MODULE-II

PLANNING, ORGANIZATION, AND TYPES OF STRUCTURES

Meaning of Planning

Planning is ascertaining prior to what to do and how to do. It is one of the

primary managerial duties. Before doing something, the manager must form an
opinion on how to work on a specific job. Hence, planning is firmly correlated
with discovery and creativity. But the manager would first have to set goals.
Planning is an essential step that managers at all levels take. It requires making
decisions since it includes selecting a choice from alternative ways of
performance

Planning Process/steps

As planning is an activity, there are certain reasonable measures for every manager to follow:

(1) Setting Objectives

 This is the primary step in the process of planning which specifies the objective of an

organization, i.e. what an organization wants to achieve.

 The planning process begins with the setting of objectives.

 Objectives are end results that the management wants to achieve by its operations.

 Objectives are specific and are measurable in terms of units.

 Objectives are set for the organization as a whole for all departments, and then

departments set their own objectives within the framework of organizational

objectives.

Example: A mobile phone company sets the objective to sell 2,00,000 units next year, which
is double the current sales.

(2) Developing Planning Premises

 Planning is essentially focused on the future, and there are certain events which are

expected to affect the policy formation.

 Such events are external in nature and affect the planning adversely if ignored.

 Their understanding and fair assessment are necessary for effective planning.
  Such events are the assumptions on the basis of which plans are drawn and are known

as planning premises.

Example:

The mobile phone company has set the objective of 2,00,000 units sale on the basis of forecast
done on the premises of favourable Government policies towards digitisation of transactions.

(3) Identifying Alternative Courses of Action

 Once objectives are set, assumptions are made.

 Then the next step is to act upon them.

 There may be many ways to act and achieve objectives.

 All the alternative courses of action should be identified.

Example:

The mobile company has many alternatives like reducing price, increasing advertising and
promotion, after sale service etc.

(4) Evaluating Alternative Course of Action

 In this step, the positive and negative aspects of each alternative need to be evaluated

in the light of objectives to be achieved.

 Every alternative is evaluated in terms of lower cost, lower risks, and higher returns,

within the planning premises and within the availability of capital.

Example:

The mobile phone company will evaluate all the alternatives and check its pros and cons.

(5) Selecting One Best Alternative

 The best plan, which is the most profitable plan and with minimum negative effects, is

adopted and implemented.

 In such cases, the manager’s experience and judgement play an important role in

selecting the best alternative.

Example: Mobile phone company selects more T.V advertisements and online marketing with
great after sales service.
(6) Implementing the Plan

 This is the step where other managerial functions come into the picture.

 This step is concerned with “DOING WHAT IS REQUIRED”.

 In this step, managers communicate the plan to the employees clearly to help convert

the plans into action.

 This step involves allocating the resources, organising for labour and purchase of

machinery.

Example:

Mobile phone company hires salesmen on a large scale, creates T.V advertisement, starts
online marketing activities and sets up service workshops.

(7) Follow-Up Action

 Monitoring the plan constantly and taking feedback at regular intervals is called follow-

up.

 Monitoring of plans is very important to ensure that the plans are being implemented

according to the schedule.

 Regular checks and comparisons of the results with set standards are done to ensure

that objectives are achieved.

Example:

A proper feedback mechanism was developed by the mobile phone company throughout
its branches so that the actual customer response, revenue collection, employee
response, etc. could be known.

What are the classification of plans? Plans can be classified into three
types:

 Operational planning
 Strategic planning
 Tactical planning
What are the features of Planning?

 Planning is a primary function

 Planning is goal-oriented
 Planning is continuous
 Planning is futuristic or future-oriented
 Planning focuses on achieving the objectives

Importance /Advantages of Planning

Planning is definitely significant as it directs us where to go, it furnishes direction and
decreases the danger of risk by making predictions. The
significant advantages of planning are provided below:

 Planning provides directions: Planning assures that the objectives are

certainly asserted so that they serve as a model for determining what action
should be taken and in which direction. If objects are well established,
employees are informed of what the company has to do and what they need
do to accomplish those purposes.
 Planning decreases the chances of risk: Planning is an activity which
permits a manager to look forward and predict changes. By determining in
prior the tasks to be completed, planning notes the way to deal with changes
and unpredictable effects.
 Planning decreases overlapping and wasteful activities: Planning works as
the foundation of organising the activities and purposes of distinct branches
departments, and people. It assists in avoiding chaos and confusion.
Since planning guarantees precision in understanding and action, work is
conducted on easily without delays.
 Planning encourages innovative ideas: Since it is the primary function of
management, new approaches can take the form of actual plans. It is the
most challenging project for the management as it leads all planned actions
pointing to the growth of the business.
 Planning aids decision-making: It encourages the manager to look into the
future and make a decision from amongst several alternative plans of action.
The manager has to assess each option and pick the most viable plan. FL
of Planning

Features and Limitations of Planning

The limitations of Planning are furnished below:
(1) Planning Leads to Rigidity

 The plans are rigid in nature and have to be complied with throughout the organisation.

 Such rigidity of plans may be internal as well as external.

 Internal rigidity relates to plans, policies, programs, rules, and methods, etc.

 External rigidity relates to political, industrial, technological, legal and economic

changes, etc.

 Example: A super specialty hospital has fine branches in a city. Whatever the top
management of the hospital decides the head of the branch of the hospital and their
subordinates have to follow. Though on occasions they know they could have done
better on their own the plan laid out provides rigidity to their approach.

(2) Planning May Not Work in a Dynamic Environment

 The environment in which a business survives is dynamic as it keeps on changing.

 It is difficult for an organization to access future trends, the taste of customers, natural
calamities, competitors’ policies and the effects of changes in the different components
of the environment.

 The organization has to constantly adapt itself to changes because it is difficult to

forecast future changes with absolute accuracy.

 The dynamic environment may sometimes lead to the failure of plans.

 Example: Nestle, a very successful producer was very proactive in deciding strategies
for Maggi noodles. Maggi noodles were in a lot of demand but they were off the shelf
due to political and legal dimensions. This was due to the high content of lead in Maggi
noodles.

(3) Planning Reduces Creativity

 Planning is mostly done by the top management and other members

 like middle and lower levels of management have to follow these plans.

 They can’t deviate or change the plans made by their seniors.

 Under such circumstances, employees become orders following machines and don’t
involve creative thinking from their side.

 Such rigidity to comply with the laid plans kills the creativity of some talented persons.
  Example: The need for a branch of a renowned shoe manufacturing company sees a lot
of scope in customized shoes. The top management is not interested in this idea as the
company manufactures standardised shoes.

(4) Planning Involves Huge Cost

 Formulation of plans can be too much costly because there is a lot of time and money
is involved.

 Some costs are incidental in nature like- expenses on boardroom meetings, discussions
with professional experts and preliminary investigations to find out the feasibility of
the plan.

 Checking the accuracy of facts and scientific calculations may involve lots of time.

 Sometimes, cost incurred may not justify the benefits derived from the plans; it may
leave a harmful effect on the enterprise.

 Example: Companies like IBM spend a lot of research. Many world-class levels give
their advice to this company and change their fee. However, without so much of
painstaking such a huge company won’t be able to sustain itself. So planning in case of
IBM becomes necessary.

(5) Planning is a Time-consuming Process

 Planning is a very lengthy process as it consumes a lot of time for collection, analysis,
and interpretation of data.

 Due to such a lengthy process, sometimes decisions get delayed, opportunities are lost
and there is not much time left for the implementation of plans.

 Example: Health is wealth Ltd. plans to organise 25 health checkup camps on the
World Health Day and send a requisition to the top management but management could
send its approval just a day before and the sales manager could organise only 5 camps
and thus huge opportunity is lost. Here the implementation was delayed.

(6) Planning Does Not Guarantee Success

 The success of an enterprise is possible only when plans are properly drawn up and
implemented.

 Plans become meaningless if it is not translated into action.

 Managers have a tendency to rely on previously tried and tested successful plans.
  It is not necessary that a successful plan in the past will bring success in the future also
as every business organization survives in a dynamic and uncertain environment.

 Plans must be implemented in the light of changing environment otherwise it may lead
to the failure of the business.

 Example: In a paint manufacturing company, the top management very meticulously

chalked out a great plan. The whole company worked out on the plan in a much focused
manner. However, with the entrance of a competitor with better paint quality the whole
plan failed. The reason for the failure was the dynamic conditions which were not in
control of the organisation.

TYPES OF PLANS / COMPONENTS OF PLANNING: In the

process of planning, several plans are prepared which are known as components
of planning.

 Strategic plans
 Tactical plans
 Operational plans
 Operational plans lead to the achievement of tactical plans, which in turn
lead to the attainment of strategic plans. In addition to these three types of
 plans, managers should also develop a contingency plan in case their
original plans fail.
 a) Strategic plans:
 A strategic plan is an outline of steps designed with the goals of the entire
organization as a whole in mind, rather than with the goals of specific
divisions or departments. It is further classified a
i) Mission:
 . The mission is a statement that reflects the basic purpose and focus of the
organization which normally remain unchanged. The mission of the
company is the answer of the question : why does the organization exists?
 Properly crafted mission statements serve as filters to separate what is
important from what is not, clearly state which markets will be served and
how, and communicate a sense of intended direction to the entire
organization.
 Mission of Ford: “we are a global, diverse family with a proud inheritance,
providing exceptional products and services”.
 ii) Objectives or goals:
 Both goal and objective can be defined as statements that reflect the end
towards which the organization is aiming to achieve. However, there are
significant differences between the two. A goal is an abstract and general
umbrella statement, under which specific objectives can be clustered.
Objectives are statements that describe—in precise, measurable, and
obtainable terms which reflect the desired organization’s outcomes.
 iii) Strategies:
 Strategy is the determination of the basic long term objectives of an
organization and the adoption of action and collection of action and
allocation of resources necessary to achieve these goals.
 Strategic planning begins with an organization's mission. Strategic plans
look ahead over the next two, three, five, or even more years to move the
 organization from where it currently is to where it wants to be. Requiring
multilevel involvement, these plans demand harmony among all levels of
management within the organization. Top-level management develops the
directional objectives for the entire organization, while lower levels of
management develop compatible objectives and plans to achieve them.
Top management's strategic plan for the entire organization becomes the
framework and sets dimensions for the lower level planning.

 b) Tactical plans:
 A tactical plan is concerned with what the lower level units within each
division must do, how they must do it, and who is in charge at each level.
Tactics are the means needed to activate a strategy and make it work.


 Tactical plans are concerned with shorter time frames and narrower scopes
than are strategic plans. These plans usually span one year or less because
they are considered short-term goals. Long-term goals, on the other hand,
can take several years or more to accomplish. Normally, it is the middle
manager's responsibility to take the broad strategic plan and identify
specific tactical actions.
 c) Operational plans
 The specific results expected from departments, work groups, and
individuals are the operational goals. These goals are precise and
measurable. “Process 150 sales applications each week” or “Publish 20
books this quarter” are examples of operational goals.
 An operational plan is one that a manager uses to accomplish his or her job
responsibilities. Supervisors, team leaders, and facilitators develop
operational plans to support tactical plans (see the next section).
Operational plans can be a single-use plan or a standing plan
 i) Single-use plans apply to activities that do not recur or repeat. A one-
time occurrence, such as a special sales program, is a single-use plan
because it deals with the who, what, where, how, and how much of an
activity.


 Programme: Programme consists of an ordered list of events to be

followed to execute a project.


 Budget: A budget predicts sources and amounts of income and how

much they are


 used for a specific project.



 ii) Standing plans are usually made once and retain their value over a
period of years while undergoing periodic revisions and updates. The
following are examples of ongoing plans:


 Policy: A policy provides a broad guideline for managers to follow

when dealing with important areas of decision making. Policies are general
statements that explain how a manager should attempt to handle routine
management responsibilities. Typical human resources policies, for
example, address such matters as employee hiring, terminations,
performance appraisals, pay increases, and discipline.


 Procedure: A procedure is a set of step-by-step directions that explains

how activities or tasks are to be carried out. Most organizations have
procedures for purchasing supplies and equipment, for example. This
procedure usually begins with a supervisor completing a purchasing
requisition. The requisition is then sent to the next level of management for
 approval. The approved requisition is forwarded to the purchasing
department. Depending on the amount of the request, the purchasing
department may place an order, or they may need to secure quotations
and/or bids for several vendors before placing the order. By defining the
steps to be taken and the order in which they are to be done, procedures
provide a standardized way of


 responding to a repetitive problem.



 Rule: A rule is an explicit statement that tells an employee what he or

she can and cannot do. Rules are “do” and “don't” statements put into place
to promote the safety of employees and the uniform treatment and behavior
of employees. For example, rules about tardiness and absenteeism permit
supervisors to make discipline decisions rapidly and with a high degree of
fairness.
 Contingency plans
 Intelligent and successful management depends upon a constant pursuit of
adaptation, flexibility, and mastery of changing conditions. Strong
management requires a “keeping all options open” approach at all times —
that's where contingency planning comes in.
 Contingency planning involves identifying alternative courses of action
that can be implemented if and when the original plan proves inadequate
because of changing circumstances

Keep in mind that events beyond a manager's control may cause even the most
carefully prepared alternative future scenarios to go awry. Unexpected problems
and events frequently occur. When they do, managers may need to change their
plans. Anticipating change during the planning process is best in case things don't
go as expected. Management can then develop alternatives to the existing plan
and ready them for use when and if circumstances make these alternatives
appropriate.

MANAGEMENT BY OBJECTIVES (MBO)

MBO was first popularized by Peter Drucker in 1954 in his book 'The
practice of Management’. It is a process of agreeing within an organization so
that management and employees buy into the objectives and understand what they
are. It has a precise and written description objectives ahead, timelines for their
motoring and achievement.

The employees and manager agree to what the employee will attempt to achieve
in a period ahead and the employee will accept and buy into the objectives.
Definition

“MBO is a process whereby the superior and the mangers of an organization

jointly identify its common goals, define each individual’s major area of
responsibility in terms of results expected of him, and use these measures as
guides for operating the unit and assessing the contribution of each of its
members.”
Features of MBO

MBO is concerned with goal setting and planning for individual managers and
their units.
The essence of MBO is a process of joint goal setting between a supervisor
and a subordinate.
Managers work with their subordinates to establish the performance goals that
are consistent with their higher organizational objectives.
MBO focuses attention on appropriate goals and plans.
MBO facilitates control through the periodic development and subsequent
evaluation of individual goals and plans.
Steps in MBO:
Setting objectives:

For Management by Objectives (MBO) to be effective, individual managers must

understand the specific objectives of their job and how those objectives fit in with
the overall company objectives set by the board of directors.

The managers of the various units or sub-units, or sections of an organization

should know not only the objectives of their unit but should also actively
participate in setting these objectives and make responsibility for them.

Management by Objective (MBO) systems, objectives are written down for each
level of the organization, and individuals are given specific aims and targets.
Managers need to identify and set objectives both for themselves, their units, and
their organizations.
Developing action plans

Actions plans specify the actions needed to address each of the top organizational
issues and to reach each of the associated goals, who will complete each action
and according to what timeline. An overall, top-level action plan that depicts how
each strategic goal will be reached is developed by the top level management.
The format of the action plan depends on the objective of the organization.

3) Reviewing Progress:

Performance is measured in terms of results. Job performance is the net effect of

an employee's effort as modified by abilities, role perceptions and results
produced. Effort refers to the amount of energy an employee uses in performing
a job. Abilities are personal characteristics used in performing a job and usually
do not fluctuate widely over short periods of time. Role perception refers to the
direction in which employees believe they should channel their efforts on their
jobs, and they are defined by the activities and behaviors they believe are
necessary.

4) Performance appraisal:

Performance appraisals communicate to employees how they are performing their

jobs, and they establish a plan for improvement. Performance appraisals are
extremely important to both employee and employer, as they are often used to
provide predictive information related to possible promotion. Appraisals can also
provide input for determining both individual and organizational training and
development needs. Performance appraisals encourage performance
improvement. Feedback on behavior, attitude, skill or knowledge clarifies for
employees the job expectations their managers hold for them. In order to be
effective, performance appraisals must be supported by documentation and
management commitment.

Corporate Planning Definition – Strategy, Importance,

Objectives and Elements
Corporate planning is a type of strategic planning, responsible for mapping out a course of
strategies and their implementations to empower top-management. It optimizes exposure,
reach, leads, sales, profits, credibility, loyalty, sustainability, and opportunities of a business.

With the help of corporate strategic planning, a business can efficiently channelize corporate
management by leveraging its resources with better acumen than the other market players.
Corporate Planning is defined as forming long-term goals and objectives within
the organization’s strengths and weaknesses in the existing and
prospective environment.

This is done to ensure the achievement of their plans by combining their short-
term and long-term objectives or bringing amendments in the structural working
in the organization’s composition.

In the words of David E. Hussey, writer of the book- Corporate Planning: Theory
and Practice-

Corporate planning includes the setting of objectives, organizing the

work, people and systems to enable those objectives to be achieved, motivating
through the planning process and through the plans, measuring performance and
so controlling progress of the plans and developing people through better
decision-making, clearer objectives, more involvement, and awareness of
progress.

Some of the points that describe the need and importance of corporate planning are mentioned
below:

. Long-term goals

Corporate Planning broadly focuses on long-term goals and sets a blueprint to achieve them in
a stipulated period. Long-term goals help an organization keep its core focus on maintaining
its efforts, workforce, and efforts on a pre-decided target.

Corporate Planning keeps the employees engaged in their respective tasks with deadlines and
ensures effectiveness and efficiency. It also brings harmony, peace, and cooperation among the
employees and supervisors in a firm as they all smoothly work towards a common objective.

2. Focus

A strategic business plan helps a business organization provide a focal point not to get deviated
or distracted from its end goal. The first and foremost step of corporate planning involves
devising a mission statement that tells the world its roles and objectives.
Formulation of a mission statement aids the firm stick to its focus, do all the requisite tasks,
assign responsibilities to the employees, and evaluate their work to achieve that final
destination.

3. Better Decisions

Developing a strategic plan helps a company make better decisions that are beneficial and
helpful in attaining the mission statement. A corporate plan should be structured to spell all the
information in the organization’s interest, like the skills required with the employees,
machinery or equipment required, etc.

Forming a roadmap to achieve the final goal helps the business people hire the best personnel
for their form, arrange funds according to the tasks, and further invest in the most viable
propositions.

4. A Measure of Success

Corporate planning also acts as a yardstick to determine an organization’s success in achieving

its goals. A firm shall periodically analyze its work to check its progress and make further
amendments like replacing personnel, hiring more employees, arranging more funds,
upgrading the machinery, etc.

Finding, evaluating, and analyzing the loopholes periodically that block the ways of achieving
the mission statement helps in the upgradation of the work and ensure efficiency and
effectiveness of the tasks devised. The touchstone function of corporate planning works best
in the organizations that devise plans that allow for changes in attaining the tasks.

5. Saves money

The extra benefit associated with corporate planning is that it forms budgets that help save
substantial sums. Budgeting allows a firm to allocate its financial resources to the projects that
require it the most by cutting out unimportant expenses.

Having a detailed budget tells how much cash is earned, spent, or lent. This wipes
out confusion regarding the amount of money allocated to different projects.
Objectives of Corporate planning in Management

Following are the basic objectives of corporate plans:

1. Setting a strategy

The fundamental objective of framing a corporate plan is setting a business strategy. At this
stage, companies should look at the opportunities and analyze the threats in the market. For
this, they can make a SWOT analysis and select viable propositions for investing their funds.

2. Planning the operations

Once a firm knows its mission statement, it can use these objectives and find ways of attaining
them. The sole purpose of corporate planning is to help a firm plan and prepare a list of
resources it requires to deliver to achieve its goals.

3. Monitoring and Control

There should be measurable indicators present in a strategic plan to evaluate the progress of
the work rate vis-à-vis the initial plans. It mainly includes financial theory related to accounts,
the value of output, etc.

4. Review

Establishing and forming well-devised instruments to devise annual reports is a crux to a

successful corporate plan. Since the market environment constantly changes
with events happening in the economy, a company regularly needs to review its plans, policies,
and even rules and regulations associated with the operations.

Elements of Successful Corporate Plan: .

1. Gathering information

Having all the information related to the firm, industry, and competitors are the primary step
towards a well-defined corporate plan. Either a business is big or small, it should be aware of
the happenings in the market in its sectors, find out opportunities, grab them at the right moment
and beware of the threats.

2. Set the objectives of the plan

Having a well-devised mission statement helps a firm stick to its focus of achieving it and
keeps all the strategic work smooth in operations. Setting objectives helps form a clear mind
about the work done, and the purpose of doing the work makes it fascinating.

3. Devise strategies to meet goals

Having a blueprint helps in effectively achieving the objectives. Forming strategies define the
work to be done by the employees. Managers and leaders mainly devise strategies considering
the funds available, personnel in the organization, and the deadline to achieve the requisite
target. It brings efficiency to the operations of a business.

4. Implementing the plan

The next step is to implement the plans effectively. It involves the execution of the assigned
tasks by the personnel within the guidelines and deadlines set. It involves the execution of the
assigned tasks by the personnel within the guidelines and deadlines set.

5. Monitor plan performance

An organization should monitor its work by forming progress reports, finding the drawbacks,
and work on them immediately.

6. Evaluate the effectiveness of the plan

In the end, a firm should see if the corporate strategy devised by it is competitive or up to the
market standards. A plan should be challenging to achieve. A plan that is easy to achieve may
not be a viable option in the existing scenario. This may require the organization to reset its
plans and considering the market standards.
What is an Organizational structure.

An organizational structure details how certain activities are delegated toward achieving an
organization's goal. It outlines an employee's role and various responsibilities within a
company. The more authority employees have, the higher up they'll be on the organizational
structure. In addition, the more organized a structure is, the more efficiently a company
operates. There are four types of organizational structures: functional structures, flat archy
structures, matrix structures and divisional structures.

What are the benefits of organizational structures

Though not all businesses use organizational structures, those that do can reap several benefits.
Here are some benefits of implementing an organizational structure in your company:

 Faster decision making

 Multiple business locations
 Improved operating efficiency
 Greater employee performance
 Eliminates duplication of work
 Reduced employee conflict
 Better communication

Faster decision making

When your company's various teams are able to communicate more effectively, your
company's overall communication will be positively impacted as well. This will then lead to
quicker decision-making. In other words, the flow of information with an organizational
structure can be used to promote faster decision-making.

Multiple business locations

If you're a business owner, having an organizational structure helps to ensure all of your
locations are operating in a similar manner and are abiding by the same procedures. Because
it's not possible for owners to be at every location, an organized structure can provide you some
peace of mind. This is particularly the case when your company begins to grow in size.
Improved operating efficiency

Because organizational structures divide companies into various teams or branches, they're
helping to ensure that all tasks and responsibilities specific to those divisions are met more
easily. When an employee knows what they should be working on, they're able to operate
quickly and more efficiently. In essence, an organized structure creates an efficient and
streamlined system that helps improve company operations overall.

Greater employee performance

When an employee is delegated certain tasks and responsibilities in a clear manner, they're able
to perform well at their job. An organized structure provides employees with the guidance they
need to perform at their best every day. An improvement in employee performance can also
lead to greater employee morale and confidence.

Eliminates duplication of work

When employees are divided into teams according to their skills and expertise, the risk of
overlapping job duties is eliminated. For example, if a project is assigned to one team, the other
teams know it's not their responsibility to take it on because they have their own tasks outlined
as well.

Reduced employee conflict

Using organizational structures can potentially eliminate conflict between employees. While
several factors can come into play in this regard, once an employee knows their duties, the
more focused they'll be on their own work. For the most part, this is a great way to avoid any
rising conflict between coworkers.

Better communication

While this will vary from company to company and depend on the specific organizational
structure in place, an organizational hierarchy has the potential to foster healthy communication
between different divisions and teams. Once duties are delegated to various teams and
individuals, others in the workplace will know who to turn to for certain matters. For example,
if you're on a team with one manager, you'll know who to report to should issues arise. In a
similar manner, if someone from marketing has a question about the design of the project, they
know to contact the art department.

Types of organizational structures: There are four types of organizational

structures. Understanding how they work and what their benefits and drawbacks are can help
you make a more informed decision as to which to implement in your workplace. The four
types are:

1. Functional structure
2. Divisional structure
3. Flatarchy
4. Matrix structure

1. Functional structure

In a functional structure, organizations are divided into specialized groups with specific roles
and duties. A functional structure is also known as a bureaucratic organizational structure and
is commonly found in small to medium-sized businesses. Most people in the workforce have
experience working in this type of organizational structure. For example, many companies
divide their organization into various departments such as finance, marketing and human
resources. Each of these departments then has a manager who oversees it. This manager is then
supervised by an administrator or executive who oversees multiple departments.

Here are some advantages of this structure:

 Employees grouped by skill

 Greater sense of teamwork

Here are some disadvantages of this structure:

 Lack of communication with other departments

 Unhealthy competition
 Management issues
2. Divisional structure

In a divisional structure, various teams work alongside each other toward a single, common
goal. Each of these divisions has its own executive who manages how that branch operates,
controls its budgets and allocates its resources. Large companies employ this type of
organizational structure. One example of the divisional structure is a car company that
separates their company by SUV, electric or sedan vehicle branches. While each branch has its
own function, they all work toward the same goal of making a sale. This is also known as the
multi-divisional structure.

Here are some advantages of this structure:

 Focus on a single good or service

 More centralized leadership

Here are some disadvantages of this structure:

 Poor integration with other divisions

 Competition between divisions
 Lack of communication between divisions
 Potential tax implications

3. Flatarchy

In a flatarchy, there are little to no levels of management. A company using this structure could
have only one manager in between its executive and all other employees. It is called a flatarchy
because it is a hybrid of a hierarchy and a flat organization. This type of organizational structure
is used more by smaller companies since they have fewer employees, though it can be used in
companies of all sizes. While some companies grow out of this organizational structure, others
continue to use it.

Here are some advantages of this structure:

 Cost efficient
 Fosters good communication
 Higher employee morale
  Faster decision making

Here are some disadvantages of this structure:

 Potential employee conflict

 Leadership confusion

4. Matrix structure

In the matrix style of organizational structure, employees are divided into teams that report to
two managers—a project or product manager along with a functional manager. In essence, a
matrix structure is a combination of various organizational structures. Because these teams
have two managers, a matrix structure promotes duality and the sharing of resources.
Employees working for companies using the matrix structure have the potential to widen their
skill set since they might be assigned to various projects requiring different levels of expertise
or skills.

Here are some advantages of this structure:

 Fosters open dialogue

 Flexible workplace environment

Here are some disadvantages of this structure:

 Leadership confusion
 Conflicting leadership loyalties
 Potentially more costly
 Roles may not be clearly defined
 Potentially heavy employee workload

Departmentatio , Centralization and Decentralization

Departmentation :
The procedure of grouping of activities into units with the end goal of organization is called
departmentation. It can be characterized "as the procedure by which exercises or elements of
big business are gathered homogeneously into distinctive gatherings." The regulatory units are
called divisions, units or offices. The followings are the premise of departmentation :

(a)When departmentation is done on the relax of capacities the offices made are generation,
showcasing, bookkeeping, money and staff divisions.

(b) When departmentation is done on the premise of land region, the offices are known as
eastern office, western office, northern and southern office.

(c) Departmentation should be possible on the premise of clients.

(d) Departmentation should be possible on the premise of item taken care of.

Departmentation is a procedure coming about out of decision to gathering assignments as per

some standard. The resultant procedure of departmentation incorporates decisions with respect
to isolating hierarchical work, designation of work to persons, telling all included who is in
control and accommodate the backing required by those. Given the nature of these decisions
and decisions, departmentation and the criteria or bases utilized for making offices can have
genuine effect on the association's viability.
Centralization
Centralization is the procedure by which the exercises of an association, especially those with
respect to arranging and decision - making, get to be thought inside of a specific area also, or
bunch. The term has a mixture of implications in a few fields. In political science, centralization
alludes to the centralization of a government's power – both topographically and politically –
into a brought together government. In political sciences, centralization alludes to the
developmental pattern of the sensory system to be parceled into a focal sensory system what's
more, fringe sensory system. In business studies, centralization what's more, decentralization
allude to where decisions are made in the levels of leadership.

Centralization is said to be a procedure where the grouping of decision making is in a couple

hands. All the imperative decision and activities at the lower level, all subjects and activities at
the lower level are liable to the support of top administration. As indicated by Allen,
"Centralization" is the orderly and reliable reservation of authority at essential issues in the
association.
The ramifications of centralization can be:-
Reservation of operating authority with the center level directors.
The level of centralization and decentralization will rely on the measure of authority appointed
to the most minimal level. As per Allen, "Decentralization alludes to the precise push to
delegate to the most minimal level of authority aside from that which can be controlled and
worked out at essential issues.
Decentralization
Decentralization is an orderly delegation of authority by any stretch of the imagination levels
of administration furthermore, in the majority of the association. In a decentralization concern,
authority in held by the top administration for taking major decisions and surrounding strategies
concerning the entire concern. Rest of the authority may be assigned to the center level and
lower level of administration. Decentralization is not the same as delegation. Truth be told,
decentralization is all augmentation of delegation. Decentralization example is more extensive
is degree and the powers are diffused to the least most level of administration. Delegation of
authority is a finished process and happens from one for every child to another.While
decentralization is finished just when fullest conceivable delegation has occurred. For instance,
the general administrator of an organization is in charge of accepting the leave application for
the worry's entire. The general administrator appoints this work to the staff supervisor who is
currently in charge of getting the leave candidates. In this circumstance delegation of authority
has occurred. Then again, on the solicitation of the staff supervisor, if the general chief
representatives this power to all the departmental heads at all level, in this circumstance
decentralization has occurred. There is a maxim that "Everything that expanding the part of
subordinates is decentralization and that declines the part is centralization". Decentralization is
more extensive in extension and the subordinate's obligation increment for this situation. Then
again, in delegation the supervisors stay liable notwithstanding for the demonstrations of
subordinates to their bosses.

Types of Organizations

1.Line and staff organization 6.Cellular organization

2.Functional organization 7.Team structure

3.Committee organization 8.Boundary less organization

4.Matrix organization 9.Inverted Pyramid structure

5.Virtual organization 10.Lean and flat organization structure

What is a line-staff organization

A line-staff organization is a structure that distributes work responsibilities from upper

management to lower-level employees. The managers establish standards for the quality of the
work and deadlines for employees to finish their tasks, and they communicate their
expectations to the team. It's the team's responsibility to meet those expectations in the assigned
time.

A line-staff organization is more flexible than a line structure. Instead of one professional
leading the entire company alone, they appoint qualified supervisors to manage associates,
which maintains the authority of the leadership. They also hire industry experts to complement
the work of the line managers. Medium-sized and large corporations often use line-staff
formats to stabilize the chain of command with large organizational membership.
Features of a line-staff organization

Line positions

The employees that fulfill line positions make direct contributions to the mission of the
company. They handle the responsibilities to help the business run smoothly. Line positions
can either include managers or entry-level employees. The line manager may design objectives
for improving the quality of the work and create milestones for the department or the
organization as a whole. The line personnel member completes the tasks the line manager
designates, which may include building a product to sell to consumers or fulfilling a client
request.

For example, a department store could use the line-staff organization. The line managers might
include the store manager, who monitors sales goals and creates shifts for all employees, as
well as the department supervisors, who manage the shoe, jewelry and apparel sections. The
line personnel could include part-time associates who replenish merchandise to the correct
departments and process customer payments. Every line employee completes work that fuels
the department store's main goal, which is to sell various products to customers.
Staff positions
Staff employees assist the line professionals in achieving organizational goals. There are also
managerial and lower-level employees who hold staff positions. The staff managers are experts in the
industry, providing recommendations to line managers on how to lead their departments to success.
They also hold a higher rank over all personnel, including lower-level line members and staff members.
The staff employees support their line counterparts with handling their occupational responsibilities.

Functional organizational structure

A functional organizational structure is a business structure that groups employees by specialty,

skill or related roles. It is based on levels of hierarchy that include different departments, under
the direction of designated leaders. Businesses commonly operate under functional structure
because it groups people who have similar knowledge, and when used in a team environment,
helps companies achieve their goals.

Examples of departments in a functional organization structure include a sales department, a

production department, a human resources department, an information technology department,
a marketing department, and a legal department. In some large corporations, these departments
are stratified into different geographical areas. In smaller companies, they may simply occupy
different areas of the same office building.

Advantages of using a functional organizational structure

Increased productivity

People in a functional structure setting have specialized skills that allow them to work more
quickly and efficiently than those who may be unfamiliar with specific subjects, which leads
to greater productivity. Also, their confidence level enables them to complete tasks with
minimal supervision. Employees within this system of hierarchy who demonstrate high levels
of productivity often receive promotions to other positions.

Skill development:

Companies following a functional organizational structure have multiple departments

composed of small teams. Within each team, experienced managers have the chance to teach
their team members the same skills they possess, resulting in an enhanced skill set for all
involved. Both soft (interpersonal) and hard (technical) skills may develop over time as people
work together to find unique solutions and overcome work-related challenges.

Clarity:

When companies bring people of the same specialty together, it creates an environment of
clarity. Any time someone within the company needs high-level information related to
marketing, human resources, customer service or operations, they know where to go. This
applies to people outside of the company as well, who may contact the company with a special
request. Plus, the hierarchical nature of the functional structure clarifies the specific roles and
responsibilities of every person within a department.

Committee organization; A committee organization is an association of people

set up to arrive at solutions to common problems. The line people are given opportunities to
discuss their problems in the committee. The committee organizational structure is not like
line or functional organization, but is similar to staff organization. Its decisions are
implemented, whereas staff decisions are not necessarily implemented. It is a formal part of
the organizational structure wherein the members are specifically mentioned. For example, the
Finance Committee will include all the functional managers, viz. Marketing Manager,
Production Manager, Personnel Managers, etc. as members, and the Managing Director as the
Chairman. It will decide the financial requirements of each and every department. The
decisions taken by the committee are followed by the line people, as the committees are
representatives of various functional departments.

Committee organizational structure provides integrated ideas of various related people of

the company. Participative management in true form is visible under committee
organization. It is an incentive to volunteer to from integrated ideas and to willingly follow
them. New ideas and solutions of various problems are feasible with the committee
organization. It is a very good example of democratic management wherein every member
has an equal opportunity to raise his voice and come to a common solution. Flexibility and
technical excellence are possible under this organization. The top management is relieved from
certain problems. The company can encounter the changing and uncertain environment in a
better way. It facilitates high quality and innovative solutions to technical problems.
Coordination and control become easy because open discussion is invited in the
committee. Ideas and specialized functions are feasible under committee organization.

Matrix org Matrix organization:

A matrix type of organisational structure combines the traditional departments seen in

functional structures with project teams.

In a matrix structure, individuals work across teams and projects as well as within their own
department or function.

For example, a project or task team established to develop a new product might include
engineers and design specialists as well as those with marketing, financial, personnel and
production skills.

These teams can be temporary or permanent depending on the tasks they are asked to complete.
Each team member can find himself/herself with two managers - their normal functional
manager as well as the team leader of the project.
An example of a matrix structure is illustrated below:

Advantages

 Can help to break down traditional department barriers, improving communication

across the entire organisation
 Can allow individuals to use particular skills within a variety of contexts
 Avoid the need for several departments to meet regularly, so reducing costs and
improving coordination
 Likely to result in greater motivation amongst the team members
 Encourages cross-fertilisation of ideas across departments – e.g. helping to share good
practice and ideas
 A good way of sharing resources across departments – which can make a project more
cost-effective

Disadvantages

 Members of project teams may have divided loyalties as they report to two line
managers. Equally, this scenario can put project team members under a heavy pressure
of work.
 There may not be a clear line of accountability for project teams given the complex
nature of matrix structures.
 Difficult to co-ordinate
  It takes time for matrix team members to get used to working in this kind of structure
 Team members may neglect their functional responsibilities

Virtual organization

 What is Virtual Organisation? Definition, Characteristics and

Types
 Definition:
 This new form of organisation, i.e., ‘virtual organisation’ emerged in 1990 and is also
known as digital organisation, network organisation or modular organisation. Simply
speaking, a virtual organisation is a network of cooperation made possible by, what is
called ICT, i.e. Information and Communication Technology, which is flexible and
comes to meet the dynamics of the market.
 Alternatively speaking, the virtual organisation is a social network in which all the
horizontal and vertical boundaries are removed. In this sense, it is a boundary less
organisation. It consists of individual’s working out of physically dispersed work
places, or even individuals working from mobile devices and not tied to any particular
workspace. The ICT is the backbone of virtual organisation.
 It is the ICT that coordinates the activities, combines the workers’ skills and resources
with an objective to achieve the common goal set by a virtual organisation. Managers
in these organisations coordinate and control external relations with the help of
computer network links. The virtual form of organisation is increasing in India also.
Nike, Reebok, Puma, Dell Computers, HLL, etc., are the prominent companies working
virtually.

Types of virtual organisations:

Depending on the degree or spectrum of virtuality, virtual organisations can be classified into
three broad types as follows:

1. Telecommuters

2. Outsourcing employees/competencies
3. Completely virtual

Telecommuters:

These companies have employees who work from their homes. They interact with the work-
place via personal computers connected with a modem to the phone lines. Examples of compa-
nies using some form of telecommuting are Dow Chemicals, Xerox, Coherent Technologies
Inc., etc.

Outsourcing Employees/Competencies:

These companies are characterised by the outsourcing of all/most core competencies. Areas for
outsourcing include marketing and sales, human resources, finance, research and development,
engineering, manufacturing, information system, etc. In such case, virtual organisation does its
own on one or two core areas of competence but with excellence. For example, Nike performs
in product design and marketing very well and relies on outsources for information technology
as a means for maintaining inter-organisational coordination.

Cellular organization

A non-biological entity with a cellular organizational structure (also known as a cellular

organization, cellular system, nodal organization, nodal structure, et cetera) is set up in
such a way that it mimics how natural systems within biology work, with individual 'cells' or
'nodes' working somewhat independently to establish goals and tasks, administer those things,
and troubleshoot difficulties."Cellular organization" is the defining property in living
organisms.These cells exist in a broader network in which they frequently communicate with
each other, exchanging information, in a more or less even organizational playing field.
Numerous examples have existed both in economic terms as well as for groups working
towards other pursuits. This structure, as applied in areas such as business management, exists
in direct contrast to traditional hierarchical leadership that is seen in institutions such as United
States federal government agencies, where one type of supervisor gives specific orders to
another supervisor and so on down the line.

Creating cellular organizations fundamentally involves mimicking processes that occur

in natural processes. This entails fostering both strong senses of independence and
interdependence, with improvement being seen at a central level as a continuous, gradual
phenomenon. Each individual cell experiences either negative or positive reinforcements for
its specific behaviors. Advocates for these organizational structures state that their key asset is
adaptability.

Inverted Pyramid structure

Inverted Pyramid Structure

The main idea of the inverted pyramid structure is to present information in descending order
of importance so that the most important concepts and statements are located at the top of the
topic.

Why to Use Inverted Pyramid

The inverted pyramid structure has the following benefits:

 You can get user attention from the first line.

 Users can quickly understand if they really need to read the whole text.
 Users can stop reading at any point and still get the main idea.
 If you apply the inverted pyramid structure to every paragraph, users can quickly scan
through the text.
 The inverted pyramid structure has SEO benefits since the first few sentences with the
most relevant keywords will appear in search results.

When to Use Inverted Pyramid

You can use the inverted pyramid structure to write paragraphs and notes, and to organize
information in concept topics.

How to Use Inverted Pyramid

When planning the structure of a new topic, follow the next principles:

1. Think of a heading as a summary for the topic. Add keywords to the heading.
 2. Identify essential statements that users must know before they proceed to other
information in the topic. Include the most important keywords at the beginning of the
topic.

3. Outline secondary information. Move down the topic from more important to less
important details.

4. Provide context. Address related questions to bind topics together and make the
document more useful.

5. Stick to plain English. Write concisely, use headings and subheadings to organize the
topic into sections, and split information into short paragraphs and lists.

Boundary less organization:

To put it simply, the boundaryless organization is an organization without
boundaries; one that isn’t confined to the stifling walls of its office. When you
look at a traditional organization, you can see the clear with borders on both the
vertical and horizontal planes and hierarchies everywhere. Such an organization
has a very mechanistic business structure.

A boundaryless organization is quite different from this. It is an organization

where there aren’t any major structures and the main approach to business is to
allow information to flow freely and ideas to be the driving force of efficiency,
innovation, growth in the company. Such a company is built to do one thing very
well: to survive in a world that is constantly changing.

The concept of a boundaryless organization was first formulated by the former

chairman of General Electric Jack Welch, who also happens to be an authority on
the topic of management. He wanted to break down barriers, or boundaries, that
existed at the time between different parts of the company. According to his
philosophy, the most important criteria of a boundaryless organization are
flexibility and adaptability.

Another defining characteristic of boundaryless organizations is that they are

quite tech-savvy and will use the latest and greatest tools brought by technology
to make it even easier to break borders that would have traditionally been
unbreakable. Flexible working schedules and virtual collaboration are a couple
of examples of such tools.

When it comes to the employees at boundaryless organizations, they often have

their own projects to work on and targets that they must meet. They are entirely
responsible for their own work and much work in the best way to achieve the
results which are expected of them. Employee freedom is much greater in such
organizations as a result.

By their very definition, boundaryless organizations operate without boundaries.

That means that they often have a workforce that spans many different countries.
The employees will, therefore, come from different countries, with different
cultures and different backgrounds. Such employees should be brought together
in order to work in a peaceful, tolerant, and harmonious way in order to achieve
the goals of the organization. As a result, such an organization often contains very
strong visions and core ethics and values that glue employees together regardless of their
individual differences.