DJJ42022: INDUSTRIAL MANAGEMENT

PENSYARAH: ASPALILA BINTI AWANG

  1. The concepts of organization.
CHAPTER 1.0 :  2. The types of an organization
MANAGEMENT structures and their functional such
CONCEPTS as:
❑ a. Line, military or scalar
organization
Learning Outcomes 2:
THE ORGANIZATION ❑ b. Functional organization
STRUCTURES ( DK1 & ❑ c. Line and staff organization
DK4) ❑ d. Project organization
❑ e. Matrix organization.
THE ORGANIZATION CONCEPTS

 DEFINITION:
 A social unit of people that is structured
and managed to meet a need or to
pursue collective goals. All organizations
have a management structure that
determines relationships between the
different activities and the members,
and subdivides and assigns roles,
responsibilities, and authority to carry out
different tasks. Organizations are open
systems--they affect and are affected by
their environment.
  The term organisation means that a
functional group working together for
achieving common purposes/objectives.
 Organisation provides mechanism for
integrated and co-operative action by two
or more persons with a view to
ORGANIZATION implementing any plan. Organisation
facilitates efficient administration, direction
STRUCTURES and control.
 It avoids wastage of raw materials and
human efforts. Every management has to
Introduction establish its own organisation structure for
efficient conduct of business activities
 There are different structures which can be
given to an organisation. An organisation
deals with a number of elements which
defines the relationships between the
members of a group. It is concerned with
the channels of communication and lines of
authority.
 It also defines the degree of authority and
responsibility of each person in the
organisation.
  2. Definitions of Organisation

 An Organisation has been defined by E. F. L.

ORGANIZATION Breach as "a system of structural interpersonal
relationships. In it, individuals are differentiated in
STRUCTURES terms of authority, status and roles with the result
that personal interaction is prescribed, and
anticipated reactions between individuals tend to
Definition occur while ambiguity and spontaneity are
decreased".
 According to Louis A. Allen, Organisation is "the
process of identification 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".
 James Mooney defines organisation as "the form
of every human association for attainment of a
common purpose".
  Identifying the activities required to
achieve organizational objectives.
 Grouping up of these activities into
workable units (Departmentation).
 Assigning duties and responsibilities to
Organisation subordinates in order to achieve the tasks
assigned.
involves the  Delegating authority necessary and useful
following for the accomplishment of tasks assigned.
aspects:-  Establishing superior-subordinate
relationship.
 Providing a system of co-ordination for
integrating the activities of individuals and
departments.
 a. Line, military or scalar organization
b. Functional organization
The types of an c. Line and staff organization
organization
d. Project organization
structures
e. Matrix organization.
a) Line, military or Characteristics :

scalar  Line Organisation (also called Military/Scalar

Organisation) is the oldest and the simplest form of
organization internal Organisation structure. It was first
developed by the Roman army and later
adopted by armies all over the world. Factory
owners also used line Organisation structure in its
purest form in the nineteenth century in England.
 In the line Organisation, the line of authority
moves directly from the top level to the lowest
level in a step-by-step manner. It is straight and
vertical. The top-level management takes all
major decisions and issues directions for actual
execution. The general manager, for example,
issues order to various departmental managers.
Thereafter, the departmental manager issues
instructions to works manager. The works manager
will issue instructions to foreman. In this manner,
the orders and instructions will be issued to the
workers working at the lowest level. Thus authority
moves downward and also step-by-step. The
responsibility, on the other hand, moves in the
upward direction.
Advantages of  Simplicity: Line Organisation structure is easy to
Line Organisation understand and follow by superiors and
subordinates. It is simple and clear as regards
Structure authority and accountability.
 Prompt decisions: Line Organisation facilitates
prompt decision-making at all levels as the
authority given is clear and complete.
 Discipline: It brings discipline in the Organisation
due to unity of command, delegation of authority
and direct accountability.
 Economical: Line Organisation is economical as
experts are not appointed.
 Attraction to talented persons: Line Organisation
brings out talented workers and develops in them
quality of leadership. It offers opportunities of self-
development to employees.
 Quick communication, high efficiency, flexibility
and high employee morale are some more
advantages of line Organisation structure.
Limitations of Line  Heavy burden on line executives: The line executives are
given too many duties and responsibilities. Even the
Organisation quality of the decisions of executives may suffer due to
heavy burden of duties and responsibilities.
Structure  Non-availability of services of experts: There is absence of
skilled experts in line organisation. Expert assistance is not
available promptly when needed by line executives.
 Favoritism: There is wide scope for favoritism and nepotism
in the line organisation. Leadership of departmental
executive is autocratic due to heavy concentration of
powers. He may favour some employees at the cost of
others.
 Too much dependence on limited executives: In the line
organisation, all powers are concentrated in the hands of
a few executives. Naturally, the success and stability of
the entire organisation depends on their personal skill,
initiative and interest. Special difficulties arise when one
executive is to be transferred/replaced/promoted.
 Rigidity: There is rigidity in the working of line organisation.
 Delays in communication, limited freedom to employees
and unsuitability to modern large business units are some
more demerits of line Organisation.
 Characteristics :

Functional A Structure based on employee functions. It

Structures based ion different functions such as
marketing, finance, human resources and
Internet Technology. Each department
focuses exclusively on their own function. A
department may fixate on its own function,
its own budget and its own goals with no
thought for the company as a whole. Even
when problems require solutions from
multiple departments, they may not
cooperate.
Merits of
 Facilitates specialization: Functional Organisation
Functional structure facilitates division of work and specialization.
Each boss has specialized knowledge of his functional
Organisation area. He is in a better position to guide and help the
workers.
Structure  Benefits of large-scale operations: Functional
Organisation offers the benefit of economy of large-scale
operation. In this Organisation, one administrative unit
manufactures all products. The available machinery,
equipment and facilities are used fully for large-scale
production.
 Facilitates effective coordination: Functional Organisation
facilitates effective coordination within the function. This is
possible as one boss is in-charge of a particular function
and he looks after all activities, which come within that
function.
 Operational flexibility: Functional Organisation possesses
operational flexibility. Necessary changes can be
introduced easily to suit the needs of the situation without
any adverse effect on the efficiency.
 Ensures effective supervision: Functional Organisation
facilitates effective supervision by the functional heads
and foremen. Due to specialization, they concentrate on
the specific functional area and also keep effective
supervision on their subordinates.
Demerits of
Functional  Absence of unity of command: Unity of command is
absent in the functional Organisation as each worker
Organisation gets orders and instructions from several bosses.

Structure  Fixing responsibility is difficult: In functional

Organisation, responsibility is difficult to fix on a specific
person. This is because the responsibility itself is divided
among many.
 Unsuitable to non-manufacturing activities:
Functional Organisation can be introduced in the case
of manufacturing activities. However, its application to
non-manufacturing activities such as marketing, etc.
has not been successful.
 Costly: Functional Organisation is costly, as more
specialists are required to be appointed.
 Creates confusion among workers: Functional
Organisation is based on specialization as function is
taken as a base for dividing the work. The authority is
overlapping the responsibility is divided. This confuses
workers.
 Conflicts among foremen, delays in decision-making
and limited discipline within the departments are some
more demerits of functional Organisation.
 In the line and staff Organisation, line executives
Line and Staff 
and staff (specialists) are combined together. The
line executives are 'doers' whereas staff refers to
Organisation experts and act as 'thinkers'. The following chart
shows line and staff Organisation structure:
Structure
 Staff specialists are regarded as 'thinkers" while
execution function is given to line executives who
are "doers". The staff is supportive to line. The staff
specialists offer guidance and cooperation to line
executives for achieving organizational
objectives. This reduces the burden of functions
on the line executives and raises overall efficiency
of the Organisation. For avoiding the conflicts
between line and staff, there should be clear
demarcation between the line and staff functions.
This avoids overlapping of functions and possible
conflicts. In short, the line and staff functions are
different but are supportive and can give positive
results if adjusted properly i.e. by avoiding the
conflicts. They suggest/recommend but have no
power to command the line executive. However,
their advice is normally accepted because of
their status in the Organisation.
  Planning and execution: There are two aspects of
administration in this Organisation, v iz., planning and
execution.
 Combining line and staff: Planning function is entrusted
to staff specialists who are 'thinkers' while execution
function is giv en to line executiv es who are 'doers'. The
Characteristics of staff is supportive to line.
 Role of authority: The line managers hav e authority to
Line and Staff take decisions as they are concerned with actual
production. The staff officers lack such authority.
Organisation  Guidance from staff: The staff prov ides guidance and
adv ice to line executiv es when asked for. Moreov er, line
executiv es may or may not act as per the guidance
offered.
 Exercising control: The staff manager has authority over
subordinates working in his department.
 Scope for specialization: There is wide scope for
specialization in this Organisation as planning work is
giv en to staff and execution work is giv en to line
executiv es.
 Possibility of conflicts: Conflicts between line and staff
executiv es are quite common in this Organisation but
can be minimized through special measures.
 Suitability: Line and staff Organisation structure is suitable
to large-scale business activ ities.
  Less burden on executives: Line executives get the assistance
of staff specialists.This reduces the burden of tine executives.
This raises overall efficiency and facilitates the growth and
expansion of an enterprise.
Merits of Line and  Services of experts available: The benefits of services of
Staff Organisation experts are provided to line managers. Highly qualified
experts are appointed and they offer guidance to line
executives.
 Sound decision-making: Line and staff Organisation facilitates
sound management decisions because of the services of
experts and specialists. The decisions are also taken in a
democratic method i.e. in consultation with the experts.
 Limited tension on line managers: The pressure of work of line
bosses is brought down as they are concerned only with
production management.
 Benefits of specialization: There is division of work and
specialization in this Organisation. Naturally, the benefits of
division of work and specialization are easily available.
 Training opportunities to employees: Better opportunities of
advancement are provided to workers. The scope for
learning and training for promotions are available.
  Delay in decision-making: The process of decision-making is delayed,
as line executives have to consult staff experts before finalizing the
Demerits of Line decisions. The decisions of line managers are likely to be delayed due
to this lengthy procedure.
and Staff  Buck passing among executives: The line bosses are concerned with
actual execution of work. However, they depend on staff experts for
Organisation guidance. If something goes wrong, the attempt is made to pass on
the blame by one party to the other. Thus, there is shifting of
responsibility or buck-passing.
 Conflicts between line and staff executives: In this Organisation,
quarrels and conflicts between line managers and staff specialists are
quite common. The line managers are generally not interested in the
advice offered by experts. Secondly, specialists feel that the line
bosses lack knowledge of new ideas. Such conflicts lead to bitterness.
 Costly Organisation: Line and staff Organisation is a costly
Organisation as the line executives are supported by highly paid staff
executives who are experts. All this adds to the overhead expenses
and the cost of production increases.
 Complicated operation: This Organisation is too complicated in actual
operation because of dual authority, division of functions and too
much dependence on staff. The unity of command principle is
violated.
 Internal discipline is affected adversely: The internal discipline is likely
to be affected adversely due to decentralisation and division of
loyalty of subordinates.
  In project organizations, organizations
arrange their activities into programs or
Project portfolios, and implement them through the
organization projects.
 This is one of the main benefits of project
organized structure, as they are adaptive
and learn from their own as well as from
others’ experiences.
 Most of the resources are utilized in the
project work. It only interested in the project
work which they get from external clients.
Usually they have some small departments
such as Admin, Accounting, and Human
Resources to support the project
management activities.
Advantages of a
Projectized
Organized  Since the team members directly report to the
project manager, there is a clear line of authority.
Structure This reduces conflict, and makes decision making
faster and more flexible.
 Due to a single reporting system, there are shorter
lines of communication which creates strong and
effective communication within the project
management team.
 Due to a single authority, less time is consumed in
communication, and response to stakeholders’
concerns is fast.
 Due to a sense of urgency, milestones, good
communication, and cooperation, the learning
curve is faster for any new member.
 Team members become versatile and flexible due
to experience in different kinds of projects.
Disadvantages of
a Project  Since the project manager has full authority and
power ov er his team members, he can become
Organization arrogant. A lack of power is a problem for project
managers in functional organizations, while
Structure abundance of power of a project manager can be a
problem for team members in project organizations.
 In projects, there is always a deadline and usually a
tight schedule, which makes the work env ironment
stressful.
 If the organization has multiple projects, there can be
poor communication among them, causing resources
to be duplicated.
 There is a sense of insecurity among the team
members, because once the project is completed,
they feel that they may lose their jobs. Therefore, they
tend to be less loyal towards the organization.
 The cost of employees and equipment can be higher
because skilled people and specialized equipment
may be hired for a shorter period of time. Moreov er, if
the project gets stretched out, the cost of equipment
and other resources can be much higher.
Characteristics of
a Project
Organization
Structure  The project manager has full power
and authority over resources to be utilized
in the project. He controls the budget,
resources, and work assignments.
 The project manager has full-time team
members working under his control who
directly report him.
 When the project is completed the
team is disbanded, and team members
and all other resources are released.
MATRIX
ORGANIZATION  A company structure in which the
reporting relationships are set up as a
grid, or matrix, rather than in the
traditional hierarchy. In other words,
employees have dual reporting
relationships - generally to both a
functional manager and a product
manager.
  Resources can be used efficiently, since
Advantages experts and equipment can be shared
across projects.
 Products and projects are formally
coordinated across functional
departments.
 Information flows both across and up
through the organization.
 Employees are in contact with many
people, which helps with sharing of
information and can speed the decision
process.
Disadvantages
 Mid-level management having multiple
of matrix supervisors can be confusing, in that
organizations competing agendas and emphases can
pull employees in different directions,
include: which can lower productivity.
 Mid-level management can become
frustrated with what appears to be a lack
of clarity with priorities.
 Mid-level management can become
over-burdened with the diffusion of
priorities.
 Supervisory management can find it more
difficult to achieve results within their area
of expertise with subordinate staff being
pulled in different directions.