- Books Name
- BUSINESS STUDIES-XII
- Publication
- ABCD CLASSES
- Course
- CBSE Class 12
- Subject
- Business Studies
ORGANISATIONAL STRUCTURE:
Organization Structure:-Defined as the relationships between people, work and resources and can be shown in the organizational chart.
Factors affecting organizational structure
- Job design:-Total work is divided into various jobs like sales, finance, production, etc and the results expected from it
- Departmentation:-Jobs are grouped together to form departments on the basis of similar tasks like per unit cost, quality control under the purchase department
- Span of management:-No of employees that can be effectively managed by superior
- Narrow span:- when the size of the organization is large
- Wide-span: - when the size of the organization is small
- Delegation of authority:-Sharing of authority between the superior and subordinate and clearly specifying who is responsible for whom
Types of Organization Structures
- Functional structure and
- Divisional structure
FUNCTIONAL STRUCTURE:
Functional structure
- In a functional organization, all identical works are placed together under one functional head.
- For example, production, marketing, finance, and marketing are considered essential functions of a manufacturing enterprise.
Suitability: It is most suitable when the size of the organization is large, has diversified activities and operations require a high degree of specialization.
Advantages
- Specialization (Occupational):-Employees perform similar tasks within a department and get knowledge in a specific field. Sales, production, etc.
- Promotes control and coordination Within a department because of similarity in the tasks
- Improves employee training: Training of employees is easier due to limited work
- Cost-effective Leads to minimize duplication of effort which results in economies of scale
- Equal importance to all departments Provides equal attention and importance to different functions (department).
Disadvantages
- Functional Empires Functional head may give importance to their own departments and stop thinking about the interest of the organization.
- Limited Growth Functional heads do not get training for top management positions because they work in a particular area (like production or sale).
- Inter-departmental Conflicts Can arise when the interests of two or more departments are not the same or regarding sharing of resources
- Problem of Responsibility. Functional head is responsible for a particulars function and if some things go wrong it becomes very difficult to fix responsibility.
DIVISIONAL STRUCTURE:
Divisional Structure: -Organization structure comprises separate business units or divisions. Each unit has a divisional manager responsible for the performance and who has authority over the unit.
Suitability:-Suitable for those business enterprises where a large variety of products are manufactured using different productive resources.
Advantages:
- Responsibility fixing as divisional heads is accountable for profits. Revenues and costs related to different departments can be easily identified and assigned to them.
- Initiative and flexibility because each division functions as an independent unit which leads to faster decision making.
- Specialization (Product) helps in the development of different skills in a divisional head and this prepares him for higher positions.
- Expansion and growth as new divisions can be added without interrupting the existing operations.
Disadvantages:
- Conflict May arise among different divisions regarding the allocation of funds
- Add-In Costs Since there may be a duplication of activities across products
- Difficulty in Employee Training Due to various products training employees is quite difficult.
Distinguish between Functional and Divisional structure