Chapter - 12

Design of
Organisation
Structure
Organization Structure
 “Organization structure is a pattern of
relationships about various
components or parts of the
organization it prescribes the
relationships among various activities
and positions”
Features of Good
organization Structure:
 Simplicity
 Flexibility

 Clear line of Authority

 Application of ultimate

responsibility
 Proper delegation of Authority
Features of Good
organization Structure:
 Minimum possible managerial
levels
 Principals of unity of direction

in Command
 Proper emphasis on staff

 Provision for top management

 Departmentation:
 The first task in designing an
organization structure is the
identification of activities and
a group them properly. The
process of grouping the
activities is commonly known
as Departmentation.
Need and importance of
Departmentation
 Advantages of
specialization
 Fixation of
responsibility
 Development of
managers
 Facility of appraisal
 Feeling of autonomy
Bases of Departmentation

 Function
 Product
 Territory
 Process
 Customer
 Functional Departmentation
BOD
BOD

MD
MD

Production Marketing Finance Personnel

MR

Sales

Advertising

News Paper

Radio

TV
 Product Departmentation

Chief executive

Mid Class Sedan Segment. SUV

Production Marketing Finance Personnel

 Territorial Departmentation of Nissan

Head office
(Mumbai)

Northern Zone
Eastern Zone (Delhi)
Southern Zone Western Zone

Jalandhar Roorki haridwar Meerut

Branch Branch
Process Departmentation

Manager
(production)

Structure assembling finishing

Customer
Departmentation

Marketing Manager

Direct customer Corporate Customer Transport customer

 Span of Management
 Span of management refers to the number
of subordinates who can be managed
effectively by superior’
 Soujanen has suggested that span of
management traditional concept and is
not valid because coordination and control
can be achieved through formal and
informal activity.
Determination of span of
management
 Direct single relationship
 Direct group relationship
 Cross relationship
Factor affecting span of
management
 Capacity of informal relation
 Capacity of subordinate

 Nature of work

 Degree of decentralization

 Degree of planning
Factor affecting span of
management
 Communication techniques
 Use of staff assistance

 Supervision from others