Creating an Organigation

8/3/2019 Creating an Organigation

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CREATING ANORGANOZATION

PREPARED FOR:MOHAMMAD BADRUZZAMAN BHUIYAN.LECTURER

DEPARTMENT OF ACCOUNTINGCOMILLA UNIVERSITY

PREPARED BY:

CONSIST OF:FARDUS MAHMUD-12 (GROUP LEADER)TAPSHI RABEYA-44 (ASST. GROUPLEADER)UMMAY TASLIMA-02 (MEMBER)SIRAJUM MONIRA-03 (MEMBER)SANOWAR HOSSAIN-29 (MEMBER)

DATE OF SUBMISSION:



30 SEPTEMBER 2007 1. What an organization is & why it

necessary? Some people wanted to organize a

business. First, they make a plan to organize the business. They fixed their goal. To attain the goal they have to taketime, energy & money to develop quality plan needs toorganize its employees. Otherwise, they will not be able toreach their goal.

Generally, origination means groups of people who arecombining to achieve a specific goal.

Weihrich & koontz defined organization as a1. Identification & classification of required

activities.2.The groping activities necessary to attain

objective.3. the assignment of each grouping to a manager

with the authority necessary to supervise it &4. The provision for coordination horizontally &

vertically in the organization structure.Therefore, we can say that, organization is harmonious

adjustment of specializedparts for the accomplishment of some common purpose or

purposes.

WHY IT IS NECESSARY We know that organization is a group of people.

Who are combined to achieve a specific goal. We knowplanning is important for an organization. Only planningcannot ensure the success of an organization. However, agrope of people may take time, energy & money but withoutorganizing them, they cannot start their business. Theseelements should be organized. Staff & employees need toorganize to attain the organizational goal. That means

Organization provides a structure that makes

clear who has responsibility for all task &who reports to whom.Beside these, there are some questions-



- Who will do what types of work?- Who will give order?- Who will supervise them?- To whom they will report.

By creating & organization above question, become clean.Organization is the management function of

assigning activities & grouping people so that the firm’sobjective can be accomplished. In case of large organizationthere need specialization. Some types of organizationstructure is needed for things to run smoothly. Manager mustplan & implement the way a business will be organized. Eachfirm believes that a particular organizational structure worksbest.

2.LIST & DESCRIBE THE STEPS INTHE ORGANIZING PROCESS

Managers build & modify organizations by usingthe organizing process. To create an organization we have tofollow the steps-

STEP-1: Consider objective & plansObjectives & plans are the starting point.

Objectives mean the purpose that organization have or willhave. Managers begin the process by examining the objectiveof the organization. As a result

- objectives are being developed- new departments may be created

-old one may be given new responsibility

STEP-2: Determining the necessary work activities

After identifying the objectives manager,determine what work activities are necessary to accomplishthe identified objectives creating a list of tasks to beaccomplished. Thus, tasks may be on going that means dailyworks, as hiring, training & record keeping. Others taskinclude assembling, machining, shipping, sorting, selling,advertising. Manager ready to classify these works into manywork units. Manager fix what works must be done.

STEP-3: Classify & group activities



In this step manger fix what tasks will performedby which department. Then he makes group & divide thesetasks into related areas. Than he establish the basicdepartment design for the organization structure.

As example selling, advertising, shipping & storingcan be considered as marketing related activities.

Assembling, cutting, machining, welding, paintingare manufacturing process.

Hiring, training, developing, and recruiting arepersonnel relate activities. STEP-4: Assign work & delegate appropriateauthority

After classifying & group activities, a manager

informs the worker & assigns their work. That means worksare being divided among the workers. As they know what theyhave to do. They are given appropriate authority on therework to accomplish the task. As example accounts officer maycheck the accounts. He has to give the right to do so.

STEP-5: Design a hierarchy of relationshipThis is the last step of the organizing process. In

this step manager, complete the vertical & horizontal

operating relationship of the organization as a whole.Vertical structure shows a decision-making hierarchy that

shows who is in charge of each task of each specialty area.Horizontal structure shows working relationship between

operating department & it makes the final decision on thespan of control.

3.IDENTIFY THE FORMS OFDEPARTMENTALIZATION & THE SITUATIONS

IN WHICH EACH WOULD BE APPROPRIATE In the third process of building an organization, necessary

activities are classified & grouped into related work unit suchas production, marketing, finance, personnel etc. To do suchdepartmentalization is created. In simple words, we can saythat departmentalization is the process where it creates adepartmental structure for the organization. This structureshows how to form groups, departments & divisions than

according to the objectives of the organizations.



We can divide into four categories of thedepartmentalization. Now in the following we will discussabout the forms of departmentalization with a figure, whichshows the methods of departmentalization.

Functional departmentalization:Functional departmentalization

means a structure in which each unit or department has adifferent set of activities & responsibilities. There are somecommon function of each organization. Such as production,finance, marketing, personnel etc. we can say them the majorheadings. Under the major headings there are also have somefunctions. For example in a manufacturing firm, can beconsidered engineering, manufacturing & marketing would be

separate department. Selling, advertising, storing, shippingcan be considered marketing activities & they are groupedunder the marketing heading. Because of separatedepartment functional experts becomes even more skilled intheir areas. Functional departmentalization clearly draw thelines between the functionalAreas.

Geographic or territorial

departmentalization:Territorial departmentalization

groups activities & responsibilities according to geography.Specifically we can say that territorial departmentalization issuch kind of departmentalization in which units are dividedbased on territory or geographical region. Thisdepartmentalization divisions when companies expand theirbusiness in various parts of the country because of favorable

labors, materials costs, tax incentives, easy transportationsystem or the need to be near customers to serve themquickly & efficiently. If we look at the figure, we can see thedivisions-the eastern region & western region- that illustratethis method. Each division operates like an independentbusiness. Division managers have authority to take advantageof regional costs, resource & competitive conditions.

Product departmentalization

Product departmentalizationassembles the activities of creating, producing & marketing



each product into one department. That is all the productrelated activities are included into the Productdepartmentalization. Product departmentalization isconsidered that is product requires a unique marketingstrategy, production process, distribution system etc. In thefigure we can see that typewriters and calculator departmentassembles their activities in to one department that meansproduct department.

Customers departmentalizationCustomers departmentalization are

formed from the customers point of view it main objective isto fulfill the customers demand. In this case, customers’departmentalization considers the customer choice,

inclination, situation, demand etc. When a company marketthere product different types of customer can consume them.Such as Government. Retail, hospital etc. Each of thiscustomer groups has a different set of demands, bees andpreferences. In turn, each requires a different set of approach,customs and operations.

4.DEFINE AUTHORITY & EXPLAIN

THE DEFERENCES AMONG LINE, STAFF, &FUNCTIONAL AUTHOTITY.

AUTHORITY:In an organization manager, accomplish organizationalactivities by subordinates. So manager have to supervisethem. As a result, they need authority. Authority means rightto control subordinates. All managers have authority.Authority varies from level to level. Authority is a managerial

tool; it can be described as the right to commit resources orlegal right to give orders. Legal right to give orders means tellsomeone to do or not to do something.Authority is the “glue” that holds organization together. Itcomes from top level & goes to lower levels that mean chainof command. Authority is fixed in manager because of position& they occupy the organization.

There are three types of authority:

1. line authority2. staff authority



3. functional authority

Line authority:Each position in managerial hierarchy has line authority or

direct authority over lower level in hierarchy. A manager withline authority is the unquestioned superior for all activities of his or her employees. Line authority defines the relationshipbetween superior & subordinate. It is direct supervisory.

Staff authority:In staff authority, manager gets assistance from an advisor.

Advisor only can provide advice or technical knowledge. Theycannot dominate or obligate manager.

Functional authority:Functional authority is the authority to make decisions on

specific activities that are undertaken by personnel in otherdepartments. A personnel manager must monitor & reviewcompliance in operating departments for recruitment,selection, & performance appraisal systems.

5.RELATE THE CONCPT OFDELEGTION TO AUTHORITY, RESPONSIBILITY & ACCOUNTABILITY.

Delegation takes place for two reasons- When companyexpands & more employees here or managers fell the need of skill ness of subordinates. Superior delegates authority tosubordinates to perform duties successfully. It is alwaysrelated to formal authority. From the definition, we can seesome steps are maintained in delegation.

Lets we describe the sequence of events, which arecreated in delegation:

Step-1:Assignment of task:At first manager should identify the specific duties for specificemployees or departments & allocate it. When it becomespossible than all employees are responsible for their tasks.

Step-2:Delegation of authority: To complete their tasks or duties they need proper authority.However, it should be considered that authority & duties mustbe equal. If less authority is given to the subordinates, theycannot perform their duties for lack of right. On the other hand

if more authority is given they may misuse of there right.



So superiors must be conscious when delegate the authority.

Step-3: Acceptances of responsibility:To describe the point we must describe what responsibility is.

Responsibility means the obligations or bindings to thesuperiors for ones specific duties. When any person acceptsany duty, they are responsible to perform this by their bestability. In the delegation process, a manager to an employeedoes not delegate responsibility. An employee becomesresponsible when the superiors accept the assignment. Whenemployee receives, duties & delegate authority thanresponsibility emerge naturally.

Step-4: Creation of accountability:Accountability means a practice to answer someone for

actions. Either it means gets the result of doing works- creditor blame. When the manager identifies and allocates dutiesspecifically than it is easy for accountability. Whensubordinate take duty & authority, they will be accountable,answerable for action taken. A manager is accountable for twotimes first time manager is accountable for there authority &performance. Second time for the performance of theirsubordinates.

6.EXPLAIN THE ORGATIONALCONCEPTS OF SPAN OF CONTROL.

SPAN OF CONTROL:Span of control means diversity of the number of

subordinates a manager supervises. Span of control is the onekind of principal, which is necessary for the betterment of organization to achieve the goal. It limits the number of subordinates reporting to a supervisor. For solving any types

of problem, controlling power is diversified among variouspeople. It is called span of control.

The exact number for each manager is determined by-

The complexity & variety of thesubordinates work.

The capacity of manager

The ability & training of thesubordinates



The supervisor’s willingness todelegate authority

Therefore, we can say that the principal of organization thatlimits the number of subordinates reporting to a supervisor.

7.DIFFERENTIATE AMONG LINE,LINE & STAFF, FUNCTIONAL & MATRIXORGANIZATION STRUCTURE.

Formal organization is an organization where those who haveauthority, responsibility & accountability create themanagement. The formal organization structure is displayed inthe organization chart. Formal organization structure isdeveloped by companies to help achieve their specific

objectives. The organization structure selected by anorganization will depend on its objectives, resources, stage of development, & philosophies of management. There are fourtypes of formal organization structures developed bymanagers. Four types of formal organization & theredifference are fully explained with diagram is given below-

Line organization The line organization structure is the simplest & the oldest

form of organization. In the line organization, structurerelationship is created between superior & subordinate. Theline organization is based on direct authority. Lineorganization is an organization where direction is providedfrom top-level management to lower level management. Eachmanager is responsible for making his or her own decisions. Inmaking these decisions, the manager is responsible forcollecting & processing his or her information without any helpof specialists or staff advisors. The line organization is mostapplicable to small organization but it is not applicable for bigorganization because of complexity, lot of employees, scopeof operations. This organization also called militaryorganization.

Line & staff organizationThis organization consists of line organization & staff personal

& the staff personal provide advise to the line management todo their work effectively. Staff departments & theiremployees’ advice the line personal than the line manager s



make decisions &then take actions directly affect the firm’sperformance. So we can see that in this organization staff personal has no power to make a decision, they only have thepower to advise. In the line & staff organization structure,there are three types of authority. Such as –

Line authority: Line managers’ passes or control lineauthority- direct supervisory authority over their departments& operations. They have the authority to make decisions & tocompel action.

Staff authority: Staff managers control the staff authority. Their objective as to advise line managers. They donot have the authority to give order or make decision.

Functional authority: Some staff managers are givenfunctional authority. They have the authority to makedecisions on specific activities.

Functional organizationFunctional organization structure is a structure is onorganization structure where management provide expert togive technical advice to each workers. One person is not ableto do work effectively like one expert separate supervisor.

Different types of technically skilled supervisors in thisstructure supervise different types of element of anorganization.

Matrix organizationMatrix organization has received increasing attention in resentyears. Matrix organizational structure means a group of manyspecialists from different departments or divisions to work onspecial project. When the project is completed, the specialists

either return to their control area or engaged to anotherproject. In this structure to fore a group members are selectedfrom the different departments & are supervised for theduration of the project by the project manager. For itscharacteristics. It is also called project organization structure.

Difference among four types of organizational structure

Authority: In the line, organization subordinate has no power &

superior has the total authority to control the organization line& staff organization specialized or expert have no authority to



control, line management has this authority. In the functionalorganization because of separate supervisors has theauthority & in the matrix organization specialists has theauthority to perform every activity.

Decision-making:In the line organization, decision can be

made faster. In the staff & line, organization decisions can bedelayed for research. In the functional organization, decisioncan be made faster for separate expert. In the matrix,organization decisions can be delayed because of specialists’research. Skilled specialists:

In the line organization, do not have special

skills to perform as effectively. In the line & staff organizationmanagement, provide expert thus the organization haveskilled specialists. However, separate tasks are given toseparate specialists so they become skilled person. In matrixorganization, specialists of different department form a group.In matrix organization, a project team composed of skilledmember from major departments. Uses:

Line organization is applicable for small & easytypes of organization. Line & staff organization is applicablefor large & complex organization. Functional organization isused for the betterment of six element of production. To solvea project matrix organization structure is used.

Flexibility:Line organization structure, there is no scope

of flexibility. In line & staff organization, subordinate can helpsto open different department & can change if it is necessary.In the functional organization each & very tasks are beingdone by specialist, as a result they can change in their ownfield if they want.

EXPLAIN THE NATURE OF THE INFORMALORGANIZATION

Man is social being. Naturally, they talk to

each other. When they live or work together in an area theycommunicate & share their views, it is the grapevine of



informal communication. From informal communication,informal organization arises.

Informal organization is the network of personal & social relationship that emerges naturally in thegroup employees of an organization. It organizes or crate bylaunch bunch bowling team, meeting & conversation afterofficial work.

Informal organization is not mandatory frommanagerial structure. It is voluntary. It totally depends onmember’s wish. Manager cannot control the informalrelationship of the employees. Employees naturally create aninformal organization to interact & develop relationship. Ininformal organization, different department & levels

employees come together & share their views & information.Their main purpose find commonalities

support & assist each other satisfy needs. It helps to maintainequality of the employees, do all work successfully, andprovide stability, support managers.

When they discuss among themselves manyinformation come & their hesitation remove about many task& rumor.

Information collected from

Business for

the 21

st

century * (Skinner & Ivancehvich) Introductionto business * (Straub & Attner)

Principle of management * (Stephen P. Robins)

Documents

Creating an Organigation