SHIVAJIRAO S JONDHALE INSTITUTE OF MANAGEMENT

SCIENCE & RESEARCH

SUBJECT : ORGANISATIONAL BEHAVIVOUR

PREPARED BY : PRAVIN PAWAR
SACHIN KADAM

INTRODUTION
The typically hierarchical arrangement of lines of authority, communications,
rights and duties of an organization. Organizational structure determines how
the roles, power and responsibilities are assigned, controlled, and coordinated,
and how information flows between the different levels of management. A
structure depends on the organization's objectives and strategy. In a
centralized structure, the top layer of management has most of the decision
making power and has tight control over departments and divisions. In a
decentralized structure, the decision making power is distributed and the
departments and divisions may have different degrees of independence. A
company such as Proctor & Gamble that sells multiple products may organize
their structure so that groups are divided according to each product and
depending on geographical area as well.
Organization Designs
Organization is a social entity that has a collective goal and is linked to an
external environment. The purpose of an organization to coordinate the efforts
of many to accomplish goals. There are a number of options, functional
(pyramid of hierarchy), project, and matrix organization Project Managers need
to understand relative advantages and disadvantages of each
Organization Structure
An organizational structure consists of activities such as task allocation,
coordination and supervision, which are directed towards the achievement of
organizational aims. Organisation Structure refers to the pattern of
relationships among individuals and department in an organisation.
Organisation Structure is the framework through which the organisation
operates. Classification of organisation structure is based on various activities
which are grouped together to create departments and units & prescribing
their relationships in the organisation. Organizational structure also refers to
the well defined jobs, each bearing a definite authority, responsibility and
accountability.
Why Have a Structure?

All businesses have to organise what they do.

A clear structure makes it easier to see which part of the business does
what.
There are many ways to structure a business.

Ways to Structure a Business?

By function: Arranging the business according to what each section or

department does.
By product or activity: Organising according to the different products
made.
By area: Geographical or regional structure.
By customer: Where different customer groups have different needs.
By process: Where products have to go through stages as they are
made.

Represents the management hierarchy:

Reporting relationships who report to whom
The official chain of control or authority, which deals of official activities,
such firing, hiring, and promotion.
Organization can be grouped into major subdivisions on the basis of a
number of frameworks.
Responsibilities & type of work for each subdivision
Official lines of authority & communication
Informal organization also important and can exist in parallel to the official
organization communication of the informal is socially motivated.
Alternative Structures
Functional Organization
This type relies on formal rules, procedures, coordinated plans, budgets, fairly
common, segmented by department and their functions works well in
repetitive, stable environments.
Functional structure is created by grouping the activities on the basis of
functions required for the achievement of organizational objectives.
Functions are classified into Basic(essential: e.g. production,
marketing, in manufacturing organization),Secondary(subparts :e.g.
marketing is further divided into market research, advertising, sales
etc) & Supportive (e.g. finance, accounting, personnel, industrial
relations)functions according to their nature and importance.
Authority relationships in functional structure may be in the form of line, staff &
functional.

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A functional organization is the most common type of the three.

It works best in small organizations in which the different sections are
geographically close together and which provide only a small number of goods
and/or services.
In a functional structure, the organization is broken into different sections
based upon specialty. For example, there may be one area for sales, one for
customer service and one for the supervisors who deal with escalated
problems.
The project manager's role is to ensure smooth execution of processes
and projects; however, the functional manager has the most power
and makes the final decisions.
Types of Functional orgnisation
Geographic Differentiation
Product Differentiation
Customer Differentiation
Process Differentiation
Advantages of Functional Organisation
An advantage to the functional structure is the role of the functional manager,
which means there is only one boss. This reduces or prevents conflicts of

interest and makes it easier to manage specialists:

Clear line of authority

Career development
Comfortable and easy
Technical expertise
Flexible resource assignment

Disadvantages of Functional Organization.

A disadvantage of this type of structure is that the project manager has limited
authority and a limited career path.
No accountability over complete project
No project emphasis
Low coordination across function
No customer focal point
Low delegation of authority
Work delays due to red tape
Heavy politics
Lack of a big picture view
Organisation Chart by Product/Activity
The Divisional structure or product structure is a configuration of an
organization, which breaks down the company into divisions that are selfcontained. A division is self-contained and consists of collections of functions
which work to produce a product. It also utilizes a plan to compete and operate
as a separate business or profit center. According to Zainbooks.com, divisional
structure in America is seen as the second most common structure for
organization today.
Employees, who are responsible for certain market services of types of
products, are placed in divisional structure in order to increase their flexibility.
The process can be further broken down into geographic (for example a U.S
Division and an EU division), and product services for different consumers (for
example companies or households). Another example of divisional structure
would be an automobile company which utilizes a divisional structure. The
company would have one division for trucks, another for SUVS, and another for
cars. The divisions may also have their own departments such as marketing,
sales, and engineering.
The advantage of divisional structure is that it uses delegated authority so the
performance can be directly measured with each group. This results in
managers performing better and high employee morale. Another advantage of
using divisional structure is that it is more efficient in coordinating work
between different divisions, and there is more flexibility to respond when there
is a change in the market. Also, a company will have a simpler process if they
need to change the size of the business by either adding or removing divisions.

When divisional structure is utilized more specialization can occur within the
groups. When divisional structure is organized by product, the customer has
their own advantages especially when only a few services or products are
offered which differs greatly. When using divisional structures that are
organized by either markets or geographic areas they generally have similar
function and are located in different regions or markets. This allows business
decisions and activities coordinated locally.

Advantages
Clear focus on market segment helps meet customers needs
Positive competition between divisions
Better control as each division can act as separate profit centre
Disadvantages
Duplication of functions (e.g. different sales force for each division)
Negative effects of competition
Lack of central control over each separate division
Organisation by Area:
In this kind or organizational structure the division based on geographic
locations. If an organization is having business in different regions then such
type of organizational structure can help in developing multiple teams. One of
the disadvantages of such structure is the competition arising between the

regions which might become an impediment when two or more regions have to
work together.

Advantages
Serve local needs better
Positive competition
More effective communication between firm and local customers
Disadvantages
Conflict between local and central management
Duplication of resources and functions
Other Organisational Structures
By Customer : Similar effects to structuring by product
By Process: Similar to structuring by function
Organisational Structures:
Flat Structure Organisation
In contrast to a tall organisation, a flat organisation will have relatively
few layers or just one layer of management. This means that the Chain
of Command from top to bottom is short and the span of control is
wide. Due to the small number of management layers, flat organisations
are often small organisations.

Advantages of flat Organisations

More/Greater communication between management and workers
Better team sprit
Less bureaucracy and easier decision making.
Fewer levels of management which includes benefits such as
lower costs as managers are generally paid more than worker.
Disadvantages of flat Organisations
Workers may have more than one manager/boss.
May limit/hinder the growth of the organisation.
Structure limited to small organisations such as partnerships,
co-operatives and some private limited companies.
Function of each department/person could be blurred and merge
into the job roles of others.
Tall Structure Organisation
In its simplest form a tall organisation has many levels of
management and supervision. There is a long chain of
command running from the top of the organisation eg Chief
Executive down to the bottom of the organisation eg shop floor
worker.

Advantages of tall Organisations

There is a narrow span of control i.e each manager has a small number of
employees under their control. This means that employees can be closely
supervised

 There is a clear management structure

The function of each layer will be clear and distinct. There will be clear
lines of responsibility and control.
Clear progression and promotion ladder
Disadvantages of tall Organisations
The freedom and responsibility of employees (subordinates) is restricted
Decision making could be slowed down as approval may be needed by
each of the layers of authority.
Communication has to take place through many layers of management.
High management costs because managers are generally paid more than
subordinates. Each layer will tend to pay its managers more money
than the layer below it.
Matrix ( or project-based) organisations

The matrix structure, is a hybrid of divisional and functional structure. Typically

used in large multinational companies, the matrix structure allows for the
benefits of functional and divisional structures to exist in one organization. This
can create power struggles because most areas of the company will have a
dual management--a functional manager and a product or divisional manager
working at the same level and covering some of the same managerial territory.
The matrix structure groups employees by both function and product. This
structure can combine the best of both separate structures. A matrix
organization frequently uses teams of employees to accomplish work, in order
to take advantage of the strengths, as well as make up for the weaknesses, of
functional and decentralized forms. An example would be a company that
produces two products,
"product a" and "product b". Using the matrix structure, this company would
organize functions within the company as follows:
"product a" sales department, "product a" customer service department,

"product a" accounting, "product b" sales department, "product b" customer
service department,
"product b" accounting department. Matrix structure is amongst the purest of
organizational structures, a simple lattice emulating order and regularity
demonstrated in nature.
Weak/Functional Matrix: A project manager with only limited authority is
assigned to oversee the cross- functional aspects of the project. The functional
managers maintain control over their resources and project areas.
Balanced/Functional Matrix: A project manager is assigned to oversee the
project. Power is shared equally between the project manager and the
functional managers. It brings the best aspects of functional and project zed
organizations. However, this is the most difficult system to maintain as the
sharing of power is a delicate proposition.
Strong/Project Matrix: A project manager is primarily responsible for the
project. Functional managers provide technical expertise and assign resources
as needed.
Matrix structure is only one of the three major structures. The other two are
Functional and Project structure. Matrix management is more dynamic than
functional management in that it is a combination of all the other structures
and allows team members to share information more readily across task
boundaries. It also allows for specialization that can increase depth of
knowledge in a specific sector or segment.
There are both advantages and disadvantages of the matrix structure; some of
the disadvantages are an increase in the complexity of the chain of command.
This occurs because of the differentiation between functional managers and
project managers, which can be confusing for employees to understand who is
next in the chain of command. An additional disadvantage of the matrix
structure is higher manager to worker ratio that results in conflicting loyalties
of employees. However the matrix structure also has significant advantages
that make it valuable for companies to use. The matrix structure improves
upon the silo critique of functional management in that it diminishes the
vertical structure of functional and creates a more horizontal structure which
allows the spread of information across task boundaries to happen much
quicker. Moreover matrix structure allows for specialization that can increase
depth of knowledge & allows individuals to be chosen according to project
needs. This correlation between individuals and project needs is what produces
the concept of maximizing strengths and minimizing weaknesses.
Advantages of matrix
Individuals can be chosen according to the needs of the project.

 The use of a project team which is dynamic and able to view problems in
a different way as specialists have been brought together in a new
environment.
Project managers are directly responsible for completing the project
within a specific deadline and budget.
Disadvantages of matrix
A conflict of loyalty between line managers and project managers over
the allocation of resources.
If teams have a lot of independence can be difficult to monitor.
Costs can be increased if more managers (i.e project managers) are
created through the use of project teams