Organising

Introduction

Organizing as a management function entails dividing work among people whose efforts must be coordinated to achieve specific goals and implement pre-determined strategies. Organization is the foundation upon which the entire management structure is built. It is the foundation of management. Following the determination of an enterprise’s objectives and the preparation of a plan, the next phase in the management process is to organise the enterprise’s activities to execute the plan and achieve the enterprise’s objectives. There are numerous interpretations of the term organisation. In any event, there are two broad definitions of the phrase.

In the first meaning, organisation is defined as a dynamic process and managerial activity required for bringing people together and connecting them to achieve common goals.

In the other definition, the organisation refers to the system of relationships between roles and jobs that are put in place to achieve common goals.

Organizing – The Process

The process of building relationships among the members of an enterprise is known as organisation. Relationships are formed based on authority and responsibility. To organise means to harmonise, coordinate, or arrange things logically and orderly. Each organisation member is allocated a specific function or duty to perform and is permitted to do so. The administrative role of organising consists of rationally dividing work into groups of activities and connecting the positions representing those groups of activities to establish a reasonable, well-coordinated, and orderly framework for job completion. “Organising entails identifying and grouping the activities to be performed, dividing them among the persons, and developing authority and responsibility connections among them to attain organisational objectives,” writes Louis A Allen. The following are the various steps involved in this process:

1. Determination of Objectives: This is the first step in establishing an organisation. The organization is usually linked to specific goals. As a result, before beginning any action, management must first determine the objectives. The enterprise’s aims serve as the foundation for the organization’s structure. That is, the organisation’s structure can only be decided by management when the organisation’s objectives are known. This process assists management in framing the organisational structure and achieving the corporate objectives with the least amount of cost and effort. Determining objectives will entail establishing why the proposed organisation is to be established and, as a result, what the nature of the work to be achieved through the organisation will be.
2. Enumeration of Objectives: The key activities must be appropriately divided so the group members can effectively pool their efforts. Separating the overall job into essential actions is the first stage in organising collective effort. Each job must be appropriately classified and organised. This will allow people to understand what is expected of them as group members and will aid in preventing duplication of efforts. For example, an industrial concern’s work may be separated into the following primary functions: production, financing, people, sales, purchase, and so on.
3. Classification of Activities: The next phase will categorise operations based on commonalities, common purposes and functions, and human and material resources. Closely linked or comparable activities are then classified into divisions and departments, and departmental operations are further subdivided into sections.
4. Assignment of Duties: Specific job assignments are made to distinct subordinates to ensure consistency in work performance. Each person should be assigned a specific task based on their abilities and held accountable. He should also be given sufficient authority to complete the task at hand. “Organisation embraces the duties of designating the departments and employees that are to carry out the work, defining their functions, and outlining the links that are to exist between department and individuals,” write Kimball and Kimball.
5. Delegation of Authority: Because so many people work in the same organisation, it is the role of management to establish the organizational structure. Responsibility without authority is hazardous, and authority without responsibility is an empty vessel. Everyone should be clear about who he is answerable to; commensurate authority is granted to subordinates to enable them to demonstrate work performance. This will aid in the smooth operation of the business by simplifying the distribution of responsibility and authority.

Organizational Design

Organization design is a structured, supervised process for integrating an organization’s people, information, and technology. The development of roles, processes, and formal reporting links in an organisation is called organisational design. An organisation design process can be divided into two phases: strategic grouping, which sets the general structure of the organisation (the primary sub-units and their relationships), and operational design, which defines the more precise roles and activities.

It fits the organization’s shape as closely as feasible to its intended purpose(s). Organizations use the design process to increase the likelihood that their members’ collaborative efforts will be successful. As a result, it can be defined as a procedure for increasing the likelihood of an organization’s success.

Hierarchical Systems

Western organisations have been heavily impacted by the command-and-control structure of historic military organisations, particularly those of the United States, and the arrival of scientific management at the turn of the century. Most organisations today are designed as bureaucracies with hierarchies of authority and responsibility. To control member behaviours, laws, policies, and procedures are implemented evenly and impersonally within the hierarchy. Departments organise activities, with personnel performing specialised jobs in production, sales, or accountancy. People who do comparable tasks are grouped.

Any organisation, whether government, school, business, church, or fraternity, is considered to have the same basic organizational shape. It is comfortable, predictable, and logical. It is the first thing that comes to mind when we realize we really need to get organized!

As reasonable as the functional hierarchy may be, there are significant downsides to adopting the same organisational structure for all purposeful groupings. To name a few examples,

1. Different groups desire different outcomes.
2. Diverse groups have different members, and each group has its own culture.

These variances in desired results and culture should warn managers against assuming there is a single ideal way to organise. To be thorough, remember that different organisations will most likely adopt different tactics to attain their goals. Service organisations will use methods different from manufacturing organisations, and both will use methods different from those of groups whose primary goal is social. One structure cannot possibly accommodate all.

Organising on Purpose

The reason a group exists should be the foundation for all its members’ actions, including the selection of an acceptable organizational structure. The objective is to devise a method of organization that best matches the task at hand, independent of how other distinct groups are organized.

Only when there are striking similarities in desired results, culture, and procedures should one organization’s basic structure be applied to another—even then, only with meticulous fine tweaking. The problem is that the patterns of behaviour that make one group succeed may be dysfunctional for another, inhibiting group performance. To maximise effectiveness, the organizational structure must be appropriate for the goal at hand.

• The Design Process

Formulating a strategy—a set of choice criteria by which members will choose appropriate activities—is the first step in designing an organization. The strategy is generated from clear, concise statements of mission and vision, as well as the organization’s core philosophy. Strategy unifies the organization’s aim and directs individuals toward actions meant to achieve desired results. The technique encourages acts that further the goal while discouraging those that do not.

Developing a strategy is a form of planning, not an organisation. To organise, we must link individuals in meaningful and purposeful ways. Furthermore, we must provide them with the necessary information and technology to succeed. The formal relationships among people are defined by organisational structure, which determines their positions and duties. Administrative systems regulate an organisation by establishing norms, processes, and policies. Information and technology determine the process(es) through which members attain their objectives. Each aspect must support the others, and they must all support the organization’s objective.

For instance, many organisations, including GP, have employed evolutionary computational methods to improve many systems in ways rivalling or surpassing human capabilities. It has achieved optimization results for various challenges requiring automated controller, circuit, antenna, genetic network, and metabolic pathway synthesis.

Exercising Choice

Organizations are man’s invention. They are artificial social systems groups use to influence or achieve a specific goal. People choose to organise because they know that acting alone limits their ability to achieve. We believe that by working together, we can overcome our limitations.

When we organise, we are attempting to lead or pattern the activity of a group of people toward a shared goal. The success of this pattern is heavily influenced by how it is developed and implemented. Activity patterns that are complementary and interdependent are more likely to produce the desired results. On the other hand, unrelated and autonomous activity patterns are more prone to cause unforeseen and frequently unwanted outcomes.

The organisational design process aligns people, information, and technology with the organization’s mission, vision, and strategy. The structure is intended to improve interpersonal interactions and information flow. Systems encourage individual responsibility and decision-making. Technology is employed to enhance human capacities to complete meaningful labour. The result is an integrated system of people and resources adapted to the organization’s specific goal.

Organisation Structure

An organisational structure demonstrates the linkage between authority and responsibility among the various positions in the organisation by indicating who reports to whom. Organization entails creating an adequate structure for goal-seeking activities. It is an established pattern of relationships among the organization’s components. According to March and Simon, “Organizational structure consists simply of those aspects of organisational pattern of behaviour that are relatively stable and change only slowly.” An organisation chart typically depicts an organization’s structure. It depicts the relationship between authority and responsibility between various positions in the organisation. When designing the organisational structure, the principles of sound organisation should be considered.

The Importance of Organizational Structure

1. A well-designed organisation can improve teamwork and productivity by providing a framework for effective collaboration.
2. The structure of the organisation determines the location of decision-making in an organisation.
3. An organisation’s well-defined power system encourages innovative thinking and initiative among its members.
4. A solid organisational structure helps enterprise growth by strengthening the capacity to handle rising levels of authority.
5. The organisational structure establishes a system of communication and coordination.
6. The organisational structure enables members to understand their position and how it relates to other responsibilities.

• Determining the Kind of Organisation Structure

Drucker, Peter F “Organization is not an end in itself, but rather a means to an end in terms of company performance and results. Organizational structure is an essential tool, and improper structure will seriously hinder, if not kill, economic performance.

The organisational structure must be created to meet the corporate objectives in five, ten, or fifteen years “. Peter Drucker identified three distinct methods for determining the type or structure required to achieve the goals of a specific business:

1. Activities Analysis: The goal of ‘activities analysis’ is to identify the principal activity of the proposed organisation, as this would be the foundation for all other activities. It should be noted that one or two functional areas of business predominate in any organisation. Designing, for example, is vital for a readymade clothing maker. Following identifying and classifying activities into functional domains, they should be ranked in order of importance.
2. Decision Analysis: At this step, the manager determines the decisions required to accomplish the organization’s task. More importantly, he must determine where or at what level these decisions must be made and how each management level should be involved. This analysis is especially helpful when determining the number of levels or layers in an organization’s structure.
3. Relations Analysis: Relations analysis will include an investigation of the various ties inside the organisation. These are vertical, lateral, and diagonal linkages. When a superior-subordinate connection is envisioned, it will be vertical. The relationship will be lateral if an expert or specialist advises a manager at the same level. A diagonal connection occurs when a specialist exercises authority over someone in a subordinate position in another department within the same organisation.

Principles of Organisational Structure

Management must consider The following fundamental principles when developing an organisational structure.

1. Consideration of unity of objectives: The activity’s goal determines the organisational structure. Objective unity is essential so that all efforts can be focused on the stated goals.
2. Specialisation: Specialisation is essential for effective organisation. Specialization is facilitated by precise labour division.
3. Coordination: Organization entails the division of labour among individuals whose efforts must be coordinated to attain common goals. Coordination is the systematic organisation of collective effort to achieve unity of action in pursuing a single goal.
4. Clear, unbroken line of Authority: This emphasises the scalar principle or the chain of command. The chain of command should not be broken as it runs from the highest executive to the lowest administrative level.
5. Responsibility: Authority and responsibility should be equal, meaning each management should have enough authority to complete the mission.
6. Efficiency: The organisational structure should allow the firm to achieve its goals at the lowest possible cost.
7. Delegation: Decisions should be made at the lowest level of competence. Authority and responsibility should be transferred as far down in the organisation as feasible.
8. Unity of Command: Everyone should report to a single superior. There is a sense of personal responsibility to one person for results when an individual has to report to only one supervisor.
9. Span of Management: No superior at a higher level should have more than six direct reports. The average human brain can efficiently direct three to six brains (i.e., subordinates).

• Communication: A solid communication subsystem is critical for the efficient flow of information and understanding and practical company performance.
• Flexibility: The organisation is supposed to have built-in devices that allow for development and expansion without disruption. It should not be stiff or inflexible.

Organizational Structures, Formal and Informal

The formal organisation is the framework of jobs and positions with clearly defined functions and relationships dictated by top management. This sort of organisation is created by management to achieve an enterprise’s goals and is governed by rules, processes, and procedures. Everyone is allocated a specific duty for completing the specified work and is given the necessary authority. The informal organisation, which does not appear on the organisational chart, assists the formal organisation in successfully and efficiently fulfilling organisational goals. The operation of informal groups and leaders is not as straightforward. As a result, every manager must extensively examine the functioning pattern of informal relationships in the organisation and exploit them to achieve organisational goals.

1. Formal Structure: Formal organisation is defined by Chester I Bernard as – “a system of two or more people’s purposefully coordinated activities or forces It refers to the organisation of clearly defined roles, each with its level of authority, responsibility, and accountability.” The essence of formal organisation is a conscious common purpose, which arises when individuals:

(a) can communicate with one another,

(b) are willing to act and

(c) have a purpose.

The formal organisation is based on four major components. They are as follows:

(a) division of labour

(b) scalar and functional processes

(c) structure

(d) span of control

Thus, a formal organisation is the outcome of planning, with the design of structure previously set by top management.

Formal Organizational Characteristics

1. Top management establishes a formal organisational structure to fulfil organisational goals.
2. Formal organisation prescribes the relationships between the people who work in the organisation.
3. The organizational structures are purposefully created to enable workers to collaborate and achieve the enterprise’s common goals.
4. Organizational structure focuses on the jobs rather than the people who will do the jobs.
5. Individuals in a formal organisation are assigned jobs and positions and work according to managerial decisions. Thus, the formal links in the organisation emerge from the management-created pattern of duties.
6. Rules, regulations, and procedures govern a formal organisation.
7. A formal organisation clearly defines each level’s position, authority, responsibility, and accountability.
8. Organizational structure is built on division of labour and specialisation to achieve operational efficiency.
9. A formal organisation is purposefully impersonal. The organisation does not take into account the sentiments of its members.
10. Everyone must respect the power and responsibility connections established by the organisational structure.
11. In a formal organisation, coordination follows a predetermined pattern.

Benefits of Formal Organization

1. The formal organisational structure focuses on the tasks to be completed. As a result, it holds everyone accountable for a specific assignment.
2. Rules, regulations, and procedures govern a formal organisation. As a result, it maintains law and order within the organisation.
3. The organisational structure enables workers to collaborate to achieve the enterprise’s common goals.

Formal Organizational Disadvantages or Criticisms

1. The formal organisation does not take into account the feelings of its members.
2. The formal organization does not consider individual goals; it is intended to achieve the organization’s goals.
3. Strict rules, regulations, and procedures govern the formal organisation. This makes achieving goals harder.

 

2. Informal Organization: An informal organisation is a relationship between people in an organisation that is based on personal attitudes, feelings, prejudices, likes, dislikes, and so on. An informal organisation is formed by personal and social relationships rather than formal authority. These relationships are not formed by the rules and regulations outlined in the official organisational structure; instead, huge formal groups give rise to small informal or social groups. These groups may be formed based on similar tastes, languages, cultures, or other factors. These groupings are not pre-planned but emerge naturally inside the organisation in response to its surroundings.

Informal Organizational Characteristics

1. No formal authority establishes an informal organisation. It is unplanned and occurs on its own.
2. Informal organisations reflect human relationships. They develop from the personal and social relationships of the people who work in them.
3. Informal organisation formation is a natural process. Rules, regulations, or procedures do not govern it.
4. An informal organization’s inter-relationships cannot be depicted in an organisational chart.
5. In the case of informal organisations, people communicate amongst themselves rather than through formal channels of communication.
6. Membership in informal organisations is entirely voluntary. It appears spontaneously rather than as a result of deliberate or conscious attempts.
7. Because a person may be a member of several informal groups, their membership may overlap.
8. Informal organisations are formed around a shared interest, problem, language, religion, culture, etc. They are impacted by the people in the organization’s attitudes, emotions, whims, likes and dislikes, and so on.

Advantages of Informal Organization

1. It combines with the official organisation to improve its effectiveness.
2. Many things that are impossible to attain through formal organisation can be accomplished through informal organisation.
3. Informal organisation in a business causes managers to plan and act more cautiously.
4. Informal organisation provides workers with a sense of security, belonging, and group members.
5. Informal organisations have a significant impact on productivity and job satisfaction.
6. The informal leader relieves the formal manager’s responsibility and attempts to cover holes in the manager’s ability.
7. Informal organisation assists group members in achieving specific personal goals.
8. Informal organisation is the most effective method of employee communication. It is extremely fast.
9. Informal organisations provide members with psychological gratification. It serves as a safety valve for the organization’s employees’ emotional problems and frustrations by providing a forum for them to express their feelings.
10. It functions as a social control agent for human behaviour.

Management’s View of Informal Organization: Without question, formal organisation is a vital aspect of the organisation, yet it cannot achieve the organization’s goals on its own. The informal organisation works with the formal organisation to achieve organisational goals. If handled correctly, informal organisation can help the organisation perform its duties more efficiently and successfully. Keith Davis puts it this way: “An informal organisation significantly impacts productivity and job satisfaction. Formal and informal systems are required for group action, just as two blades are required to make a pair of scissors usable “. A manager should not neglect the informal organisation because both formal and informal organisations are critical to the success of any organisation. He should thoroughly research the operating patterns of informal relationships in the organisation and exploit the informal organisation to achieve organisational goals.

Forms of Organisation

Organization necessitates the establishment of structural relationships between various departments and the individuals who work in them to achieve the desired results. The allocation of duties and delegation of authority are the primary concerns of organisational structure. Forming formal ties among employees working in the organisation is critical for establishing clear lines of authority and efficiently coordinating the actions of diverse personnel. Several organisational structures have evolved in response to various techniques of sharing authority and responsibility among enterprise members. They are as follows:

1. Line organisation
2. Line and staff organisation
3. Functional organisation
4. Committee organisation

Lines Organization

This is the most basic and oldest kind of organisation. It is also known as a “Military,” “Traditional,” “Scalar,” or “Hierarchical” organisational structure. The line organisation represents the structure in a direct vertical relationship through which authority passes. According to this, the chain of command runs vertically downward from top to bottom across the organisation. The authority is most significant at the top and diminishes with each subsequent level down the hierarchy. All key decisions and commands are made at the top and handed down to their immediate subordinates, who then break the orders into detailed instructions for execution by another set of subordinates. A direct power and responsibility relationship is thus established between the superior and subordinate. The superior has direct power over his subordinates, who are solely answerable to their commanding superior for their performance. Thus, the line of authority in the line organisation is an uninterrupted succession of authority steps that forms a hierarchical arrangement. The chain of authority not only serves as a command channel for operating individuals, but it also serves as a channel of communication, coordination, and accountability inside the organisation.

Prof. Florence outlines three rules that must be followed to reap the benefits of this system. Failure to do so will result in inefficiency.

1. Commands should be conveyed to subordinates through the immediate superior; no links in the chain of command should be skipped.
2. There should only be one chain. That is, the command should only come from one direct superior.

The number of subordinates directly directed by the superior should be minimal.
Line Organization’s Benefits or Merits

1. It is the simplest to set up and explain to potential employers.
2. It assigns specific personnel responsibility for doing tasks in a specific manner.
3. The relationship between authority and responsibility is clearly defined. Employees are entirely aware of their job’s restrictions.
4. It is the most cost-effective and efficient method.
5. It promotes unity of control, therefore adhering to the organisational scalar concept.
6. It promotes good enterprise discipline since each individual understands who he is accountable to. Subordinates are likewise conscious of the need to please their superiors in their self-interest.
7. It allows for quick decision-making since there is apparent authority at every level.
8. Effective coordination of activities is possible because a single executive controls all operations of a single department or division.
9. This structure is flexible or elastic in that because each executive is solely responsible for his or her position and sphere of work, he or she can readily adapt the organisation to changing situations.

• Responsibility and authority are clearly defined in this system. Every organisation member knows his or her exact position and who reports to him. Because of the apparent concentration on accountability, no one can escape liability.

Line Organization’s Advantages and Disadvantages

1. As the line organisation grows, the superiors get overburdened with tasks. Because all work is done according to the wishes of one person only, the efficiency of the entire department will grow to rely on the management abilities demonstrated by the department’s leader. If something were to happen to an effective manager, the future of the department and the company’s future would be jeopardised.
2. Because it is an autocratic system, it can be arbitrary, opinionated, and authoritarian.
3. In this system, subordinates must obey their superiors’ orders without expressing their own opinions about them, which limits communication.
4. There could be a lot of nepotism and favouritism. As a result, efficient people may be left behind, while inefficient ones may be promoted to higher and better positions.
5. The line organisation suffers from a lack of specialised expertise. The modern company is so complicated that it is pretty difficult for one person to remember all of the intricacies of his work in this field.
6. Line organisations are unsuitable for large organisations because they lack specialists. Many jobs require specialised expertise.
7. If superiors make a terrible decision, it will be implemented without anyone having the bravery to reveal its flaws.
8. The organisation is strict and unyielding.
9. There is a concentration of power at the top. The firm will fail if the senior executives are not capable.

Prof. Florence categorises the inefficiencies of the line organisation scheme into three categories:

(i) failure to obtain the correct information and act on it;

(ii) red tape and bureaucracy;

(iii) lack of specialised talent or experts whereas commands are intended to go down the hierarchical system, information is expected to flow up.” Despite these disadvantages, the line organisational structure is quite common, particularly in small organisations with few levels of control and a limited number of employees.

Line and Staff Organisation

The line authority remains the same in line and staff organisations. From top to bottom, authority flows. The primary distinction is that specialists are assigned to line managers to advise them on critical issues. These specialists are prepared to support line managers when their services are required, collecting information and providing assistance to help line officials carry out their duties more effectively. Staff officers have no command authority in the organisation because they are hired to provide expert advice to line officers. The combination of line and staff organisation is the form of organisation known as line and staff organisation. The ‘line’ ensures discipline and stability, while the staff’ offers competent advice. The line produces while the team researches, plans, schedules, defines standards, and records performance. The line delegated the authority through which the staff executes these responsibilities, and the performance must be acceptable to the line before action is made. The figure displays the organisational structure of the line and staff:

Staff Positions The staff position developed to provide support to the line managers can take the following forms:

1. Personal Staff: In this case, the staff official serves as the line manager’s assistant or adviser, such as the Assistant to the Managing Director.
2. Specialized Staff: This type of staff serves as a source of expertise in specialised areas such as R&D, personnel, accounting, etc. For example, R&D personnel.
3. General Staff: This category of staff comprises experts in various fields who are supposed to advise and assist top management on matters requiring expertise, such as financial and technical advisors.

Features of Line and Staff Organisation

1. In this system, line officers have authority and command over subordinates and are held accountable for their assigned tasks. Staff officers are specialists who advise line officers so they can perform their duties effectively.
2. In this system, staff officers prepare plans and advise line officers, who then carry them out with the assistance of workers.
3. The line and staff organisation is based on the specialisation principle.

The Advantages of Line and Staff Organization

1. It applies expert knowledge to management and operational issues. As a result, line managers benefit from the specialised knowledge of staff specialists at various levels.
2. The experienced counsel and assistance provided to line officers by staff officers benefit the entire organisation.
3. By delegating extensive analysis of each significant managerial action to staff officers, line managers are relieved of the burden of focusing on specialised responsibilities.
4. Staff specialists provide expert counsel to assist line managers in making better judgments, resulting in sound managerial judgments.
5. It allows for undivided duty and authority while allowing staff specialisation. As a result, the organisation benefits from functional organisation while retaining command unity.
6. It is built on deliberate specialisation.
7. Line and staff organisation is more adaptable because additional specialised tasks can be introduced to line activities without disrupting the line routine.

Disadvantages of line and staff organisation

1. Unless the roles and responsibilities of staff members are specified through charts and manuals, there may be significant uncertainty throughout the organisation about the functions and positions of staff employees and line supervisors.
2. There is a general schism between line and staff executives. Line managers believe that staff experts do not always provide appropriate advice, while staff officials often complain that their counsel is not effectively addressed.
3. Line managers may occasionally resent staff members’ activities, believing that the presence of specialists diminishes their reputation and influence.
4. The staff specialists may be useless because they lack the authority to implement their recommendations.
5. This organizational style necessitates appointing many staff officers or experts in addition to the line officers, which is quite costly.
6. Although expert information and advice are available, they are delivered to workers through officers, increasing the likelihood of misunderstanding and misinterpretation.
7. Because staff managers are not held accountable for results, they may not be doing their tasks effectively.

Line managers solve problems more realistically. On the other hand, staff officials who are experts in their disciplines tend to be more theoretical, which may impede organizational coordination.

Functional Organisation

F.W. Taylor, who developed the Functional kind of organisation, overcame the challenge of the line organisation in getting a good chief executive. As the term suggests, the entire task of management and subordinate guidance should be split according to the type of work involved. Instead of dealing with management at a single location, the worker was to receive his daily orders and assistance from eight distinct bosses, four of whom were placed in the planning room and four in the shop. In the planning room, there are four specialists or bosses:

1. Route Clerk: Lay up the sequence of operations and teach the staff involved.
2. Instruction Card Clerk: Create precise instructions for many elements of work.
3. Time and Cost Clerk: Responsible for sending all pay information to employees and ensuring correct work returns.
4. Shop Disciplinarian: Handles matters of misconduct and absence. At the store level, there are four specialists or bosses:
   1. Gang Boss: Assemble and set up tools and machines and train workers to perform all personal motions immediately and efficiently.
   2. Speed Boss: Ensures that machines run optimally and workers use appropriate tools.
   3. Repair Boss: To guarantee that each worker keeps his machine in good working condition and that the area around him and his machines is clean.
   4. Inspector: To demonstrate to the worker how to perform the task.

F.W. Taylor pioneered functional organisation for planning and regulating manufacturing activities through specialisation. However, as Taylor recommends, functionalisation is limited to the organisation’s top.

Functional Organizational Characteristics

The following are the characteristics of functional organisation:

1. The enterprise’s work is separated into distinct functional departments, and each functional department is assigned to a different specialist.
2. The functional expert has the authority or right to issue orders concerning his function, regardless of where it is conducted in the organisation.
3. Under this approach, workers must get instructions from various professionals.
4. If anyone in the organisation has to decide on a specific function, they must consult with the functional specialist first.
5. Workers in this system must do a limited number of functions.

Benefits of Functional Organization

1. Expert knowledge underpins functional organisation. Every functionary in charge is an expert in his or her field and can assist subordinates in improving their performance.
2. Division of labour is intentional, not accidental.
3. This structure encourages worker cooperation and teamwork because there is no room for one-man management in this type of organisation.
4. This system ensures that mental and manual processes are kept separate.
5. It facilitates mass manufacturing through standardisation and specialisation.
6. This method ensures that the idea of specialisation is used to its full potential at all work points.
7. Because there is shared monitoring, functional organisation relieves the top executives of their responsibilities.
8. Functional organisations have more room for growth than line organisations. It does not have the problem of a few line managers having restricted competencies.
9. The functional managers’ specialised knowledge enables more excellent management and oversight in the organisation.

Advantages and disadvantages of functional organisation

1. It is unstable because it reduces disciplinary controls requiring employees to work for multiple supervisors. Thus, functional organisation breaches the idea of command unity.
2. In this sort of organisation, several foremen of equal rank are involved, which could lead to disagreements.
3. The co-ordinating influence required to ensure a properly operating organisation may incur significant overhead costs.
4. The failure to discover and fix blame may negatively impact worker discipline and morale through apparent or actual order contravention.
5. Because many specialists must be appointed, this system is quite expensive.
6. A functional manager tends to isolate himself and think primarily about his department rather than the entire organisation. As a result, dealing with company challenges becomes more difficult.
7. It is difficult for management to assign blame for poor performance.

Committee Organisation

Because it is administered only by a senior committee member, committee organisation has limited practical use as a technique of managerial control. However, committee organisations are frequently utilised to carry out management advising functions. Committees are often formal bodies with a defined structure. They have their structure. They are given specific responsibilities and authority.

A committee may develop strategies, make policy choices, or evaluate the performance of specific units. It may only have the authority to offer recommendations to a designated official in particular instances. Committees have grown to be recognised as significant instruments in modern industry and non-business organisations, regardless of the extent of their activity.

Objectives of Committees

Committees are formed to accomplish one or more of the following goals:

1. Consult with diverse people to obtain their perspectives.
2. Allowing numerous groups of individuals to participate
3. To ensure cross-departmental cooperation
4. To bring about unity of direction in the working of many departments and persons.

Types of Committees

1. Line committee: A-line committee can and should decide whose decisions are followed.
2. Staff committee: A staff committee is formed solely to consult and advise.
3. Formal committee: A formal committee is formed as part of the organizational structure and clearly defines jurisdiction.
4. Informal committee: An informal group is formed to guide on complex issues. It is not part of the organisational structure.
5. Coordinating committee: The committee’s purpose is to coordinate the operations of many departments.
6. Executive committee: This committee has the authority to manage the business’s operations.
7. Standing committees: These are permanent official committees.
8. Ad hoc committee: Ad hoc committees are transitory groups. They are assigned to deal with a specific problem and cease functioning once their task is completed.

Advantages or Merits of Committee

A committee is an excellent way to pool a group’s knowledge and experience. As a result, committees can address many multidimensional and complicated challenges in modern organisations that individual managers cannot adequately address.

1. Committees allow for group discourse and decision-making. Individual judgment is unlikely to produce better results than collective deliberation and group judgment.
2. When it is essential to combine diverse points of view that people cannot easily coordinate, the committee may be employed to achieve coordination.
3. Management can represent employees in various committees. Employees who believe they have a say in the organization’s operations will be motivated to perform better.
4. A committee-based organisation promotes the pooling of individual managers’ authority for making inter-departmental decisions.
5. A committee-based organisation promotes organisational cohesion. The committee philosophy is governed by group effort, team spirit, and collective accountability.

Disadvantages of Committee

1. If a manager can refer a matter to a committee, he may use it to delay or avoid the consequences of an unfavourable decision.
2. Occasionally, a committee may be unable to make the necessary judgement due to the members’ differing viewpoints.
3. Committees spend more time on procedural concerns before concluding. Slowness can substantially hamper organisational management in particular instances.
4. Committees are an expensive device in terms of both money and time.
5. When committee decisions compromise multiple points of view, they may be deemed weak and indecisive.
6. No committee member can be held individually liable for the committee’s incorrect judgment.
7. It is extremely difficult to keep the deliberations and judgments of a committee secret, especially when there are several members on the committee.

Differentiation

By differentiation, one understands the enterprise strategy of segmenting the market and then consciously tailoring oneself to the wants of various consumer groups to gain an advantage over competitors.

One of the three traditional competition strategies is differentiation. It is aimed at a large market and entails the development of a product or service that is considered distinctive throughout its sector. After that, the corporation or business unit may charge a premium for its goods. Differentiation can take several forms, including:

1. Prestige or brand image
2. Technology
3. Innovation
4. Features
5. Customer care
6. Distribution system

Differentiation is a potential technique for generating above-average returns in a particular industry since the resulting brand loyalty reduces customers’ price sensitivity. Cost increases are frequently passed on to buyers. Buyer loyalty can also act as an entry barrier; to compete successfully, new enterprises must build their particular competency to differentiate their products in some way.

Hero Honda, Asian Paints, HLL, Nike athletic shoes, Perstorp BioProducts, Apple Computer, and Mercedes-Benz vehicles are examples of successful diversification strategies.

Because differentiation provides a more significant entry barrier, research suggests that a differentiation approach is more likely to yield larger profits than a low-cost strategy. A low-cost strategy, on the other hand, is more likely to result in increased market share. This could be true or false.

Types of Differentiation Strategy

The differentiation strategy has two variations, which are as follows:

1. Shareholder value model: The shareholder value model states that the timing of the usage of specialised information can produce a differentiating advantage as long as the knowledge is unique. According to this model, clients purchase items or services from a company to have access to its proprietary information. Because the purchase is a one-time event, the benefit is static rather than dynamic.
2. Unlimited resources model: The unlimited resources model uses a large pool of resources to enable an organisation to outlast competitors through distinctiveness. A larger organisation can manage risk and suffer losses more quickly than a smaller organisation. This deep-pocket method only offers a short-term benefit. A company’s competitive position will not be sustained over time if it lacks the potential for continuous innovation.

The Benefits of a Differentiation Strategy

A differentiation strategy protects against numerous dangerous competitive forces, such as rivals, buyers, suppliers, potential entrants, substitutes, etc.

1. Competitors: Buyers build allegiance to the brand they choose.
2. Buyers: Reduces the bargaining power of large buyers since other products are less appealing.
3. Suppliers: The seller may be better positioned to endure supplier price increases.
4. Potential Entrants: Buyer loyalty works as an entry barrier for potential entrants.
5. Substitutes: Better positioned to fend off substitute threats based on client attachment to differentiating qualities.

What is the relevance of Hall’s studies in differentiation?

William K. Hall comprehensively examined 64 firms from eight key domestic industries. These industries were mature, operated under challenging settings, and saw below-average profitability and growth. Nonetheless, each had numerous highly profitable businesses.

Hall observed that the two top-performing (non-diversified) companies in each of the eight industries had adopted either a differentiation strategy with a high product/service/quality position or a low-cost approach, or both.

Although Hall defined two strategic thrusts, there are numerous ways to pursue each. Unlike General Motors and Goodyear, who attained their low-cost position through high market share and significant vertical integration, Inland Steel, Whirlpool, Miller, and Philip Morris relied on contemporary, automated process technology and efficient distribution systems.

Likewise, the “meaningful distinction” techniques used a range of approaches. Brand prestige, product quality, reliability, service, and distribution were all prominent positioning aspects.

Integration

An integration plan embodies a connected organisation. Integration wholly aligns with financial information objectives and modern comptrollership procedures for organisations and governments.

Designing an integration strategy requires a less organized and shorter strategy development attempt. This means the old strategy formulation process must be replaced with constant experimentation and solution prototyping. As a result, there is a “connected organisation.”

 

Business integration is not a single project’s final destination. It is all about connection and integrated performance information management. Organizations require consistent access to and exploitation of knowledge and information for a successful integration plan. It focuses on increasing the efficiency and effectiveness of the business processes. It enhances information quality and timeliness and gives information on demand and where needed, regardless of the source system. This kind of business agility cannot be attained simply by adopting integration technology on a project-by-project basis without a comprehensive strategy for how it fits together. Rapid business strategy implementation necessitates an enterprise-level integration strategy. Finally, the business integration approach saves time and money when managing information and resources.

Organizations that adopt a “knowledge perspective” to integrate processes and controls throughout the service delivery chain learn and exploit knowledge through interactions with clients, suppliers, and stakeholders. Integration strategy links horizontal processes and controls throughout the organisation by deploying your processes, systems, people, finances, geography, and delivery mechanisms to improve service delivery.

Another issue is that business integration is inherently tricky. Different integration technologies will be required for various sorts of projects. A single product or technology cannot meet all integration requirements. It is also not viable to meet all current and future integration needs with a single project. However, a purely tactical approach will necessitate the integration of integration technology at some point.

A business integration strategy aims to help the organisation work more intelligently. It provides a unified and consistent approach to integration, guiding implementation decisions and lowering costs on tactical projects while building the framework for business agility and future projects. An effective business integration plan will increase ROI while lowering the total cost of ownership over time.

Different Types of Integration

Integration can be of two types, as defined by the following discussion:

1. Horizontal integration: A business or corporation’s product selling strategy in multiple marketplaces. This sort of integration occurs when one firm is acquired by or merged with another firm in the same industry and production stage as the merged firm. For example, consider a vehicle manufacturer combining with another. Both companies are in the same stage of production and the same industry in this scenario. Horizontal integration provides the advantages of economies of scale, economies of scope, economies of stocks, and a strong presence in the reference market.
2. Vertical integration: Vertical integration connects companies through a hierarchical structure with a shared owner. Typically, each hierarchy member creates a unique product or (market-specific) service, and the products work together to meet an expected demand. Horizontal integration is opposed to it. There are three types of vertical integration: backwards (upstream), forward (downstream), and balanced (horizontal).

• Backward vertical integration occurs when a corporation owns subsidiaries that manufacture part of the inputs used to produce its products. A vehicle firm, for example, may own a tyre, glass, and metal company. Control of these three subsidiaries ensures a steady supply of inputs and consistent quality in their ultimate product. It was the primary business strategy of Ford and other automobile manufacturers in the 1920s, as they sought to reduce costs by centralising the production of automobiles and automobile parts.
• When a company controls distribution centres and stores where its products are distributed, it moves toward vertical integration.
• Balanced vertical integration means a company has complete control over all components, from raw materials to ultimate delivery.

The three types mentioned are abstractions; businesses use many nuanced variants. Suppliers are frequently contractors rather than legally owned corporations. Nonetheless, a client can effectively control a supplier if their contract only guarantees the supplier’s profitability. Partnerships in distribution and retail are similarly complicated and interdependent. Pure vertical integration via explicit ownership is uncommon in reasonably open capitalist systems – and dispersing ownership is frequently a risk-distribution tactic.

Barriers to and Advantages of Integration

To be successful, integration must overcome numerous obstacles. Such impediments could include:

1. Legal, as a result of varied legislative provisions for research in different member countries
2. Institutional refers to varying expectations at various government agencies or research institutions
3. Cultural, referring to various cultures of different member countries, linguistic
4. Professional, in terms of varying goals, working techniques, reward schemes, and outcomes among various professional groupings (for instance researchers and government officials)
5. Infrastructure, referring to incompatible knowledge exchange platforms
6. Financial, referring to various methods and quantities of funding for research and innovation

However, all of these barriers must be addressed because of the potential benefits of integration. The following are some of the benefits of integration:

1. Networked Business Models – linking value-exchanging organisations;
2. Sustainable Economies of Scale – applicable on a discrete and integrated basis;
3. Concentrate on Core Competencies – gaining skills and assets as needed and
4. Trusted Relationships – confidence between stakeholders and clients.