Organization Structure and the Types and merits

Various types of Organization Structure Merits and Demerits

1. TYPES OF
ORGANISATION

2. DIFFERENT TYPES OF ORGANISATION ARE:-

- Line Organisation * Project Organisation
+ Line & Staff Organisation + Matrix Organisation
- Functional Organisation * Committee Organisation

- Divisional Organisation

3. > The Line organization Structure

The Line organization authority is delegated directly fro
top to bottom.

There is vertical line of authority running from top to th
bottom of the organisation.

The man at the top has the highest authority and it is
reduced at each successive level down the hierarchy.
Suitability: This kind of structure is suitable for smaller
organizations.

4. Structure of Line Organization | |

Vice President
Marketing

Flow of
Authority
(Down the

Resposi
(Up the line)

+

5. Merits

o Simplicity- easy to understand by workers.

o Discipline- Required high discipline because each manager

has direct contact with his subordinates.

© Prompt Decision- manager is not suppose to consult staff
specialist.

o Orderly Communication.

o Easy Supervision and Control.

o Economical- As no staff specialist are required.

6. DEMERITS

Lack of Specialization

Absence of Conceptual thinking- Since they are
overburdened with administrative work.

Autocratic Approach- Manager has monopoly of decision
making.

Little upward communication.

7. > LINE AND STAFF ORGANIZATION

+ Staff authority is used to support the line authority.
Line and staff organizations have both line and staff
executives. Line executives are assisted by staff
specialists in planning, distribution, quality, legal,
audit, public relations, etc.

+ For example, a production manager (a line authority)
does not have enough time and experience to handle
labour relation problems. Staffs help them in doing so.

8. Line and Staff Structure Organization

Board of Director

9. Demerits

OPlanned Specialization OConfusion
QQuality Decisions Olneffective staff
QExpert Advice OLine and Staff Conflicts
OTraining Ground for

Personnel

Suitability: This structure can be followed in larg
organizations where specialization of activities.

10. > Functional Organization

This kind of organizational structure classifies
people according to the function they perform in
their professional life or according to the
functions performed by them in the
organization.

Under it, organisation is divided into a number
of functional areas. Each function is managed by
an expert in that area.

11. > Functional Organization

r Board of Director

12. CiSpecialization
Executive Development
Ciscope for Expansion
CiBetter Control

Uviolates the principle of
unity of command

OComplexity
OlLack of coordination

Suitability: It has been criticized by many authors due

violation in unity of command.

13. > Divisional Organization

This is the kind of structure that is based on th
different divisions in the organization.

For example, same food-processing company ma
have three separate divisions for biscuits, bread an
milk-products, respectively

14. Product (Biscuit) Product (Bread) Product (Milk-product)
Division | Division 2 Division 3

15. Divisional structures can be divided into:

C) Product basis — It is based on organizing employee}
and work on the basis of the different types
products. If the company produces three differe
types of products, they will have three differe
divisions for these products.

U Market basis — It is used to group employees on th
basis of specific market the company sells in.

16. [Geographic basis — large organizations have office
at different place, for example there could be a nort
zone, south zone, west and east zone. Th
organizational structure would then follow a zon
region structure.

17. > Matrix Organization

CiCombination of function, and product structures.
[Matrix organization has been developed to meet the nee
large organizations for a structure which is flexible

technically sound.
An individual has 2 bosses- his permanent and the pro
manager.

OSuitability- it can be successful only when there is
agreement amongst the key executive.

18. Matrix Organization Structure

19. ODevelopment of

management skills
OSuited to fast change and
flexibility

general

High product,
program visibility

ÜProcesses multiple tasks in
parallel, easy to cross
functional line; better
coordination in function

project or

Üinnovation/growth restricte
existing project areas.

ÜShared functions hard to
coordinate

Less top management contr

OlCompetition for corporate
resources

20. MERITS OF MATRIX ORGANIZATION

Q Full time focus of personnel on project of matrix.

Clit stresses authority of knowledge than the status.
Olspecialized technical skills to the product/market.
Flexible structure- easily adapted to changes.

OHelps in the development of both general and functional
skills.

21. Demerits of Matrix Organization

Cicostly to maintain personnel pool of staff matrix.

OParticipants experience dual authority of matrix manager
functional area manager.

DLittle interchange with functional groups outside the matri

UParticipants of matrix need to have good interpersonal ski
order for it to work.

QFrustration and confusion due to dual chain of command.

22. COMMITTEE
ORGANISATION

+ A committee is a group of persons formed to discuss and

deliberate on problems and to recommend or decide
solutions.

+ It may be authorized to deal with all or specific activities.

+ Acommittee may be constituted at any level of organisation
and its members may be drawn from various departments.

23. TYPES OF COMMITTEES

Standing or Ad Hoc Committee.

+ Executive or Advisory Committee.
- Line or staff Committee.

«Formal or Informal Committee.

24. ADVANTAGES

+ Group Judgement

+ Effective coordination- integrates viewpoint of managers from
different departments.

+ Motivation through participation
+ Management development.
* Consolidation of authority

25. DISADVANTAGES

+ Expensive

+ Slow decision

+ Compromise decisions
+ Tyranny of few

* Divided responsibility

- Misuse of committees