UNIT-2 BASIC CONCEPTS RELATED TO ORGANIZATION NATURE AND PROCESS OF ORGANISATION MEANING AND DEFINITION Organization is the back

bone of management and a means of multiplying the strength of an individual. It takes the knowledge of individuals and uses it as the resource. To organize manpower means to build a structure, not of wood and steel, but of human beings. The people are the material for the construction, their loyalty is the foundation and their cooperative spirit the moral that holds the structure together and gives it vitality. The concept of organization has been perceived differently by different persons. The biologists consider the human body as an organization. The sociologists think of society as an organization and the political scientists think of government as an organization. Generally speaking, an organization is the rational coordination of the activities of a number of people for the accomplishment of some common goals, through division of lab our and function, and through a hierarchy of authority and responsibility are as follows: It is a cooperative relationship of two or more persons. Its purpose is to accomplish certain goals. Its members can communicate with each other. The behavior of the group is regulated through their own bye-laws.

SIGNIFICANCE OF ORGANIZATIONS An organization is not merely a chart or a lifeless structure. It is the mechanism through which management directs, coordinates and controls the business. It is indeed the foundation of management. A good organization is important because: 1. It facilitates administration. 2. It makes growth and diversification possible. 3. It stimulates independent, creative thinking, and initiative through well-defined areas of work. 4. It provides for the optimum use of technological improvements. PROCESS OF ORGANIZATION Organization is a structure or mechanism that enables human beings to work together. The work of organizing, therefore, looks to the structural and functional aspects of business as well as correlates the different factors with their functions. The following are the important steps involved in the work of organizing. 1. Determination of objectives: An organization is always related to certain clear-cut objectives. It is, therefore, necessary for the management to identify the objectives in definite and clear terms prior to the commencement of any activity. 2.Division of work: Activities of any business undertaking need to be closely identified and classified into various categories like production, purchase, marketing, finance, etc. This will enable the people to know what is expected of them as members of the group and help in avoiding duplication of efforts.

3. Classification of activities: The next step is to classify activities in accordance with their similarities, common purposes, and functions. All similar activities are brought together and dissimilar activities are covered under different departments. 4. Fitting individuals into jobs: After classifying the activities, the next step is to appoint suitable persons for various jobs. In this process, each person is given a specific job to do and is made responsible for it. Each person is also given adequate authority to do the job. 5. Developing relationships: Since there are many individuals in the organization, the management is responsible to lay down the structure of relationships in the organization. There should be a clear definition of authority and responsibility associated with each job. Thus every person should know as to whom he is accountable to. 6. Coordination of activities: Coordination is essential to bring about an uninterrupted sequence of operations. Purchase, production, and sales departments can function successfully only if there is coherence in their policies. FORMAL ORGANIZATION The formal organization refers to the structure of jobs and positions with clearly-defined functions and relationships as prescribed by the top management. This type of organization is bound by rules, systems and procedures and is deliberately built by the management to accomplish organizational goals. But the degree of its success depends on the attitudes and capacities of the people within the organization. It is a prescribed structure of role and relationship consciously coordinate towards a common goal. It is based on division of lab our and specialization. Its structure is pre-determined by the top management. It does not consider the emotional aspect. The authority and responsibility relationships created by the organization structure need to be honored by everyone. INFORMAL ORGANIZATION Informal organization refers to the relationships between people in an organization based not on procedures and regulations but on personal attitudes, whims, prejudices, likes, dislikes, etc. It arises from the personal and social relations of the people which cut across formal channels to communicate with one another. Sometimes, it is afflicted with rumors and offers resistance to the new ideas of management. It arises spontaneously. Its formation is a natural process. It reflects human relationships. Its membership is voluntary. It is based common taste, whims, prejudices, etc. Formal Organization vs. Informal Organization Formal Organization Informal Organization

1. It is deliberately formed. 2. It has pre-determined purposes. 3. It is a structure of well-defined Authority and responsibility. 4. It is usually stable. 5. It does not human sentiments. 6. It follows a fixed chain of command. PRINCIPLES OF ORGANIZATION

1. It originates automatically. 2. It has no pre-determined purposes. 3.Its structure is based on personal attitudes, whims, and friendships, Relationship. 4. It does not last too long. 5. It reflects human emotions. 6. It does not follow a fixed chain Of command.

Principles denote a body of laws or a guide to action. Principles of organization, therefore, imply that there exists a body of laws guides to help in organizing an enterprise. Taylor, Fayola and Uric have advocated various principles for a sound organization. Some of these principles are as follows: Unity of objectives: An organization is a mechanism to accomplish certain objectives. The principle of unity of objectives states that every part of the organization should pull together to accomplish those predetermined objectives. Unity of command: Command is decisively a personnel function. There should be a unity of command in the organization for fixing responsibility and avoiding conflict of command. The principle of unity of command states that each subordinate should have only one superior and dual subordination should be avoided. Unity of direction: Unity of command cannot exist without unity of direction. If command is a personnel function, direction relates to the body corporate. The principle of unity of direction states that there should be one plan for a group of activities having common objectives. Division of work: The departments of a good organization must reflect the most efficient breakdown of the organizational activities. This is also known as the principle of specialization. The more a person concentrates on a specific job the better will be his performance. Efficiency: An organization should function on the principle of efficiency to enable it to attain its objectives at a minimum cost. Span of management. Span of control means the number of subordinates a manager can directly supervise. There is a limit for it. But a span is said to be ideal when it facilitates effective control and supervision. Scalar principle: The scalar principle represents the vertical division of authority. For instance, from the chief executive, a line of authority may proceed to departmental managers, to supervisors or foremen and finally to workers. Thus scalar principle contemplates superior subordinate relations from the top to the bottom of the organization. Exception principle: The principle of exception states that only exceptionally complex problems are to be referred to higher levels of management and the routine problems should be decided by the subordinates themselves. Principle of authority:

Authority means power to command others. There should be free flow of authority in an organization so as to enable people to take decision without delay. Principle of responsibility: Responsibility means obligation to do a particular task. Authority and responsibility should go and hand in hand. Although a subordinate is responsible to his superior, the responsibility of the superior is absolute for the acts of the subordinates. Balance: There should be balance in the formal structure of the organization between the factor shaving conflicting claims. For example, between centralization and decentralization, between span of supervision and lines of communication and authority allocated to departments and personnel at various levels. Flexibility: Flexibility is the ability to change with the environment to maintain competitive advantage. Thus a good organization should be flexible. Simplicity: Simplicity ensures efficiency. An organization is said to be good if it is simple with a minimum number of levels. Continuity: Change is the law of nature. Thus, specific attention should be paid to implement reorganization as a continuous process. ORGANIZATION STRUCTURE An organization structure denotes the pattern of relationship among the positions and jobs within an organization. It is the structure of human relationships or the network of horizontal and vertical dimensions designed to achieve common goals. It is a systematic combination of people and facilities which may take the from of line, staff and line and staff. The structure of an organization is generally shown in an organization chart. It shows the authority and responsibility relationship between various positions in the organization. A good organization structure should be dynamic and capable of changing in accordance with the situations or conditions. Thus, while designing the organization structure, due attention should be paid to the principles of should organization. Organization structure helps in the efficient functioning of concerns on account of the following reasons: 1. It allocates authority and responsibility. 2. It lays down the pattern of communication and coordination. 3. It creates proper balancing of activities. 4. It facilitates growth of the enterprise. 5. It is adaptable to changes. Determining the kind of structure Since an organization structure is an indispensable means for the goal seeking activities, a wrong structure will seriously impair business performance and may even destroy it. It is, therefore, essential that an organization structure is created after a careful and comprehensive analysis of the needs of the proposed organization. To this end, PeterDrucker points out the following three kinds of analysis. Activities analysis: The aim of the activities analysis is to find out activities are needed to accomplish the goals of the organization. While making this type of analysis, it should also be determined as to be emphasized in the organization structure. Decisions analysis: Decision analysis is required to determine the number of levels in the organization. At this stage, it is determined as these decisions will have to be made and how each manager should be involved in them.

Relations analysis: Relation analysis is an examination of the various types of relationships are vertical, lateral and diagonal.

ORGANISATION CHART An organization chart is a diagrammatic representation of the structure of an organization. In other words, it is a graphic portrayal of positions in the organization and of formal lines communication among them. The organization chart provides a birds eye view of the relationship between different departments of an organization of as well as the relationship between the executives and the subordinates at various levels. In the words of Louis A. Allen, the organization chart is a graphic means of showing organization data. Organization charts are snapshots; they show only the formal organization and depict it only at a given moment in time. Thus the main features of an organization chart are as follows: It is a diagrammatical presentation. It shows the relationship between different authorities. It shows the kind of relationships prevailing in the organization. It shows the authority and responsibility of various authorities. The organization chart should not be confused with the organization structure. The organization chart is a schematic representation of the formal organization as given in Figure. Benefits of the Organization Chart The main advantages of the organization chart are the following. It facilitates organizational planning and manpower planning. It helps to avoid overlapping of authority. It enables the executives to know and appreciate their own position vis--vis others in the organization. It is a source of authoritative information about the organization. It helps to analysis an organization for effecting improvements. Limitations of the organization chart The organization chart has the following limitations, in spite of the aforesaid benefits. It does not guarantee an effective structure. It may induce rigidity. It requires frequent updating. It does not incorporate the informal organization. The first real task in designing an organization structure is the identification of activities and to group them properly. the process of grouping the activities is commonly known as departmentation. The terms used to designate departments may vary in different organizations of the same nature. Need and importance of Departmentation The basic need for departmentation arises because of specialization of work and the limitation on the number of sub ordinates that can be directly controlled by a superior. If there is no departmentation, there would be serious limitation on the size of the organization. Grouping of

DEPARTMENTATION:

activities and consequently of personnel into departments makes it possible to expand an organization to any extent. However, when departments are created to overcome this basic limitation, they serve a number of other functions leading towards the organizational efficiency. The major importance of the departmentation is along the following lines: Advantages of specialisation: Probably the most important single principle in an analysis of the classical approach to organizational design is specialization of work. The basic advantage of the specialization lies in terms of efficiency with which the work is performed because a person focuses his attention on a narrow aspect of the work and he gets mastery over that aspect. 1. Fixation of Responsibility: Departmentation helps in fixing the responsibility and consequently accountability for the results. Responsibility can be discharged properly when it is clear, precise, and definite. 2. Development of Managers: Departmentation helps in the development of managers. Development is possible because of two factors. First, the manager focuses their attention on some specific problems which provides them effective on-the-job training. second. 3. Facility in Appraisal: Managerial performance can be measured when the area of activities can be specified and standards in respect of these can be fixed. Departmentation provides help in both these areas. When a broader function is divided in to small segments and a particular segment is assigned to each manager, the area to be appraised is clearly known. 4. Feeling of Autonomy: Departmentation provides motivation by developing feeling of autonomy to the extent possible. Normally; departments are created in the organization with certain degree of autonomy and freedom. The manager in charge of a department can take independent decisions within overall framework of the organization. TYPES OF DEPARTMENTATION The managerial problems associated with departmentation are directly related to the degree to which individual jobs have been specialized, that is, the number of ways to group jobs increases with the number of different specialized jobs. Thus, a small business owner employing three-four persons may not require any departmentation because he can control all the persons personally himself. Functional departmentation: It refers to the grouping of common activities to form an organizational unit is known as functional departmentation, that is, the units are organized around common functions. Functional departmentation is the most widely used basis for organizing activities and is present almost in every large organization at some level. Basic functions The basic or major functions are those which are essential for the organizations and their operations contribute to the organizational efficiency. Advantages of Functional departmentation Functional departmentation is most commonly used because it offers certain advantages which include advantages of specialization, ensuring performance of activities necessary for the achievement of organizational objective, elimination of unnecessary activities, and easier control over functions and maintaining the relative importance of functions in the organization. Disadvantages of Functional departmentation

In functional departmentation the problems like lack of responsibility for end results, overspecialization and consequently lack of general management point of view, and problems of conflicts and coordination among functional departments.

Board of Directors

Managing Director

Production Manager

Production Manager

Production Manager

Production Manager

Product wise departmentation: Product departmentation involves the grouping together of all activities necessary to manufacture a product or product line. As the organization grows in size, it becomes difficult for managers to coordinate the activities of the expanding product lines. One commonly adopted strategy is to establish departments based on products. Product differentiation is preferred for product expansion and diversification when manufacturing and marketing characteristics of each product are of primary concern. Advantages of product departmentation Product departmentation offers several advantages like reduces problems of coordination for different products, provides opportunities for further diversification and expansion of organization and provides product specialization necessary for managers especially when each product is different from others. Disadvantages of product departmentation It presents problems at the top management level for coordination, multiplicity of efforts because same functional facilities are required foe different products and also the problem in maintaining economical central staff services. Chief Executive

Radio Division

TV Division

Computer Division

Production

Marketing

Finance

Personnel

GEOGRAPHICAL DEPARTMENTATION: Territorial or geographical departmentation is especially useful to large-sized organizations having activities which are physically spread such as banking, insurance, transportation etc. For example Insurance Corporation of India has grouped its activities as shown in the chart Advantages of geographical Departmentation

Territorial Departmentation is especially suitable to large scale organizations whose activities are physically spread. In such cases, Territorial Departmentation provides certain efficiency in operation. Disadvantages of geographical Departmentation The foremost problem is communication and the next problem is which comes in the way is The distance between policy framers and policy executors. CEO (Head Office)

9mumbai) Eastern Zone Northern Zone Southern Zone Western Zone

Production

Marketing

Finance

HR

CUSTOMER WISE DEPARTMENTATION: Customer-base departmentation is basically market-oriented in which departments are created around marketing channels. Grouping of activities around marketing channels involves making an organization structure reflect the ways an organization reaches an ultimate customer. Therefore, it is suitable mainly to those organizations which either serve different customers such as pharmaceutical company supplying to hospitals, government, retail-stores etc. Advantages The most important advantage is that it focuses on customers who are ultimate suppliers of money to the organization. Disadvantages Coordination between sales and other functions becomes difficult because this method will followed only in marketing division. Duplication and confusion may arise in product research and development activities as well as in manufacturing. Marketing Manager

Wholesale

Retail

Govt agencies

Export

ADVANTAGES DEPARTMENTATION Each of the bases of departmentation has its suitability, advantages, and disadvantages. Consequently, the selection of bases of departmentation involves a consideration of the relative advantages of each base for the organization suitable basis of departmentation is one which facilitates the performance of organizational functions efficiently and effectively so that its objectives are achieved. Therefore, determination of suitability of departmentation bases should be considered in the light of various factors affecting the functioning of an organisation. Such factors may be of the following types:

1. Specialization: The basis of departmentation should reflect the specialization in performing the work. The more an organization structure reflects the division of work in an organization through grouping of activities in departmental form, the more efficiently and effectively it tends to contribute to organizational operation. This is possible because of specialization of work. 2. Coordination: Coordination involves that all the related activities are performed in a way that their performance is synchronized so that each activity contributes to others. In a sense, all activities grouped in various forms have the same objective of achieving organizational goals, though they may be dissimilar in nature and their performance may require different skills. The best result can be achieved when all activities are performed in a coordinated way and each activity contributes in the positive way to others. 3. Control: It is the process of analyzing whether the intended results are being achieved by a particular department or not. If not, what can be done to bring the situation to a desirable level. Control measures and their effectiveness depend on the way in which activities are grouped in to departments. Normally, more the clearly-defined activities and consequently responsibilities of departments are, more are the chances for effective control because the manager can know very easily what is to be controlled. 4. Economy: A balance should be maintained between the cost of creating a department and its contribution. Creation of departments involves costs on the part of the organisation. Cost involved may be of two types. First, when a new department is created, it requires personnel and other matching facilities which involves cost. Second, creation of additional department means creation of additional interactions in the organization requiring additional time of managers which is very important for them. For example, if too many staff departments have been created, they may pose severe time constraints on line managers. 5. Focus on Results: In an organization, the final results are achieved through the achievement of subordinate results. Therefore; all those activities which contribute to the achievement of these results should be given proper attention. Thus, activities whose contributions are higher are likely to get more prominence. 6. Local conditions: While creating departments, adequate consideration should be given to the requirements of local conditions. This is more important to those organizations which operate in different geographical areas. 7. Human Consideration: Departmentation should also take in to consideration of the human factor in the organisation. Because departments should be created on the basis of availability of personnel, their aspirations and value systems, informal work groups and attitudes of people towards organizational structure. CENTRALISATION AND DECENTRALISATION Another highly important issue in organizing is the extent to which authority is centralized, or its opposite, decentralized, in a formal organization structure. In management, centralization identifies concentration of authority and decentralization dispersion of authority. However; both these terms are used to give various connotations. These words are used in the context of administrative processes, physical and geographical location, physical or geographical decentralization refers to dispersion of an organizations operations throughout the country. When centralization and decentralization are used in the context of degree of authority at various levels and associated management practices, they denote different degrees of delegation of authority.

For example, Allen has defined both the terms as follows: Centralization is the systemic and consistent reservation of authority at central points within an organization. Decentralization applies to the systemic delegation of authority in an organization-wide context. In a centralised organisation head office(or a few senior managers) will retain the major responsibilities and powers. Conversely decentralised organisations will spread responsibility for specific decisions across various outlets and lower level managers, including branches or units located away from head office/head quarters. An example of a decentralised structure is Tesco the supermarket chain. Each store of Tesco has a store manager who can make certain decisions concerning their store. The store manager is responsible to a regional manager . Organisations may also decide that a combination of centralisation and decentralisation is more effective. For example functions such as accounting and purchasing may be centralised to save costs. Whilst tasks such as recruitment may be decentralised as units away from head office may have staffing needs specific only to them. Certain organisations implement vertical decentralisation which means that they have handed the power to make certain decisions, down the hierarchy of their organisation. Vertical decentralisation increases the input, people at the bottom of the organisation chart have in decision making. Horizontal decentralisation spreads responsibility across the organisation. A good example of this is the implementation of new technology across the whole business. This implementation will be the sole responsibility of technology specialists Advantages of Centralised Structure For Organisations Senior managers enjoy greater control over the organisation. Advantages

of

Decentralised to

Structure For Organisations Senior managers have time

concentrate on the most important decisions (as the other decisions can be undertaken by other people down the organisation structure. Decision making is

The use of standardised procedures can results in cost savings.

a form of

empowerment. Empowerment can increase motivation and therefore mean that staff

output increases. Decisions can be made to benefit the People lower down the chain have a organisations as a whole. Whereas agreater understanding of the environment decision made by a departmentthey work in and the people (customers and knowledge skills and experience may enable them to make more effective decisions than manager may benefit their department,colleagues) that they interact with. This but disadvantage other departments.

senior managers. The organisation can benefit from the Empowerment managers.

will

enable

decision making of experienced seniordepartments and their employees to respond faster to changes and new challenges. Whereas it may take senior managers longer

to appreciate that business needs have

changed. In uncertain times the organisation will Empowerment makes it easier for need strong leadership and pull in thepeople to accept and make a success of more same direction. It is believed that strongresponsibility. leadership is often best given from above.

Factors determining degree of decentralization A basic question that arises while designing the organization structure is: how much to decentralize the authority? Managers cannot ordinarily be for or against decentralization of authority. They may prefer to delegate authority, or they may like to make all decisions. 1. Size of organization: Decenentralisation depends on the size of the organisation.The larger the size of the organization, the more urgent is the need for decentralisation.In a large organization, . 2. History of organization: Decentralization of authority depends on the way the organization has been built up over the period of time. Normally those organizations which expand from within or expand under the direction of the owner- founder show a marked tendency to keep authority centralized. 3. Availability of Managers: Availability of Managers directly affects the degree of decentralization because exercise of authority requires competence on the part of those who exercise authority. If better quality managers are available, there is more chance for decentralization because of two reasons. First, these managers can handle the problems of decentralized units effectively. Second, such managers have higher need for degree of autonomy which is possible in decentralized structure only. Moreover, decentralization also works as training ground for managers which increase the ability of good managers. 4. Control Techniques: Development and use of control techniques affect the degree of decentralization by ensuring whether the performance of various levels and points of the organizations is in line with planning. Higher the degree of development and use of control techniques better is the prospect for decentralization. 5. Decentralised Activities: In many cases, decentralization of authority becomes necessary because there is decentralization based on other factors like economies of division of labour, the opportunities for using physical facilities at various locations, and the nature of work. For example, the activities of banking, insurance and transport organizations have to be decentralized.. 6. Rate of change in organization: The rate of change in the organization also affects the degree of which authority may be decentralized. If the business of the organization is fast developing and it is facing the problems of expansion. CENTRALISATION BENEFITS: Centralization, as discussed earlier, is the systematic and consistent reservation of authority at central points within the organization. This results into a number of benefits in the organization.

1. Centralization provides opportunity for personal leadership. 2. It facilitates integration of efforts. 3. Quick decisions are possible; hence emergencies can be handled very easily. 4. It makes communication and control easier in the organization. 5. It helps in reducing wastage of efforts by avoiding duplication. 6. There is uniformity in actions throughout the organization and thus, coordination can be achieved easily. Limitations of centralization: 1. Employees dissatisfaction regarding decision-making: In case of centralization employees will not get an opportunity to participate in decision-making process which leads to dissatisfaction in their jobs. 2. Conflicts between levels of management: Top level management will not encourage lower level management people and middle level management people. It may leads to conflicts between different levels of management. 3. Improper utilization of talents: The skills and talents of lower level management people will not be utilized properly by top level management people which is one of the major limitations of centralization. 4. Inefficient in decision-making: proper decisions may not be taken in the case of centralization. DECENTRALISATION BENEFITS: 1. It reduces burden of the top management so that it can focus more attention on strategic management. 2. It facilitates growth and diversification in the organization. 3. It is a good philosophy to motivate managers. 4. It encourages development of managers by providing them opportunities to shoulder more responsibility. 5. It emphasis on horizontal growth of the organization thereby reducing the number of management levels and increasing the span of management. 6. It pinpoints more accurately on the results to be achieved by each unit of the organization by making various units autonomous. LIMITATIONS: 1. If not followed properly, decentralization will create chaos in the organization in the absence of proper control. 2. It tends to increase costs by making most units autonomous for facilities. 3. In decentralized structure, there is no more need for good managers. Unless these, managers are available, decentralization cannot be effective.

4. Decentralization requires high degree of self-motivation and self-control because of autonomy given to managers. FORMS OF ORGANISATION STRUCTURE When two men work together to move a stone they are increasing their individual strength by pooling them and when they recognize this, they deliberately from organization. - CHESTER I.BARNARD INTRODUCTION Organization structure is basically concerned with allocation of tasks and delegation of authority its forms differ from one enterprise to another. Thus any one of the following forms of organization structure may be set up depending on the nature and objectives of the enterprise. Design of organization structure is considered to be a matter of choice among a large number of alternatives. There are various forms of organization structure; however, not all of them are suitable for all situations because of the differences in contextual variables which affect the organization structure as discussed in chapter 11. From this point of view, managers must be aware of the various alternatives so that they are able to choose a suitable structure for the organization. The classification of organization structure is based on the way; various activities are grouped together to create deportments and units as prescribing their relationship in the organization. Thus, there are seven types of organization structure-line, line and staff, functional, divisional, project, matrix, and free form. Each of these emphasizes different arrangement of organization activities. Some of these are designed on mechanistic pattern, for example, line, line and staff structures; some are designed on organic or dynamic pattern, for example matrix and free form structures. Others have a combination of both mechanistic and organic patterns in varying degrees. 1. Line organization 2. Functional organization 3. Line and staff organization 4. Committee pattern organization Line organization structure Line or military organization is the oldest and simplest form of organization .Line structure is generally found in small business units, although this is the basic framework of organization in large business units. Other forms are simply the modification of the line structure. Under this system the authority flows vertically from top to bottom. On the other hand responsible for his work and is accountable to his boss. Since authority and responsibility flow in an unbroken straight line this type of organization is strictly based on the principles of 'unity of command' and 'scalar chain . Line organization structure is also know as scalar, military, or vertical organization and perhaps is the oldest form. This concept holds that in any organization or hierarchy derived from a scalar process, there mist be a single head who commands it. Although an executive can delegate

authority, he has ultimate responsibility for results .Line organization can be designed in two ways .they are 1. Pure line organization 2. Departmental line organization 1. Pure line organization: Under this form, similar activities are performed at a particular level. Each group of activities is self-contained unit and able to perform the assigned activities without the assistance of others. It may be depicted as follows. 2. Departmental line organization: Under this form, entire activities are divided into different departments on the basis of similarity of activities each department is placed under one departmental superintendent. All persons in the department are subjected to control by the departmental head. The basic objectives of this form are to have uniform control, authority, and responsibility. Characteristics of line organization structure: Lines of authority and instructions are vertical, that is they flow from the top to bottom. The unity of command is maintained in a straight and unbroken line .It implies that each subordinate receives instructions from his immediate superior alone and is responsible to him only. All persons at the same level of organization are independent of each other .It implies that all the departmental heads are supreme in their respective areas and independent of one another and are responsible to the chief executive .This applies to all other positions also. This structure specifies responsibility and authority for all the positions limiting the area of action by a particular position holder. It comprises direct vertical relationships. Each position enjoys general authority over all the lower positions in the hierarchy. The principles of unity of command and scalar principle are followed. Responsibility goes upwards. There is no provision for the staff specialist. Merits: 1. Simplicity: This organization is quite simple in both understanding and implementation .every person is clear about what is expected of him. Since a person is receiving orders and instructions from only one superior , he does not have any confusion in his mind about his role and responsibility in the organization. 2. Discipline: Since each position is subject to control by its immediate superior position, often the maintenance of discipline is easy. 3. Orderly communication: Line organization follows scalar chain method of communication. It implies that communication going up and down will pass through the immediate superiors. This system of communication is

easy to maintain, orderly in nature, supports the authority of superior, and provides for closeness of contact thereby reducing changes of miscommunication. 4. Easy supervision and control: The line organization provides for easy supervision and because each subordinate is controlled by a single superior. The superior has direct and close contact with his subordinates who facilitate supervision and control. 5. Economical: The line organization is quite economical because it does not use staff specialists whose appointment is a costly affair especially for small organizations. Every person in the organization is directly responsible for his contribution to the organizational objectives. 6. Overall development of the managers: Since the line organization does not have provision for staff specialists, the various managers have to combine among themselves the expertise of a staff member 7. Unity of command: It makes for unity of command and also conforms to scalar principle of organization. 8. Stability: It is stable. 9. Not expensive: It is not expensive because no staff personnel are involved. 10. Fixation of responsibility: It fixes responsibility for the performance of tasks in a definite manner upon definite individuals. Demerits Line organizations offer many problems and limitations which are as follows: 1. Not suitable: It is not suitable for big organizations as specialization is absent. 2. Rigidity: It is rigid and inflexible. 3. Favouritism: It is likely to encourage favoritism. 4. Lack of expert advice: It suffers from lack of expert staff advice. 5. No proper communication: There is no communication from bottom upwards as authority is concentrated at the top level. 6. Lack of specialization: The line organization does not offer scope for specialization. A manager has to perform a variety of functions which may not necessarily be closely interrelated 7. Autocratic approach: The line organization is based upon autocratic approach. The line of authority being direct, demands high level of obedience on the part of the subordinates. In spite of the above said limitations the line organization can be successfully followed 1) In continuous process industries. 2) In small-scale business where the subordinates are not many. 3) Where labor-management problems are not difficult to solve. 4) Where the work is largely of routine nature and 5) Where the machinery is nearly automatic. Suitability The line organization is not suitable for large-scale organizations because it cannot fulfill the requirements of large organizations .However ,it quite suitable to small- organizations where the number of subordinates is quite small .The need for small organization is centralized control called only few levels of authority , direct interpersonal communication ,and direct control and supervision.

2. Functional organization Functional structure is a means of putting the specialists in top positions throughout the organization. They have only a limited power of command. Their functional authority remains confined to functional guidance of different departments. Under this system the whole work of management and direction of subordinates are divided in accordance with the type of work involved. At higher levels the functional organization refers to the structure that is formed by grouping all the works into major functional departments. The initial concept of the functional organization is credited to F.W.Taylor. He recommended fictionalization even at the shop level and suggested the scheme of functional foremanship. The functional foremanship recommended by Taylor has already been explained in previous fig 4 is the functional organization at the management level showing the direct authority of the personnel manager over the personnel in the works department. Work manager

Accountant

Suertendentent

Supervisor

Route clerk

Time and cost clerk Suitability:

Gang boss

Disciplarian

Inspector

Instruction card clerk

Speed Boss

Functional organizational structure is the most widely used in the medium and large organizations having limited number of products. This structure emerges from the idea that the organization must perform certain functions in order to carry on its operations . As it grows and division of labor leads to specialization, the organization has more work to do, it adds new specialties and further divides its presently employed specialties. Features of the functional organization The following are the important features of the functional organization The whole activities of the organization are divided into various functions in accordance with the type of work involved Each functional area is put under the charge of one executive or specialist If anybody wants to take any decision relating to a particular function he has to consult the functional specialist. Specialists often operate with considerable independence. Specialization by functions. Emphasis on goals. Line and staff division Functional authority relationships among various departments Limited span of management and tall structure. Advantages of the functional organization

The benefits of the functional organization are a follows It ensures division of labor and specialization based on individual proficiency and specialized knowledge It ensures separation of manual and mental functions so as to facilitate quick decision and mass production The limitations of one-man control under the line organization are largely alleviated here It ensures easy implementation and control of decision Fictionalization helps in better utilization of employees and development of there skills and also better utilization of resources also. It promotes professional achievement as a person is restricted to his own area of specialization. Thus, it provides satisfaction to specialists. There is a high degree of control and coordination of functions because all work of one kind is under one manager. Disadvantages of the functional organization: The disadvantages of the functions of the functional organization is as follows Functional structure offers usually line and staff conflict and inter departmental conflict. The heightened degree of such a conflict becomes detrimental to organizational efficiency. It is difficult to establish because of the high degree of specialization. It is unstable because it weakens the discipline. Specialists are seldom all- rounders so that a deficiency of leadership is almost perennially felt. Overlapping of authority and responsibility often leads to conflict among foremen of equal status. Difficulty in achieving control and coordination on account of considerable independence of specialists. 3. Line and Staff organization Line and staff organization refers to a pattern in which staff specialists advice line manages to perform that duties when the work of an executive increases , its performance requires the services of specialists which he himself cannot provide because of his limited capabilities on these fronts In actual practice, some times it is difficult to determine which departments line or staff .The problem can usually be solved by classifying activities within organizations in two ways 1. That which substantive (direct) in its contribution to the organizations. overall objectives, and 2. that which is objective (indirect) in its contribution .The departments perform formal group of activities are lined once, and those performing later group of activities are staff once. Both the line and functional systems are inadequate in the sense that the line system concentrates too much on authority and the functional system divides the authority too much but the line and staff system strikes a happy balance between the two in this system the administrative work is divided into two divisions namely the 1. Staff function and 2. Line function The staff is responsible for planning and the line for the actual execution of the work. The staff personnel only give advice to the line officials but do not enforce it. They prepare plans and recommend them to the line officials who implement them. Under the line and staff organization

the line is supplemented by the staff. The staff refers to officers who are not line managers. The staff consists of: 1. Personal staff such as a personal assistant or adviser attached to a line executive. 2. Specialized staff such as accountant a personal manager a public relations officer ,etc and. 3. General staff such as other experts in different fields who advise the top management and normally operate at higher levels. Features of the line and staff organization The important features of the line and staff organization are as follows 1. The staff supplements the line. 2. This organization clearly distinguishes between the two aspects of administration, viz. planning and execution. 3. Since the staff officers provide advice only to the line officers they do not have any power of command over them. 4. In the line and staff organization, line authority moves down in the same manner as in the line organization. Advantages of the line and staff organization [or] Merits The advantages of the line and staff organization are as follows: Merits 1.Planned specialization: Line and staff structure is based upon the principle of specialization .the managers are responsible for operations contributing directly to the achievements of the organizational objectives whereas staff people are there to provide expert advice on the matters of their concern. 2. Quality of Decisions: The quality of decisions in line and staff structures is high because the decisions come after careful consideration and thought. Each expert gives his advice in the area of his specialization which is reflected in the decisions. 3. Prospect for Personal Growth: this system of organizing offers ample prospect for efficient personal to grow in the organization. Not only has that it offered opportunity for for concentrating in a particular area, thereby increasing personal efficiency. 4. Training Ground for Personnel: it provides training ground for the personnel in two ways. First, since everybody is expected to concentrate on one field, ones training needs can easily be identified. 5. Specialization: The principle of specialization is attained through the clear-cut demarcation between thinking and doing. 6. Expert advice: Line managers can seek assistance from specialists by way of advice. 7. Flexibility: The line and staff organization is highly flexible because new activities may be introduced through additional staff without disturbing the line procedure. 8. Better decision: Better management decisions are possible as the decisions are made by experts. 9. Reduction of burden: The burden of the line officials is reduced as the staff specialists look after the detailed analysis of each important activity 10. Development of employees: In the line and staff structure a greater variety of responsible jobs are available enabling developments of capable employees. Disadvantages of the line and staff organization [or] Demerits: The line and staff structure suffers from limitations which particularly become acute when it is not implemented properly. Following are some basic problems and limitations 1. Lack of well defined Authority:

Though it is easy to say about line and staff authority, often in practice, it becomes difficult to differentiate clearly between line and staff because, in actual practice, the authority is often diffused. 2. Conflict between line and staff: The line and staff relationships are often tenuous and lead to numerous frictions and jealousies. There is a danger that the staff officers may encroach on the line authority. 3. Confusion: Confusion may prevail when the line and staff relationship is not properly understood 4. Loss of judgment and initiative: Line managers may depend to much on staff experts. it may therefore lead to loss of judgment and initiative on the part of line officials. 5. Ineffective staff: The staff experts may feel ineffective as they do not get the authority to implement their recommendations. 6. Expensive: This type of organization may prove very expensive as a large number of specialists are appointed. 7. Line staff conflict Line and staff structure is based on the assumption that both will help and support each other. But often both try to dominate each other .This leads to numerous frictions and jealousies. In this respect the view points of both line and staff are as follows:

Committee organization structure: A committee does not represent a separate type of organization like the line, line and staff or functional. It is rather a device which is used as supplementary to or in addition to A committee does not represent a separate type of organization like the line, line and staff or functional. It is rather a device which is used as supplementary to or in addition to any of the above types of organizations. A committee may be defined as a group of people performing some aspect of managerial function. It represent a group of persons to whom a task has been committed thus a committee is a body of persons appointed or elected for the consideration of specific matters brought before it. Committees function in almost all types of undertakings and organizations. Religious and social institutions prefer the committee pattern to achieve wider participation in their affairs. Most of the functions in educational institutions are performed through various committees. In business also committees are rampant. Committee is another form of formal group. Committees are found in every large organization. Exact definition of a committee is slightly difficult because there are too many variations in the scope and functions of committees. Literally the word committee means those whom some matter or

charge is committed. Thus, committee can be defined as body of persons appointed to meet on an organized basis for the discussion and dealing of matters brought before it. Based on this definition, following features of committee are identified. In an organization, there can be several types of committee, for examples, finance committee, budget committee, purchase committee, grievance committee, and welfare committee and so on.

Features of committee 1. A committee as a group of persons. It implies that there should be at least two persons. There are no limitations on the maximum number of persons in a committee. However, beyond a certain number, deliberations at committee meetings 2. become difficult. there are strictly A committee can deliberate only on matters that are brought before it. It cannot go for action in all spheres of activities. When a committee is constituted, defined jurisdictions within which it is expected to justify its existence. 3. Members of the committee draw authority though delegation. The authority of members is usually expressed in terms of one for each member for deciding the matters. 4. The type of authority delegated to a committee may vary from making final decisions on a matter to mere submission of relevant information on the matter concerned 5. A committee may be constituted at any level of the organization and its members can be drawn from any level or function. Reasons for use of committees 1.pooling of knowledge and experience: The most important advantages in using committees is that knowledge and experience can be pooled together and decisions can be arrived at through group deliberations judgment. A committee works on the theme that two heads are better than one. 2. Facility for coordination: Committees are very useful for coordinating activities among various functional units. When it is necessary to integrate and unify various viewpoints which cannot conveniently and effectively be coordinated by individuals, the committee may be useful in bringing all those concerned together. 3. Representation on Interest Groups: Committees are often used to give representation to various interest groups. Such types of committees are quite popular in government, educational and other institutions where people from diversified groups should have their say in the functioning of the organization. Even in business organization such committees may be set up, for example board of directors, welfare committee. 4. Fear Too Much Authority in Single person. Sometimes committees are constituted to avoid the concentration of too much authority in a single individual. This problem is more prominent in government and educational organizations and less in business organizations.

5. Consolidation of Authority: A committee can be used to consolidate splintered authority. A manger of department or of a section may have only limited amount of authority necessary to accomplish a programme. Therefore, the manager cannot solve a problem with out simultaneous exercise of authority by other mangers related to the problem 6. Transmission and sharing of information: Committees are useful for transmission and sharing of information. All parties and persons interested in a problem have simultaneous face-to-face communication through the proceedings of the committee meetings. Doubts and ambiguity may be removed at the spot. This saves a lot of time in communication. The spoken words, with the possibilities for overtones and emphasis and the opportunities 7. Motivation through Participation: People do better when they participate in decisions affecting their working because when they participate in decision making, they accept and live with that decision; they feel committed to the decision. This feeling of involvement and commitment motivates them for better performance 8. A Tool of management Development: A committee can be used as a tool of management development like many other tools .A manager can be developed through learning from experience .While experience of a manager on his job may restrict him to know about his job only, committees may widen his knowledge and he can learn how his job is related with others; in what way it affects others and is affected by others.. 9. Avoidance of Action: A committee can be used to avoid action on a problem being faced by the manager. He may not like to take action but he may not be in a position to avoid action also. Therefore, he can find out the best solution to refer the matter to committee. Thus, a committee can be used to cool off agitation and temper on the part of affected people. Benefits of committees 1. Integrated group knowledge and judgment. 2. Representation of different interest groups. 3. Coordination of plans and policies. 4. Executive team work and personal interactions. 5. Wider participation and motivation. 6. Improved communication. 7. Training ground for executives. Limitations of committees [or] Problems in committees 1. High cost: Constitution of a committee may be costly both in terms of time and money. Committee meetings may take time of various managers which can be spent otherwise for the organization. If the decisions are arrived at very quickly, it shows mere formality of holding meeting without any contributions from the members 2. Slow Decisions: Committee decisions are essentially slow because of the basic nature of decision-making process in a committee. In a group decision making, all members to consider a problem must be informed about it. This may require staff work to prepare a report giving members the basic facts. It

may take time. Similarly, in the meeting, deliberations take lot of time. Each member is expected to be heard. 3. Indecision: Many times, committee meetings result into indecision. The meetings may be adjourned because of lack of time for thorough deliberations so that agreement can be arrived at. Thus, there can be deadlock on the matter and no action can be taken. Further, agreement is reached on the basis of compromise. 4. Splitting of Responsibility: People work more efficiently when they have clear authority and responsibility. In taking a group decision, an individual member of the group feels a lower degree of responsibility than if the decision had to be taken by him. A major drawback in committee decision is that it splits the responsibility and no member really feels responsible for group action. VIRTUAL ORGANISATION The concept of virtual organization or corporation along with virtual team and office has entered management field very recently. The literal meaning of virtual is having the efficiency without the material part unreal but capable of being considered as real for the this concept, virtual corporation has been defined as follows. Virtual corporation is a temporary network of independent companies-suppliers, customers, even erstwhile rivals-linked by information technology to show the skills, costs and access to one anothers market. It will have neither hierarchy, no vertical integration. Thus, virtual organization is temporary alliance between two or more organization that band together to undertake a specified venture. Recently, in telecommunication sector in India, many virtual organizations have been created to provide different services. Business Week has identified five basic features of a virtual organization which are as follows. Technology: Informational networks will provide far-flunged companies and entrepreneurs to link up work together from start to finish. The partnerships will be based on electronic contrasts to keep the lawyers away and speed the linkup. Opportunism: Partnership will be loss permanent, less formal and more opportunistic. Companies will band together to meet a specific market opportunity and, more often than not fall apart once the need evaporates. Excellence: Because each partner brings its core competence to the effort, it may be possible to create a best-of-everything organization .Every function and process could be world classsomething that no single company could achieve Trust: These relationships make companies far more reliant on each other and require for more trust than even before .They will share a sense of co-destiny, meaning that the fate of each partner is dependent on other. No Borders: The new corporate model redefines the traditional boundaries of the company. More cooperation among competitors, suppliers, and customers makes it harder to determine where one company ends and another begins. Reasons for Virtual organization The basic reason behind creating a virtual organization is to generate synergy through temporary alliances However, management scholars have divided opinions over the effectiveness of virtual organizations because of the trust that is required in creating such organization. Often, clash of central office nor organization chart. It will have no purpose. Based on

interest generates much sooner than expected. For example, one of the virtual organizations created by Intel, USA and Japanese company could not work properly because the Japanese company was not able to complete its part of the project, leaving Intel with a major product delivery problem. Intel was not happy about that venture and decided not to participate any venture. Virtual office Along with virtual organizations, the concept of virtual offices has also emerged in which physical office space and individual desks have been replaced with an array of portable communication tools email, cellular phones, voice mail system, laptop computers, fax machines ,modems, vedio conferencing systems etc. Employees armed with these tools perform their works without going to their offices but do this from homes, cars, customers offices etc. Thus, the work is performed through telecommuting. It is flexible to employees in designing their work schedule and workplace. The initial reactions of the employees have been mixed one pleased. While some employees have found it quite attractive others have not been pleased. They feel that the virtual office system denies an opportunity for the social interaction as they still need tom gather informally, exchange ideas and experiences face-to-face and develop a sense of teamwork, to over come this hybrid system is adopted in which the employees attend their office at pre determined day and time while on other days they can work through telecommuting. MATRIX ORGANIZATION STRUCTURE Matrix organization structure is essentially a violation of unity of command and, therefore, whole classical concepts related to the principle of unity of command are violated. Matrix structure is the realization of two- dimensional structure which emanates directly from two dimensions of authority. Two complementary structures -pure structure and functional structure-are merged together to create matrix structure. Thus, matrix structure not only employs a multiple command but also related support mechanism and associated organizational culture and behaviour. Thus, it shows many organizational overlaps not only in terms of command system but also in terms of whole organizational processes and behaviour. Sometimes, matrix and project structures are considered to be the same. How ever, there is a difference between the two. In project organization, separate identifiable units are created for taking and managing projects, and complete responsibility for the tasks as well as all the resources needed for their accomplishment are usually assigned to one project manager. Design of Matrix Structure: In matrix organization structure, a project manager is appointed to coordinate the activities of the project. Personal are drawn from their respective functional departments. Upon completion of the project these people may return to their original departments for further assignment. Thus, each functional staff has two bosses-his administrative head and his project manager. Suitability of Matrix Structure: Matrix structure is of recent origin but its use has spread in various fields. For example, Davis and Lawrence have observed that matrix structure can be successfully applied to the following types of activities: manufacturing activities - aerospace, chemicals, electronics, heavy equipment, industrial products and pharmaceutical; service activities-banking, brokerage, construction, insurance and retailing; professional activities-accounting, advertising, consulting, and law; and non -profit organizations-government agencies, hospital, united nations and universities.

Merits of Matrix Structure: 1. Matrix structure focuses resources on a single project, permitting better planning and control to meet the project deadline. In project management, time is of prime importance and, therefore, it should be completed within the specified time. However, since the organization can not create many project divisions, matrix serves s the purpose adequately. 2. It is quite flexible structure as compared to traditional hierarchical structure. 3. It emphasizes on professional by elaborating authority of knowledge rather than authority of position. 4. It improves motivation because people can focus more directly on completion of one project than they can in the traditional functional structure. It also improves communication by discarding hierarchical system which produces more inhibiting factors. 5. It relieves top management for taken a long-term course of action so that the organization can design its strategies suitable to environmental needs. Demerits of Matrix Structure: Matrix structure has many problems in practice because of its too much flexibility. The major problems of matrix structure are as follows and managers should take adequate precautions to overcome these. 1. There is always power struggle in matrix structure. The essence of matrix structure is dual command, and to survive such a form, there needs to be balance of power. However, this power balance shifts constantly as people try to maximize their benefits. This results into power struggle among people which may become dysfunctional if top management does not play active role in balancing the power. 2. Matrix structure can develop anarchy if not managed properly. People have work under multiple commands. Besides, there may be informal relations among people. 3. This structure may not work very well when there is economic crunch. In the case of economic crunch, the organization may not be in the same position as there may be many changes in market position, pressure on profit margin, and financial problems. 4. If matrix organization is not followed properly, there is delay in decision making. The decision making process is such that many persons are involved in the decision. 5. At the initial level, matrix structure becomes quite costly because of top heavy management. It does seem to double up management because of dual chain of command. CEO / President

R&D specialists

Finance department

Marketing department

Personnel department

Production department

Project A

R&D specialists

Finance specialists

Marketing specialists

Personnel specialists

Production specialists

Project B

R&D specialists

Finance specialists

Marketing specialists

Personnel specialists

Production specialists

TEAM : In order to meet the challenges of dynamic business environment, more and more organizations are replacing old hierarchies with teams of different types in the form of work teams or project teams. A team is a group of people in the organization constituted for completing certain assignments. A team is like a task force with a major difference. A task force is created to solve unusual problems that an organization may face occasionally. In contrast to this, work teams are constituted quite frequently. For example, in information technology companies, most of the work is done by teams which are constituted on project-to-project basis. TYPES OF TEAM: In an organization, there may be different types of teams. Typology of teams may be based on their constitution, purpose, power entrusted, duration, etc. The more common type of teams that may be found in an organization are lead teams, cross-functional teams, problem-solving teams, and self-managing teams. Several teams may be created in each type. Lead Team: A lead team consists of managers and their direct subordinates. This is the most usual form of team which works in every part of an organization. A basic feature of this type of team is that it is created on the basis of hierarchical relationships as organizational administrative units. Cross-functional Team: A cross-functional team is constituted by drawing personal from different functional areas, particularly from those functions which have high interdependence. The basic objective of such a team is to solve problems and take decisions in those areas which cannot be done by a particular functional department. Because of the interdependence of various functions in an organization. Problem-solving Team: A problem-solving team, also known as corrective action team, is constituted to solve specific problems which an organization may be facing. Team members for such a team are drawn from those areas where the problems requiring solution exist. Self-managing Team: In todays context, more emphasis is given on self-managing teams, also known as empowered or self-directed team. 1. Defining Areas of Responsibility: To begin with, management should define the areas of responsibility of the team. It should be define with the consultation of the possible members. The
2.

areas of responsibility may include

productivity, quality, safety, maintenance, personnel, and administration. Measures, Boundaries, and Feedback Methods: The second step is to decide measures, boundaries, and feedback methods for each area of responsibility. Measures imply the means adopted to identify the extent to which responsibility is being discharged. Boundaries prescribe the limits of responsibility. Feedback relates to get information on how the responsibility is being discharged in different areas. 3. Specific team Members Responsibilities: Apart from the team responsibility, responsibility of each member is also defined. Thus, a team member is responsible for his own job as well as the job of the entire team. The team members will assume to track and review performance data, plan and coordinate activities to achieve their goals and identify and solve problems.

4. Determination of Training Needs : At this stage, managers, in consultation with team members identify the training needs for the members and train them to carry out their responsibility. 5. Plan for Transition: At the final stage, there is transition from the old way of working to empowered team working and new responsibilities may gradually be added. Effective Team An effective team is one which contributes to the achievement of organizational objectives by performing the task assigned to it and providing satisfaction to its members. Skills and Role Clarity: For an effective team, two things are required from its members: skills which are complementary to the team requirement and understanding of ones own role as well as roles of other members. Supportive Environment: A team loaded with skilled members cannot perform well if the organizational climate is not supportive for that. If the organizational climate is not in tune with high achievement, team members may not show high degree of enthusiasm and they will use only a part of their skills in performing the jobs. Super ordinate Goals: Super ordinate goals are those which are above the goals of a single team or a single individual. Team Rewards: Team performance depends on how reward is linked to team performance and how members perceive this linkage. If team members perceive that reward is contingent on team performance, they will put their maximum. Rewards of both types-financial and non-financial-should be taken into consideration. FLAT AND TALL ORGANIZATIONS Flat organizations are those, which have relatively few or even one level of management. Many enterprises have adopted flatter structures to reduce levels of management and bureaucracy and give their workforce greater decision-making responsibilities. A service organization with 3 equal partners and 30 employees is the best example for a flat structure. Flat organizations are known by their wider span of control. In other words, each manager controls more number of employees at a given point of time. Flat structured organizations facilitate communication across the organization. Managing Director

Managing Director

Managing Director

Managing Director

Managing Director

Tall organizations have many levels of management. Tall structure organizations focus on vertical communication through the levels of grades in it. Managing Director

Additional Managing Director

Sales Manager

Production Manager

Personnel Manager

Finance Manager

Tall organization structures involve a narrower span of management. Wide and narrower span of management are evaluated as given below: Wide span of control: Advantages: Fewer levels of management and decision-making. Lower supervision costs. The subordinates feel more satisfied on the job front with greater decision-making authority. Disadvantages: Makes it difficult to supervise the subordinates directly. Flat structures may not work as the business expands. Narrow span of control: Advantages: Allows for tight control and supervision. Communication with subordinates is easier. Disadvantages: Subordinates may feel left out of the decision-making process and may lack motivation. Costs related to management and administrations tend to increase. Coordinating decisions of numerous managers becomes difficult. Too much supervision may hinder initiative and motivation. To keep the organizations vibrant, cost-effective and competitive the modern trend is to reduce the size and length of organizations to lean and flat. Most of the public and private organizations announce golden handshake schemes to motivate people to leave the organization. Boundary less organization A boundary less organization is a contemporary approach in organization design. It is an organization that is not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure. This term was coined by former General Electric chairman Jack Welch because he wanted to eliminate vertical and horizontal boundaries within the company and break down external barriers between the company and its customers and suppliers. To achieve Boundary less Information Flow, an organization needs to put in place infrastructure services that bring data sources together and provide that information to those users and applications that need it. Creating the environment for integrated information has been a challenge. What were once regarded as necessary boundaries between the different stages in operational processes designed to achieve the benefits of specialization, now represent silos delivering outmoded solutions, which do not allow for the sharing of information. Barriers at the business and technical levels must be broken down. MERITS: 1. Flexibility: A boundary less organization is flexible when compared with other organization structures. 2. Quick decision-making: in case of boundary less organization decisions taken by top level management is quick without losing any opportunities. 3. Quality: in case of boundary less organization quality decisions will be taken and qualitative products will be produced. 4. Timeliness: corrective and proper actions will be implemented and timeliness in running of business operations will be possible in case of boundary less organization.

DEMERITS: 1. Difficult of maintenance: maintenance of different operations at all levels of management is difficult in case of boundary less organization. 2. Lack of proper understanding: the lower level management people may not get clear cut division of work which acts as one of the major limitation of boundary less organization 3. Costlier: it is very expensive to prepare reports in case of boundary less organization which acts as one of the major limitation. Inverted pyramid structure Inverted pyramid structure is an alternative to the traditional chain of command. This is a structure which is narrow at the top and wide at the base. It includes levels of management. MERITS: 1. Unity of command: in case of Inverted pyramid structure only one manager will make commands over lower level managers as well as employees and workers. 2. Span of control: power will be vests in the hands of one person and its the ability of manager to control more number of employees. 3. Effective decision-making: effective decisions will be possible in case of Inverted pyramid structure. DEMERITS: 1. Overlapping of activities: the major limitation of Inverted pyramid structure is overlapping of activities at the same point of time. 2. Time constraint: the major drawback of Inverted pyramid structure is lack of time in taking decisions. 3. Conflicts: there will be a chance of arising conflicts between levels of management in the organization structure in case of Inverted pyramid structure.

CELLULAR ORGANIZATION STRUCTURE In cellular organizations workers manufacture total product or sub assembles in teams [cells]. Every team of workers has the responsibility to improve or maintain the quality and quality of its products. Each team is free to reorganize itself improve performance and product quality. The cells comprise self managed teams.

MERITS:
1. Improvement in performance: the performance of employees will be increased in case of

cellular organizations.
2. Quality: the quality in case of production and goods will be possible in case of cellular

organizations.
3. Understanding capacity: all the members will be able to understand the orders of

managers in cellular organizations. DEMERITS: 1. problem in division: division of cells in the organization is the biggest problem in cellular organizations. 2. Time constraint: lot of time is required for dividing the organization into different cells is a problem in cellular organizations.