BCOC-132 BUSINESS ORGANISATION AND MANAGEMENT CHAPTER-11 DEPARTMENTATION AND FORMS OF AUTHORITY RELATIONSHIPS

on

 

BCOC-132 BUSINESS ORGANISATION AND MANAGEMENT CHAPTER-11 DEPARTMENTATION AND FORMS OF AUTHORITY RELATIONSHIPS

DEFINITION OF DEPEARTMENTATION
Definition:- organizing an organization’s activities into separate units(departments) for efficient functioning
Purpose of departmentation:-

  1. Specialisation:- allows organization to bene5it from specialized skill

  2. Role clarification:- helps individuals understand their roles in the organization

  3. Communication and coordination:- facilitate effective communication ,

    coordination and control

  4. Organizational success:- contribute to achieving organizational goal

Bases of departmentation:-
1. Function Departmentation :- commonly used , involving grouping activities

based on principle functions like production, sales, finance etc.

Advantages of functional departmentation:
• Logical and natural
• Promotes specialization for optimal resources use • Emphasize every department’s contribution
• Facilitate delegation of authority

Disadvantages:

  • Overemphasis on specialization

  • Potential conflict between departments

  • Coordination and control challenges

  • Risk of building fu functional empires by managers

2. Production Departmentation :-departments are created based on products,

useful for product expansion and diversification Advantages:

• Reduce coordination issues
• Integrates activities for specific product
• Facilitates product expansion and diversification

Disadvantages:

  • Duplication of physical facilitates and functions

  • Centralization advantage may not be achieved

  • Under-utilization if product demand is insufficient

3. Territory Departmentation:-organized by geographical areas , useful for banks, insurance ,transport companies

Advantages:-

• Bene5its of local operations
• Local managers understand needs • Better coordination in region

Disadvantages:
• Duplication of physical facilities lead to uneconomical operations • Integration problem between regional of5ices
• Lack of talented personnel in regions

4.Customer Departmentation:- departments created to serve specific customers needs

Advantages:
• Considers the needs of variety of customers
• Concentrates on clarify identified and potential customer • Easier development of rapport with attractive customers

Disadvantages:
• Almost impossible to consider all customers and their interests • Coordination problem between sales and production
• Potential discrimination between rich and poor customer

5.Process equipment Departmentation:- groups of activities based on manufacturing process, bringing similar labor and equipment together Advantages:

• Helpful when machine or equipment require special operating skill
• It better suited to manufacturing companies
• It enables the organization to gain advantages of specialization , optimum

Disadvantages:

• Departmentation by process makes coordination of various functions and product difficult

• Conflict between different managers at different levels

Choosing a Basis Of Departmentation

  1. Specialization:- importance specialization enhances internal economies, promoting

    efficiency , consideration: group activities for work specialization, avoiding

    excessive specialization to maintain motivation

  2. Economy:- relevance creating new departments increases cost(personnel, space,

    equipment)consideration: ensure new departments maximize resources utilization

    for maximum economy

  3. Appreciation of key areas:- importance proper attention to vital area crucial for

    business success. Functional departmentation often emphasizes key function like

    production , finance and marketing

  4. Minimum conflicts:- requirement clearly de5ine departmental jurisdiction to

    prevent conflicts, specialization clearly outline authority for different department

    mangers

  5. Coordination:- purpose departmentation aims for organizational goal achievement.

    Requirement coordination among departments is essential for goal accomplishment

  6. Control:- significance: control is crucial for guiding and checking department activities. Consideration: selected departmentation basis should ensure effective control for economical and efficient goal achievement

  7. Human consideration:- consider not only technical aspects but also informal groups, cultural patterns and values , weightage: give due to importance to human factor in grouping personnel

Benefits of departmentation:

  1. Specialization:-organizational activities are grouped according to speci5ic functions

    or objectives , leading to specialization. Departmental mangers specialize in

    assigned tasks

  2. Administrative control:- allows precise standards of performance for each

department. Facilitate effective control and helps in managing expenditure

3. Fixation of Responsibility:-since organization work is divided into manageable units and authority and responsibility are precisely defined it easer to 5ix accountability of different mangers for the performance and tasks

4. Freedom or authority:-departments become semi autonomous units with head having sufficient authority. Increases departmental efficiency

5. Development of management:- provides opportunities for managerial personnel to make independent decision and take initiatives , executives can develop themselves for higher roles

Authority Relationship

Line organization:

  • Represents a direct vertical relationship for 5low of activities

  • Known as scalar or military organization

  • Authority 5lows from top to bottom in an uninterrupted series

  • Provides a clear chain of command , communication, coordination and

    accountability Advantages:

    1. Simple to establish and understand
    2. Clear identification of authority and responsibility 3. Ensure better discipline
    4. Facilitate prompt decision -making
    5. Conforms to scalar principle

    Disadvantages:

    1. Concentration of authority at the top
    2. Limited communication from bottom to top
    3. No suitable for large organizations lacking specialization

    Line and Staff organization

    • Line authority moves down as in line organization
    • Specialists(staff) advise line managers without having command power
    • Staff assists with specialized knowledge in areas like budgeting, selection and

    training

    Merits:

    1. Line managers bene5it from staff specialization
    2. Issues ignored in line organization can be properly addressed 3. Staff specialist relive line managers of specialized functions
    4. Facilitates better decision-making with expert advice
    5. More flexible than line organization

    Demerits:
    1. Con5lict between line and staff is a signi5icant drawback
    2. Difference in viewpoint and perceptions lead to con5lict
    3. Line and staff may fail to appreciate each other    ’s challenges

Line and Staff Organization v/s Line Organization

Criteria Authority flow Flexibility Conflict
Decision making Specialization

Line Organization vertical
Limited
Rare Concentrated Limited

Line and Staff Organization Vertical with staff advice More flexible
Common (line v/s staff) Involves staff inputs

Utilize staff specialization

Functional organization:
• Midway between line and staff authority
• Specialists have limited command power over other departments concerning their

functions
• Activities are classified into functions like production, marketing , finance etc.

Merits

1. Specialization of work is achieved
2. Executive development is focused on one function 3. Reduces workload on top executives
4. Offers greater expansion scope
5. Facilitates better control and supervision

Demerits

1. Violation unity of command principles
2. Operations are too complicated for easy understanding 3. Specialization may lead to succession problems
4. Limited perspective on the overall enterprise
5. Delay in decision -making due to lack of coordination

Line v/s Functional Organization

Criteria
Authority 5lows Manger type
Unity of command Discipline Suitability

Line Organization vertical Generalists
Yes

Strict Small scale

Functional Organization Functional or diagonal Specialists
No

Loose
Large scale, specialized fields


Comments

Post a Comment