Chapter 3 Organisation and

Organising

Chapter Index

S. No Reference

No Particulars

Slide

From-To

1 Learning Objectives 3

2 Topic 1 Concept of Organisation 4-7

3 Topic 2 Types of Organisations 8

4 Topic 3 Organisational Theories 9

5 Topic 4 Concept of Vision, Mission and

Organisational Objectives 10-12

6 Topic 5 Organising-A Basic Function of Management 13-15

7 Topic 6 Concept of Organisational Structure 16-19

8 Topic 7 Corporate Restructuring – A Tool to Modify

Organisational Structure 20-21

Learning Objectives

Explain the concept of organisation

Describe the types of organisations

Elaborate on organisational theories

Discuss the concept of vision, mission and organisational objectives

Explain the importance of organising as a managerial function

Describe the concept and types of organisational structure

Elaborate on corporate restructuring and its importance

Concept of Organisation

An organisation refers to a structure in which people come together to attain

some common goals.

In an organisation, the individual goals are foregone for the group goals and

the group goals are compromised for organisational goals so the maximum

benefit can be derived by using limited available resources.

A system is defined as a group of independent but interrelated components. Five

independent and interrelated components of an organisation are:

Task

People

Structure Technology

Environment

Organisation as a System

Characteristics of an Organisation

Strong employee involvement

Forming alliances

Developing team culture

Mindfulness towards the change in environments

Resources

Influence

Security

Tenacity

The 7s Framework

Structure

Systems

Style

Skills Staff

Shared Value

Strategy

The 7-S Framework of an Organisation

Types of Organisation

The different types of organisations are:

Bureaucratic Organisation

Democratic Organisation

Participative Organisation

Pyramid Organisation

Simple Organisation

Matrix Organisation

Strategic Business Unit (SBU)

Virtual Organisation

Organisational Theories

Organisational theory describes the functioning and performance of an

organization as well as the behaviour of individuals working in it. The three

main organisational theories are shown in the below figure:

Types of

Organisational Theories

Classical

Theory

Neoclassical

Theory

Modern

Theory

Concept of Vision, Mission and Organisational Objectives

Vision refers to the long-term goals of

an organisation. It describes the

aspiration of the organisation for the

future but does not describe the

means to achieve it.

A vision statement refers to the clear,

concise and inspiring statement that

consists of the vision of the

organisation in a written form.

Concept of Vision

Mission is the purpose or reason for the organisation’s existence. The below figure

illustrates the process of creating a mission:

Formulating

a Mission

Defining the

Business

Analyzing

the Vision

Statement

In this step, the vision statement is analysed to define the long-

term goals of an organisation. Thus, mission is formulated

based on these long-term goals.

Concept of Mission

This step focuses on the identification of: Scope of the

business; Stakeholders of the business; Purpose of the

business; Customers of the business; Products and services of

the business; Techniques and methods employed in the

business.

This step involves preparing the mission statement based on

the: Strategies for future operations; Key values of the

business; Code of Conduct for the business operations

Organisational Objectives include the targets including vision and mission

statements; identifying activities necessary to be performed and assigning

those activities to capable individuals; and empowerment.

Concept of Organisational Objectives

Organising: A Basic Function of Management

According to Louis Allen, organising is the process of identifying

and grouping the work to be performed, defining and delegating

responsibility and authority, and establishing relationships for the

purpose of enabling people to work most effectively together in

accomplishing objectives.

Determining

Activities

Grouping

Activities

Assigning

Duties

Delegating

Authority

Coordinating

Activities

Organising Process

The steps involved in the organising process are:

Principles of Organising

Principle of unity of command

Principle of work specialisation

Principle of departmentation

Principle of span of management

Principle of a scalar chain

Principle of unity of purpose

Principle of authority and responsibility

Principle of navigation and synergy

Principle of team spirit

Following points explain the purpose of organising:

Purpose of Organising

Departmentation

Co-ordination

Work simplification and specialisation

Organisational hierarchy

Concept of Organisational Structure

Organisational structure is a hierarchy in which a group of people co-ordinate

with each other to accomplish the common goal of the organisation. The

organisational chart is shown in the below figure:

After delegating the roles and responsibilities to individuals, a relationship among

the various positions and functions in an organisational structure is graphically

illustrated in the organisational chart, which is shown in the below figure:

The different types of organisational structures are as follows:

Different Types of Organisational Structures

Line organisational structure

Line and staff organisational structure

Functional organisational structure

Divisional organisational structure

Project organisational structure

Matrix organisational structure

Elements of Organisational Structure

Centralisation

&

decentralisation

Departments

Chain of

command Span of control

Work

Specialisation

Formalisation

Corporate Restructuring – A Tool to Modify Oranisational Structure

Corporate restructuring refers to modifying the existing structure of an organisation

to increase its efficiency. Corporate restructuring is classified as

It refers to the

changes in

ownership by the

way of mergers and

acquisitions,

leveraged buy-outs,

spin offs, joint

ventures, strategic

alliances and

buying back of

shares.

It is a restructuring

in which ownership

remains unchanged;

however, the way of

carrying out business

is modified.

Ownership

restructuring

Business

restructuring Asset restructuring

It involves the sale of

assets to change the

ownership

composition of the

organisation.

Merger refers to the corporate strategy dealing with the purchasing, selling and

combining of two or more organisations. Merger can be usually classified into:

Mergers

Horizontal merger

Vertical merger

Conglomerate merger

Merger