into specific jobs & departments Assign tasks and responsibilities associated with individual jobs Establish relationships among individuals , groups and departments Establish formal lines of authority Allocate and deploys organizational resources.

ORGANISING
Establishing an intentional structure of roles for people to fill in an organization.

Organizing Structure & Organization Chart

Formal & Informal Organizations

Formal Organization
The intentional structure of positions, roles and functions in an enterprise.

Organizing Structure
system of tasks, reporting relationships, and communication that links people and positions within an organization.

Informal Organization
A network of interpersonal relationships that arise when people associate with one another.

Organization Charts
describe the formal structure, how an organization should ideally work.

Formal Organization

Informal Organization

Golf Group Bridge Group Cricket Lovers Friendships etc !

Organization Dimensions
Vertical horizontal

Span of Management
The number of subordinates a manager can supervise effectively and efficiently Narrow (Vertical/ Tall) Wide (Horizontal/ Flat)

Narrow Span
Advantages

Narrow Span
Close supervision Close control Fast communication

Disadvantages
Superior tend to get too involved in subordinates work Many levels of management High cost due to many levels Excessive distance between the top &lowest level

No of subordinates four or less

Wide Span
Advantages

Wide Span
Superiors are forced to delegate Clear policies are made Subordinates are carefully selected

Disadvantages
Overloaded superiors become decision bottlenecks Superiors may lose control Require exceptional quality of managers

No of subordinates six or more

Factors Influencing Span

Training of subordinates Clarity of delegation of authority Clarity of objectives Rate of change Communication techniques & Meetings Employee's specialities Nature of tasks Level of subordinates

Influencing Factors : Narrow vs Wide

Little/ No training Inadequate/ Unclear Auth Non-verifiable objectives Fast changes Use of poor comm techniques Ineffective interaction bosssubordinate Ineffective meetings More specialities lower/ middle Incompetent/ untrained manager Complex task Immature subordinates Thorough training Clear delegation of Auth Verifiable objectives Slow changes Use of proper comm techniques Effective interaction bosssubordinate Effective meetings More specialities upper level Competent/ trained manager Simple task Mature subordinates

Steps of Organizing Process

1. Establishing objective 2. Formulating supporting plans& policies 3. Identifying necessary activities to accomplish (1&2 above) 4. Grouping activities: Available resources (human and material) 5. Delegating authority to the head of each group 6. Tying the groups:
vertically & horizontally Chain of command & flow of communication

Organizing Structure
Departmentation
Chapter

See Figure 7- 4 on Page 179 (Book) 7-

Departmentation
Grouping of activities according to the functions of an enterprise: (Sales, Production, Financing etc) etc

Departmentation
Functional Structure Divisional Structure
By Geography/ territory By Customers Group By Product

Matrix (Functional + Divisional)

Departmentation By Function
MD

Departmentation By Function
Advantages Logical reflection of functions Maintains power and prestige of major functions Follows principle of occupational specialization Simplifies training Furnishes means of tight control at top Disadvantages De-emphasis of overall company objective Overspecializes and narrows viewpoint of key personnel Reduces coordination between functions Responsibility for profits is at the top only Slow adaptation to changes in environment Limits development of general managers

MARKETING

ENGINEERRING

PRODUCTION

FINANCE

MARKETING`

ADMIN

PLANNING

PLANNING

PLANNING

DESIGN

PURCHASING

BUDGETING

SALES

QULITY CONTROL

GEN PRODUCTION

ACCOUNTING

See Figure 8-1 on Page 187 (Book) 8-

Departmentation By Geography/ Territory

Departmentation By Geography/ Territory

Advantages: Places responsibility at a lower level Places emphasis on local markets and problems Improves 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 Disadvantages: Requires more persons with general manager abilities Tend to make maintenance of economical central services difficult and may require services such as personnel or purchasing at the regional level Increases problem of top management control

MD WESTERN REIGON ESTERN REGION

NORTHERN CENTERAL SOUTHERN

(HQ)

See Figure 8-2 on Page 188 (Book) 8-

Departmentation By Customers Group

Departmentation By Customers Group

Advantages: Encourages concentration on customer needs Gives customers feeling that they have an understanding supplier Develops expertness in customer area

MD Community City Banking

Corporate Banking

Agricultural Banking

Mortgage Loans

See Figure 8-3 on Page 189 (Book) 8-

Disadvantages: May be difficult to coordinate operations between competing customer demands Requires managers and staff expert in customers problems Customer groups may not always be clearly defined (For Example, large corporate firms vs. other corporate businesses)

Departmentation By Product

Departmentation By Product
Advantages: Places attention and effort on product line Facilitates use of specialized capital, facilities, skills, and knowledge Permits growth and diversity of products and services Improves coordination of functional activities Places responsibility for profits at the division level Furnishes measurable training ground for general managers Disadvantages: Requires more persons with general managers abilities Tends to make maintenance of economical central services difficult Presents increased problem of top management control

MD Washing Machines Microwave Ovens

Refrigerators

Air conditioners

See Figure 8-4 on Page 191 (Book) 8-

Matrix Organization
The combining of functional and project or product patterns of departmentation in the same organization.

Matrix Organization

Guidelines : Making Matrix Organization Effective

Strategic Business Unit (SBU) A single business that is independent of main organization and formulates its own strategy. It will have its own: Unique mission Competitors Plans Organization/setup Recourses

Define objectives of the project or task Clarify roles , authority and responsibility of managers and team members
based on knowledge & experience Not based on rank

Balance power of functional and project managers Install appropriate cost , time and quality control