Organisation

The classicists have used the term Organisation in the form of organising which is a part of management

process.

Presently, the term Organisation is used in following ways: As entity

As process As structure

As group of people

Line Organisa

tion Structur

e

Line & Staff

Organisation

Structure

Functional

Organisation

Structure

Divisional

Organisation

Structure

Project Organis

ation Structur

e

Matrix Organis

ation Structur

e

Forms of Organisation Structures

Functional Organisation Structure

Functional organisation structure is the which where “authority rests with the functional heads; the

structure is sectioned by departmental groups.” -Teams in Engineering Education

Arizona University

It is a kind of Formal Organisation whose structure is based on organising resources to perform specialized

tasks or activities in order to attain the goals of organisation.

This structure emerges from the idea that the organisation must perform certain functions in order to carry on it’s operations.

Functional structure is created by grouping the activities on the basis of functions required for the achievement of organisational

objectives. For this purpose all the functions required are classified as shown below:-

Nature & Performance

Basic Secondary Supporting

The basic or major functions are those which are essential for the organisation. Consider , the following examples,

Movie-making : The key person is the casting director. The concept of casting extends not only to the actors, but also to choosing the array of technical and support people. These decisions are critical to the success of the movie. Everyone has a unique and special personality. It is the job of the casting director to coordinate these personalities in such a fashion that everyone can function together. Such decisions can make or break the movie.

Manufacturing Organisation : Production and Marketing are basic functions when departments are created on the basis of functions and a manager feels that his span of management is too wide to manage effectively , which normally happens in a large organisation. Several departments are created on the basis of dividing basic function into sub-functions.

Eg. Marketing can be sub-divided as shown ,

Marketing

Mktg. Research

Advertising

Others

Sales

Apart from basic and secondary functions , departments are also created to take advantages of specialization & to support basic and secondary activities.

Such departments may be finance , accounting , personal , industrial relations , legal etc.

Characteristics of Functional Organisation

Functional authority relationship

Specializ-ation by function

Organisation chart of functional structure.

Citizens of Columbia , Missouri

Mayor & City council

City manager City clerk

Municipal Judge

Internal Auditor

Courtesy : The Internet.

Suitability of Functional Structure

The establishment of a functional structure is necessary when a small organisation grows & it’s business activities become more complex.

In such a case more formalized and systematic approach is required to handle situations.

However , the top management will continue to control decisions involving strategies & co-ordination.

The benefits provided by a functional structure to an organisation :

•Results in high degree of specialisation.•Brings order and clarity.•Promotes professional achievement.•Proper usage of organisational resources.•Higher control and coordination of functions.

Problems arising in Functional Structure.

Sometimes the relative advantages may lead to certain disadvantages.For example , •Control & Co-ordination may overload the manager.•Specialization may lead to goal displacement.

Therefore , if there is too much emphasis on any aspect it may lead to dysfunctional behaviour of that aspect.The Functional Structure isn’t suitable to an organisation that involves diversification.

Now the question that might be arising in your mind is WHY it isn’t suitable?

The reasons are likewise :-

Responsibility for ultimate performance cannot be fixed in functional structure because no one is responsible for product cost and profit. Each department focuses on it’s contribution to the product but not entire product.

Slow decision making process because the problem requiring decision has to go through various departments.

Strengths & Weaknesses of Functional Organisation Structure

Allows Economies of scale within

functional dept..Enables in depth knowledge & skill

development.Enables

organization to accomplish functional

goals.Best for one or few

products.

Slow response time to environmental

changes.Problem in

decision-making.Poor co-ordination

among dept..Less innovative.

Restricted view of organization goals.

“what is the right organization structure ? Decision tree analysis provides the answer”Organisational dynamics – Robert Duncan

Advantages & Disadvantages

Advantages

Use of Home Unit.

Keeps staff located in their units.

DisadvantagesPoor response time.Client is NOT the focus.Duplication.Process orientation.Tendency to sub-optimize.Low staff motivation.

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Product/Market OrganisationMany markets are classified on the basis of product and trading relationships. The level of market organisation is largely determined by the new imperatives of the rising level of economic development. In the non-monetised barter economy there is, perhaps, no necessity of modern market-organisation as such.

The "money economy" grows with the separation of production, consumption and distribution. In the exchange economy there is structured processes of production, distribution and delivery. The article of interdependence is fairly high. All economic activities get increasingly market-determined and market-oriented.

It may also be noted that the generation of "marketable surplus" (commercial surplus) marks a fountainhead of the development of market organisation. Greater the marketable surplus higher the market organisation. The changing composition of the marketable surplus is another added impetus.

Diversification is really inspiring. The rising market-interaction becomes a fertile ground for higher per capita income (greater purchasing power), faster change in the composition of output and taste and preference of the consumers. Because, Supply acts on Demand.

Factors that strengthen market organisation

Electricity Housing

RoadHealth

Communication

Water supply

DrainageTransport

Place for disposal of waste

Services rendered in a market organisation

Primary

services

• Assembling

• Processing

•Dispersion

Secondary

services

•Grading•Packing

•Transporting•Storing•Financing•Selling

Activities related to market that influence market/product organisation.

Market Player

Market Developer

Market Changer

Others

Depending on Market

Information

Real Time Applications

Teleca strengthens its product organisation and coordinates its consulting business in Sweden.

Conveyor improves product organisation , tracking in DePuy.

Market Organisation Chart

Courtesy : The Internet.

Credits

Market Organisation by Weisbuch, Gerard, Alan Kirman, and Dorothea K. Herreiner , University of Bonn , Germany.

The Internet.

Queries!

Thank You!Presented by :

Ashutosh Mishra MBA –

1st. sem