ii. Informal organisation.
A formal organization is one which is deliberately constructed to fulfil specific goals’. It is characterized by planned division of responsibility and a well-defined structure of authority and communication. ‘An informal organization is one which loosely structured, flexible and spontaneous, fluctuating with its individual membership’. Examples of an informal organization are colleagues who tend to lunch together. Organizational structure: There are many types of organisational structures exist. Following are the common types that include their advantages and disadvantages: A. Geographical organisation: In a structure of geographical, regional or territorial departmentation, some authority is retaining at head office, but day to day operations are handled on a territorial basis. Example: northern region, western region. Advantage:
i. There is local decision-making.
ii. It may be cheaper to establish local factories or office. Disadvantage:
i. Duplication and possible loss of economies of scale might arise. ii. Inconsistency in stander may develop from one area to another.
B. Functional organization: functional organization involves grouping together people who perform similar tasks or use similar technology or materials. Primary functions in a manufacturing company might be production, sales, finance marketing and general administration.
i. Expertise is pooled and related technology/equipment or materials accessed more efficiently. ii. It avoids duplication and offers economies of scale.
iii. It makes easier the recruitment, training and motivation of professional specialists.
i. It is organization by inputs and internal processes, rather than by output and customers demand. ii. Communication problems may arise between different specialism, with their own culture and language. iii. Poor co-ordination may result, especially in a tall organization structure.
C. Product-based organization: Some organizations group activities on the basis of product or product line. Some functional departmentation remains but a divisional manager is given responsibility for the product or product line. Example: manufacturing, distribution, marketing and sales.
i. It increased the overhead costs and managerial complexity of the organization. ii. Different product divisions may fail to share resources and customers.
D. Matrix organization: Matrix organization crosses functional and product, customer and project organization.
Advantages of the matrix organization:
i. It attempts to retain the benefits of both structures ( functional organization and project team structure ). ii. Coordinates resources in a way that applies them effectively to different projects. iii. Staff can retain membership on teams and their functional department colleagues. Disadvantages of the matrix organization:
i. Potential for conflict between functional vs. project groups. ii. Greater administrative overhead.
iii. Increase in managerial overhead
E. Centralization and decentralization organization: In a centralised organisation head office (or a few senior managers) will retain the major responsibilities and powers. Conversely decentralised organisations will spread...