Sunday, 8 October 2017

Unit III (Organizing)


SECTION A (Short Answer Questions)


1)  What is division of labour?
It is concerned with dividing the total work into a number of processes each of which will be performed by different individuals.

2)  What is meant by organization structure?
An organization structure explains the positions and official relationships between the various individuals working in an organization.


3)  What is formal organization?
Formal organization is created for the accomplishment of the enterprise objectives. It provides official relationship between the individuals. It has well established rules and procedures.

4)  Why is line organization called military organization?
Here, the superior at the top makes decision and communicates his decisions and assigns certain work to his immediate subordinate. There is a vertical flow of authority.

5)  What is an adhoc committee?
It is a temporary committee that is created for a specific purpose. As soon as the purpose has been accomplished, the committee stands dissolved.

6)  Define authority.
Authority is an official right of a person to do and make things happen in an organization.

7)  Define power.
Power is the capacity of a person to act and influence others. A person gets power by his intelligence, knowledge, skill and personal traits.

8) Define delegation.
The process of delegation involves the determination of results expected, assignment of task, delegation of authority for the accomplishment of these tasks.

9) What is responsibility?
Responsibility is the duty of the subordinate to whom some work has been assigned by a superior to perform the task required.

10) What do you mean by decentralization?

Decentralization of authority is the extent to which power and authority are delegated to lower levels in an organized structure.

SECTION-B (Explanatory Type Questions)

1)  Distinguish between authority and power


Authority
Power








Way
of
It  is  the  formal  right  given  to  a
It   is   the   personal   ability  to
rights

manager  to  make  decisions  or  to
influence others or events.


command.





Roles

Authority  is  the  right  given  to  a
Power is the ability of a person


manager to achieve the objectives
or  a   group   to  influence  the


of the organization.
beliefs   and   actions   of   other



people.




Direction

It flows in the downward direction
It can flow in any direction.


of an organization.




Legitimate
Authority  is  always  official  in
Power  need  not  be  official  in


nature; hence, it is legitimate.
nature;  therefore it  need  not  be



legitimate.






2)  Distinguish between authority and responsibility.


Authority
Responsibility




Authority is the power or right to
Responsibility is the state or fact
Definitions
give  orders,  make  decisions,  and
of  having  a  duty  to  deal  with

  enforce obedience.
something, or of having control


over someone.



Basically
It is power.
It is a duty.



Main
Here, orders and commands play a
Here, duties and obedience play
functions
vital role.
a vital role.



Time
It  stays  for  a  longer  period  as
It   gets   completed   with   the
duration
compared to responsibility.
completion of the task so it has a


shorter period.








Direction
It flows downwards.
It flows upwards.
Flow





Delegation
It can be delegated to others.
It cannot be delegated.



Example
The   right   of   a   manager   to
The obligation of a subordinate

command his subordinates.
to complete an assigned work.







3.  Explain the features of formal and informal organization?

Features of Formal organisation:
(1)   The formal organizational structure is created intentionally by the process of organizing.
(2)   The purpose of formal organisation structure is achievement of organizational goal.
(3)   In formal organizational structure each individual is assigned a specific job.

(4)    In formal organisation every individual is assigned a fixed authority or decision-making power.
(5)   Formal organizational structure results in creation of superior-subordinate relations.
(6)   Formal organizational structure creates a scalar chain of communication in the organisation.
Features of informal organisation:

(1)   Informal organizational structure gets created automatically without any intended efforts of managers.

(2)      Informal organizational structure is formed by the employees to get psychological satisfaction.

(3)    Informal organizational structure does not follow any fixed path of flow of authority or communication.

(4)     Source of information cannot be known under informal structure as any person can communicate with anyone in the organisation.

(5)     The existence of informal organizational structure depends on the formal organisation structure.


4) Explain Line Organisational Structure:

A line organisation has only direct, vertical relationships between different levels in the firm. There is only line departments-departments directly involved in accomplishing the primary goal of the organisation. For example, in a typical firm, line departments include production and marketing. In a line organisation authority follows the chain of command.

illustrates a single line organizational structure.





Features:
Have only direct vertical relationships between different levels in the firm.

Advantages:
1.  Tends to simplify and clarify authority, responsibility and accountability relationships
2.  Promotes fast decision making
3.  Simple to understand.

Disadvantages:
1.  Neglects specialists in planning
2.  Overloads key persons.
Some of the advantages of a pure line organisation are:

(i)     A line structure tends to simplify and clarify responsibility, authority and accountability relationships. The levels of responsibility and authority are likely to be precise and understandable.

(ii)   A line structure promotes fast decision making and flexibility.

(iii)     Because line organisations are usually small, managements and employees have greater closeness.
However, there are some disadvantages also. They are:
(i)   As the firm grows larger, line organisation becomes more ineffective.
(ii)   Improved speed and flexibility may not offset the lack of specialized knowledge.
(iii)   Managers may have to become experts in too many fields.

(iv)    There is a tendency to become overly dependent on the few key people who an perform numerous jobs.


5. Explain Staff or Functional Authority Organisational Structure?
The jobs or positions in an organisation can be categorized as:

(i)   Line position:

A position in the direct chain of command that is responsible for the achievement of an organization’s goals and



(ii) Staff position:
A position intended to provide expertise, advice and support for the line positions.

The line officers or managers have the direct authority (known as line authority) to be exercised by them to achieve the organizational goals. The staff officers or managers have staff authority (i.e., authority to advice the line) over the line. This is also known as functional authority.

An organisation where staffs departments have authority over line personnel in narrow areas of specialization is known as functional authority organisation. 

Illustrates a staff or functional authority organizational structure.



In the line organisation, the line managers cannot be experts in all the functions they are required to perform. But in the functional authority organisation, staff personnel who are specialists in some fields are given functional authority (The right of staff specialists to issue orders in their own names in designated areas).


The principle of unity of command is violated when functional authority exists i.e., a worker or a group of workers may have to receive instructions or orders from the line supervisor as well as the staff specialist which may result in confusion and the conflicting orders from multiple sources may lead to increased ineffectiveness. Some staff specialists may exert direct authority over the line personnel, rather than exert advice authority (for example, quality control inspector may direct the worker as well as advise in matters related to quality).

While this type of organizational structure overcomes the disadvantages of a pure line organizational structure, it has some major disadvantages:

They are: (i) the potential conflicts resulting from violation of principle of unity of command and (ii) the tendency to keep authority centralized at higher levels in the organisation.

SECTION-C (Essay type questions)

1) Explain the advantages and disadvantages of Decentralization


Advantages of Decentralization
       Decentralization reduces the workload of top executives.

       It improves job satisfaction and morale of lower level managers by satisfying their needs for independence, participation and status.

       Decision making is quicker.

       It facilitates growth and diversification. As each product division is given sufficient autonomy for innovation and creativity.

       It gives opportunity to subordinates to exercise their own judgment. They develop managerial skills which will be useful to the organisation in the longer run.

       Decentralization requires wider span of control and fewer levels of organisation. It speeds up communication.

       Decentralization increases the administrative expenses and each division or department has to be sufficient in terms of physical facilities and trained personnel.

       As each department or division enjoys substantial autonomy it might lead to co-ordination problems.

       There might be lack of uniformity and inconsistent procedures as each department might have the authority to formulate its own policies and procedures.

Disadvantages of Decentralization

       Decentralization increases the administrative expenses and each division or department has to be sufficient in terms of physical facilities and trained personnel.

       As each department or division enjoys substantial autonomy it might lead to co-ordination problems.

       There might be lack of uniformity and inconsistent procedures as each department might have the authority to formulate its own policies and procedures.

2)  Explain the advantages and disadvantages of centralization.
Advantages of Centralization
       Effective utilization of talents of the top management.
       It reduces co-ordination problems as a unifying force integrates all operations.
       It allows the development of a strong co-ordinates top management team.
       There is uniformity of policies and plans across the organisation.

       Centralization organisations are best suited where resources and information has to move swiftly, especially in emergencies.

       Duplication of functions and facilities is minimized which in turn reduces costs.

       Due to the fact that all decisions are made at the top it might result in delays in decision-making and communication.

       Centralized power and authority might be abused.

       Doesn’t give an opportunity to lower level managers/supervisors to develop their managerial skills.

       Centralized organisation faces the problem of lower motivation levels among workforce.

       The success of organisation depends on the competence of top executives which might be quite risky.

Disadvantages of Centralization

       Due to the fact that all decisions are made at the top it might result in delays in decision-making and communication.

       Centralized power and authority might be abused.

       Doesn’t give an opportunity to lower level managers/supervisors to develop their managerial skills.

       Centralized organisation faces the problem of lower motivation levels among workforce.

       The success of organisation depends on the competence of top executives which might be quite risky.


3. Explain Committee and project type of Organization Structure?
Committee Organisational Structure Features:

Committee Organizational Chart


Committees are advisory bodies. They are usually appointed to advise organizations. Examples of committees include; parent teachers associations and student councils which are committees within a school organization. Committees usually delegate certain duties to sub-committees. For example, an executive committee may appoint a finance committee to advise it on financial matters. Note that an element of the line organization exists in the committee organization as all sub-committees are responsible to the executive committee.

(a)  Formed for managing certain problems/situations

(b)   Are temporary decisions.

Advantages:
1.  Committee decisions are better than individual decisions
2.  Better interaction between committee members leads to better co-ordination of activities
3.  Committee members can be motivated to participate in group decision making.
4.  Group discussion may lead to creative thinking.
Disadvantages:
1.  Committees may delay decisions, consume more time and hence more expensive.

2.  Group action may lead to compromise and indecision.
3.  ‘Buck passing’ may result.

4. Explain the Project Organisational Structure:


A project organisation is a temporary organisation designed to achieve specific results by using teams of specialists from different functional areas in the organisation. The project team focuses all its energies, resources and results on the assigned project. Once the project has been completed, the team members from various cross functional departments may go back to their previous positions or may be assigned to a new project. Some of the examples of projects are: research and development projects, product development, construction of a new plant, housing complex, shopping complex, bridge etc.

illustrates a project organisational structure.




Importance of Project Organisational Structure:
Project organizational structure is most valuable when:
(i)   Work is defined by a specific goal and target date for completion.
(ii)   Work is unique and unfamiliar to the organisation.

(iii)     Work is complex having independent activities and specialized skills are necessary for accomplishment.
(iv)   Work is critical in terms of possible gains or losses.
(v)   Work is not repetitive in nature.

Committee Organisational Structure Features:
(a)  Formed for managing certain problems/situations
(b)   Are temporary decisions.

Importance of Project Organisational Structure:
Project organizational structure is most valuable when:
(i)   Work is defined by a specific goal and target date for completion.
(ii)   Work is unique and unfamiliar to the organisation.

(iii)     Work is complex having independent activities and specialized skills are necessary for accomplishment.
(iv)   Work is critical in terms of possible gains or losses.



(v) Work is not repetitive in nature.

Characteristics of project organisation:

1.  Personnel are assigned to a project from the existing permanent organisation and are under the direction and control of the project manager.

2.    The project manager specifies what effort is needed and when work will be performed whereas the concerned department manager executes the work using his resources.

3.  The project manager gets the needed support from production, quality control, engineering etc. for completion of the project.

4.   The authority over the project team members is shared by project manager and the respective functional managers in the permanent organisation.

5.   The services of the specialists (project team members) are temporarily loaned to the project manager till the completion of the project.

6.  There may be conflict between the project manager and the departmental manager on the issue of exercising authority over team members.

7.      Since authority relationships are overlapping with possibilities of conflicts, informal relationships between project manager and departmental managers (functional managers) become more important than formal prescription of authority.

8.  Full and free communication is essential among those working on the project.

5) Explain Matrix Organisational Structure:

It is a permanent organisation designed to achieve specific results by using teams of specialists from different functional areas in the organisation. The matrix organisation is illustrated in Exhibit 10.8.

Feature:

Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical functional structure

Advantages:
1.  Decentralised decision making.
2.  Strong product/project co-ordination.
3.  Improved environmental monitoring.
4.  Fast response to change.
5.  Flexible use of resources.
6.  Efficient use of support systems.





Disadvantages:
1.  High administration cost.
2.  Potential confusion over authority and responsibility.
3.  High prospects of conflict.
4.  Overemphasis on group decision making.
5.  Excessive focus on internal relations.

This type of organisation is often used when the firm has to be highly responsive to a rapidly changing external environment.

In matrix structures, there are functional managers and product (or project or business group) managers. Functional manager are in charge of specialized resources such as production, quality control, inventories, scheduling and marketing. Product or business group managers are incharge of one or more products and are authorized to prepare product strategies or business group strategies and call on the various functional managers for the necessary resources.


6) Explain the features of Informal Organisation:

An informal organisation is the set of evolving relationships and patterns of human interaction within an organisation which are not officially presented. Alongside the formal organisation, an informal organisation structure exists which consists of informal relationships created not by officially designated managers but by organizational members at every level. Since managers cannot avoid these informal relationships, they must be trained to cope with it

The informal organisation has the following characteristics

(i)     Its members are joined together to satisfy their personal needs (needs for affiliation, friendship etc.)
(ii)   It is continuously changing:
The informal organisation is dynamic.
(iii)   It involves members from various organizational levels.
(iv)   It is affected by relationship outside the firm.





(v)    It has a pecking order: certain people are assigned greater importance than others by the informal group.

Even though an informal organizational structure does not have its own formal organizational chart, it has its own chain of command:

Benefits of Informal Organisation:
(i)   Assists in accomplishing the work faster.
(ii)   Helps to remove weakness in the formal structure.
(iii)   Lengthens the effective span of control.
(iv)   Compensation for violations of formal organizational principles.
(v)   Provides an additional channel of communication.
(vi)   Provides emotional support for employees.
(vii)   Encourages better management.

Disadvantages of informal organisation:
(i)   May work against the purpose of formal organisation.
(ii)   Reduces the degree of predictability and control.
(iii)   Reduces the number of practical alternatives.
(iv)   Increases the time required to complete activities.































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