ORGANISATIONAL STRUCTURE

Submitted To: Submitted By:

Mr. Sumit Kumar Sarthak Kapoor

(19213229)
 ORGANISATIONAL STRUCTURE

An organizational structure is a system that outlines how certain activities

are directed in order to achieve the goals of an organization. These
activities can include rules, roles, and responsibilities.

The organizational structure also determines how information flows

between levels within the company. For example, in a centralized structure,
decisions flow from the top down, while in a decentralized structure,
decision-making power is distributed among various levels of the
organization.
TYPES OF ORGANISATIONAL STRUCTURE

1.Formal Organisational Structure

 Line organisational structure.
 Staff or functional authority organisational structure.
 Line and staff organisational structure.
 Committee organisational structure.
 Divisional organisational structure.
 Project organisational structure.
 Matrix organisational structure and
 Hybrid organisational structure.

2.Informal Organisational Structure

Formal Organisational Structure

Formal organisation is a well-defined structure of authority and
responsibility that defines delegation of authority and relationships
amongst the organisational members. It works along pre-defined
set of policies, plans, procedures, schedules and programmes.
Most of the decisions in formal organisation are based on pre-
determined policies.It is a deliberately designed structure with
formal authority, responsibility, rules, regulations and channels of
communication. Some degree of formalization is necessary for
organisations to function effectively; to avoid taking time-
consuming decisions, to handle conflicting situations and exercise
control over the activities of subordinates.
Merits:
1. It clearly defines objectives of the organisation and authority-
responsibility relationships amongst people to attain those
objectives.
2. It results in optimum utilisation of scarce organisational
resources.
Demerits:
1. Loss of initiative
2. Unsatisfied social needs

1.Line organisational structure:

A line organisation has only direct, vertical relationships between
different levels in the firm. There are only line departments-
departments directly involved in accomplishing the primary goal of
the organisation. For example, in a typical firm, line departments
include production and marketing. In a line organisation authority
follows the chain of command.

Features:
Has only direct vertical relationships between different levels in
the firm.

Merits:
1. Tends to simplify and clarify authority, responsibility and
accountability relationships

2. Promotes fast decision making

3. Simple to understand.

Demerits:
1. Neglects specialists in planning

2. Overloads key persons.

2.Staff or functional authority organisational structure:

A functional organization structure is a hierarchical organization
structure wherein people are grouped based on their area of
specialization. These people are supervised by a functional
manager with expertise in the same field. This expertise helps him
to effectively utilize the skills of employees, which ultimately helps
organizations in achieving its business objectives.

Merits:
1.Employees are grouped by their knowledge and skills,
which helps achieve the highest degree of performance.
2.Employees are very skilled. Efficiency is achieved because
they are experienced in the same work and they perform
excellently.

Demerits:
1.A highly-skilled employee costs more.
2.Employees may have little concern and knowledge about
events outside their department. This causes obstacles to
communication and cooperation.

3.Line and staff organisational structure:

Most large organisations belong to this type of organisational
structure. These organisations have direct, vertical relationships
between different levels and also specialists responsible for
advising and assisting line managers. Such organisations have
both line and staff departments. Staff departments provide line
people with advice and assistance in specialized areas (for
example, quality control advising production department).
Features:
1. Line and staff have direct vertical relationship between different
levels.

2. Staff specialists are responsible for advising and assisting line

managers/officers in specialized areas.

Merits:
1. Committee decisions are better than individual decisions

2. Better interaction between committee members leads to better

co-ordination of activities.

Demerits:
(ii) Staff officers may resent their lack of authority.

(iii) Co-ordination between line and staff may become difficult

4.Committee organisational structure:

A committee is a group of people who work collectively, discuss,
decide and recommend solutions to the problems (of a concern)
which possibly cannot be solved by an individual. A committee
consists of a group of men conversant with a subject; naturally
their advice will be much superior to that of one man.

Committees work very well in large complex corporate

organisations having multifaceted problems too big and too
complex to be dealt effectively by one person. In a committee,
ideas put forth by several persons are pooled and offered for
criticism; the ideas are developed and thus recommendations are
made as regards procedure and policies.

Merits:
1. A committee often performs worth-while tasks since two
experts are better than one.

2. A committee coordinates the efforts of the departments which

are represented (e.g., sales, production and engineering) in
development of a new product.

Demerits:
1. Sometimes it turns out to be true that what a committee
finishes in a week, a good individual may complete in a day.

2. It may be said that committee operations are slow and

committees tend to hang on for a considerable time.

5.Divisional organisational structure:

The divisional organizational structure organizes the activities of
a business around geographical, market, or product and service
groups. Thus, a company organized on divisional lines could
have operating groups for the United States or Europe, or for
commercial customers, or for the green widget product
line.Each such division contains a complete set of functions.
Thus, the green widget division would handle its own accounting
activities, sales and marketing, engineering, production,

This approach is useful when decision-making should be

clustered at the division level to react more quickly to local
conditions. The divisional structure is especially useful when a
company has many regions, markets, and/or products.

Merits:

1.Accountability. This approach makes it much easier to assign

responsibility for actions and results. In particular, a division is run by its
own management group, which looks out for the best interests of the
division.

2.Competition. The divisional structure works well in markets where

there is a great deal of competition, where local managers can quickly
shift the direction of their businesses to respond to changes in local
conditions.
Demerits:
1.Cost. When you set up a complete set of functions within each division,
there are likely to be more employees in total than would be the case if
the business had instead been organized under a purely functional
structure. Also, there must still be a corporate organization, which adds
more overhead cost to the business.

6.Project organisational structure:

A project organisation is a temporary organisation designed to
achieve specific results by using teams of specialists from
different functional areas in the organisation. The project team
focuses all its energies, resources and results on the assigned
project. Once the project has been completed, the team members
from various cross functional departments may go back to their
previous positions or may be assigned to a new project. Some of
the examples of projects are: research and development projects,
product development, construction of a new plant, housing
complex, shopping complex, bridge etc.
Importance:
1. Work is defined by a specific goal and target date for completion.

2. Work is unique and unfamiliar to the organisation.

Merits:

1.Project organization, based on team concept, is the best means

of getting the right things done right.

2.It leads to the development of strong team-work and teams with

identity fully with project goals.

Demerits:
1. A deliberate conflict is established between the project
officer and the existing department heads because of the
overlapping of authority delegation.
2. Rotation from project to project reduces employees’
loyalty to the parent functional department.
7.Matrix organisational structure:

It is a permanent organisation designed to achieve specific results

by using teams of specialists from different functional areas in the
organisation. 

It is more dynamic than functional Management that it allows

project team members to share informations more readily across
task boundaries, and it also allows increase in knowledge.
The matrix organizational structure brings the employees and
managers together to work on a specific goal which makes it
atypical.

Merits:

1. Decentralised decision making.

2. Flexible use of resources.

 Demerits:
1. High administration cost.
2. Potential confusion over authority and responsibility.
 8.Hybrid organisational structure:

Organizational structure defines the way in which the people

and resources are organized and coordinated by the
authority to achieve the organizational goals. The major
advantage of hybrid structure is the increased efficiency.
This structure makes sure that the right quantity of work is
assigned at the right time to the right professionals, thus
making the optimum use of resources and prevention of
waste. The hybrid organizational structure is more flexible
than divisional and functional structures.

Merits:

1. Functional expertise and efficiency.

2. Adaptability and flexibility in divisions.

Demerits:

1. Slow response to exceptional situations.

2. Conflicts between corporate departments and units.

 Informal Organisational Structure
An informal organisation is the set of evolving relationships and
patterns of human interaction within an organisation which are not
officially presented. Alongside the formal organisation, an informal
organisation structure exists which consists of informal
relationships created not by officially designated managers but by
organisational members at every level. Since managers cannot
avoid these informal relationships, they must be trained to cope
with it.
Merits:
1.Assists in accomplishing the work faster.

2.Assists in accomplishing the work faster.

Demerits:
1. Increases the time required to complete activities.

2. May work against the purpose of formal organisation.

THANK YOU