3. industrial organization

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3. INDUSTRIAL ORGANIZATION

3.1 INTRODUCTION Every business needs to be organized for

effective and efficient performance. Once the objectives, strategies and

necessary plans to carry out are formulated, the next phase in management process is that of organization.

Organization is thus a function of management which basically deals with the establishment of organizational structure.

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3. INDUSTRIAL ORGANIZATION…

Organization is a backbone of management which establishes relationship between people, work and resources.

Organization involves division of work among people whose efforts must be coordinated to achieve specific objectives and to implement predetermined strategies.

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3.2 DEFINITIONS OF ORGANIZATION A process of

Identifying and grouping the work to be performed,

Defining and delegating the responsibility and authority, and

Establishing the relationships for the purpose of enabling people work efficiently together in accomplishing objectives.

The form of every human association for the attainment of a common purpose.

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3.2 DEFINITIONS OF ORGANIZATION… A system of cooperative activities of two or

more persons. A process of defining and grouping the activities

of an enterprise and establishing the authority relationship among them.

The grouping of activities necessary to accomplish goals and plans, and assignment these activities to appropriate departments and positions for authority delegation and coordination.

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3.3 SYSTEM APPROACH APPLIED TO ORGANIZATION

A business organization can be looked up on as an open system as it influences and is influenced by its environment continuously.

It receives input from the society in the form of men, materials, machinery, information, thoughts, energy and finance. By utilizing the efforts and skills of the persons, the raw material is converted in to output of goals and services required by the customers.

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The working of one part of the system is dependent on the working of other parts of the system.

The changes in the environment affect the performance of the system process.

Environment of organization consists of economic, social, cultural, political, legal, technological, etc.

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The feedback of information and results is utilized for corrective action. The feedback may be in the form of orders, customer complaints, sales, etc. This information is fed at the control points and conversion processes.

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Input Conversion Process Output

FeedbackFig. 3.1 System Approach Applied to Organization

Environment

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3.4 NECESSITY OF ORGANIZATION A good organization is necessary for the

following reasons: Complexity of industry-increasing size,

introduction of modern machines, labour problems, ...

Growing competition-tough competition existing in market,

Optimum utilization of resources-men, materials, machines, can be used efficiently if there is organization.

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3.5 ESSENTIAL ELEMENTS OF GOOD ORGANIZATIONThe essential elements of good organization are: It must be helpful in achieving objectives, There must be a harmonious grouping of

activities, The activities of the organization must be

coordinated properly, An organization must be complete in all

respects, should include all the essential activities, there should not be repetition of activities,

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3.5 ESSENTIAL ELEMENTS OF GOOD ORGANIZATION…

An organization should have an effective system of communication,

The span of control should be reasonable, Provision of expansion should be there, Clear and well defined policies and

procedures, Employees’ satisfaction is essential, Proper division of authority and responsibility.

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3.6 THE PROCESS OF ORGANIZATIONThe logical steps involved in the process of

organization are: Determination of objectives, strategies, plans and

policies, Determination of activities, Separation and grouping of activities, Delegation of authority and responsibility, Establishing inter-relationships, Providing physical facilities and proper environment, Preparation of organization chart.

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3.7 PRINCIPLES OF ORGANIZATIONSome of the important principles to be

followed for developing sound and efficient organization structure are: Consideration of unity of objectives Principle of authority Principle of coordination Principle of unity of command Principle of span of control Principle of exception

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3.7 PRINCIPLES OF ORGANIZATION… Principle of flexibility Principle of simplicity Principle of responsibility Principle of balance Principle of continuity Principle of scalar chain Principle of parity between authority and

responsibility Principle of efficiency Principle of communication

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3.8 ORGANIZATIONAL STRUCTURE Organizational structure is a skeleton or

framework that divides the total activities in to related groups, develops superior and subordinate relationships among the persons by prescribing the authorities.

Thus it indicates the hierarchy, authority structure and reporting relationships.

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There are three main types of organizational structure:

i. Functional structure, ii. Divisional structure and iii. Matrix structure. Each structure has its own strong and

weak points.

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i. Functional Structure The employee will work in departments based on

what they are doing. It enhances the experience of each function. It saves us money because of the economies of

scale. It makes the coordination between different

departments more difficult than other structures.

It also does not allow for flexibility because of the centralization.

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Fig. 3.2 Functional Organizational Structure

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ii. Divisional Structure Divisional structure divides the employees based on

the product/customer segment/geographical location. This structure is a decentralized structure and thus

allows for flexibility and quick response to environmental changes.

It also enhances innovation and differentiation strategies.

On the other hand, this structure results in duplication of resources.

It does not support the exchange of knowledge between people working in the same profession.

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Fig. 3.3 Divisional Organizational Structure

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iii. Matrix Structure Matrix structure combines both structures. Some employees will have two managers:

functional manager and product manager. This type of structure tries to get the

benefits of functional structure and also of divisional structure; however, it is not easy to implement because of the dual authority.

This structure is very useful for multinational companies.

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Fig. 3.4 Matrix Organizational Structure

3. industrial organization

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