THEORIES DESIGN & STRUCTURE PRESNTED TO: PROF. S.K. SRIVASTAVAPRESENTED BY: GROUP A (ADAM SMITH) MBA FT SEM 1st MEMBERS: ABHISHEK VERMA DIWAKER PRATAP DEEP CHAND VERMA VINAY KUMAR Adam Smith Born 5 June 1723 OS Kirkcaldy, Fife, Scotland Died 17 July 1790 (aged 67) Edinburgh, Scotland Nationality British (Scottish) Region Western philosophy Main interests Political philosophy, ethics, economics Adam Smith was a Scottish moral philosopher and a pioneer of political economy. Adam Smith is best known for two classic works: The Theory of Moral Sentiments (1759),The Theory of Moral Sentiments ( Smith critically examines the moral thinking of his time, and suggests that conscience arises from social relationships) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).An Inquiry into the Nature and Causes of the Wealth of Nations (There is a fundamental disagreement between classical and neoclassical economists) Smith is cited as the "father of modern economics modern economics What is an Organization A social unit of people structured to meet a need management structure determines relationships between members assigns roles, responsibilities, and authority affected by their environment. Definition of Organizations " Organization is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationship for the purpose of enabling people to work most effectively together in accomplishing objectives. by Louis A. Allen " Organization may be defined as a group of individuals, large of small, that is cooperating under the direction of executive leadership in accomplishment of certain common object. by keith Davis 'organisation' is used in four different senses: Organisation as a Process: a dynamic process and a managerial activity planning the utilization of company's resources Organisation as a Framework of Relationship: structure of relationships and among position jobs which is created to release certain objectives. Organisation as a Group of persons: group of persons contributing their efforts towards certain goals. Organisation as a System: organizations are made up of components each of which has unique properties, capabilities and mutual relationship. Organization theories Organization theory refers to the study of the phenomena of organizational functioning and performance and of the behavior of Groups and individuals working in them. There are several theories which explain the organization and its structure. Organization theories CLASSICAL ORGANIZATION THEORY NEOCLASSICAL THEORY MODERN ORGANIZATION THEORY Classical vs. Neoclassical Theory Modern theories Modern theories are based on the concept that the organization is an adaptive system which has to adjust to changes in its environment. Modern theories include the systems approach, the socio-technical approach, and the contingency or situational approach. The systems approach considers the organization as a system composed of a set of inter-related - and thus mutually dependent - sub-systems. Thus the organization consists of components, linking processes and goals. The socio-technical approach considers the organization as composed of a social system, technical system and its environment. These interact among themselves and it is necessary to balance them appropriately for effective functioning of the organization. The contingency or situational approach recognizes that organizational systems are inter-related with their environment and that different environments require different organizational relationships for effective working of the organization. Division of work Groping of jobs Assigni ng duties Grantin g authorit ies Delegate authori ty Effective communi cation Process of Organization Division of work Groping of jobs Assigning duties Granting authorities Delegate authority Effective communication Considerations for Building Organizational Structure OR Organization designing Job design Departmentation or Grouping of Identical Jobs Span of Control Delegation of Authority Organizational Structure Defines the organization's hierarchy of people and departments Information flows within the organization. Determines how and when information is distributed Who makes what decisions based on the information available. How job tasks are formally divided, grouped and coordinated. The Concept of Organisation Structure Structure helps influence behaviour and relationships of jobs and functions Structure defines recurring activities and processes. Structure provides a purposeful and goal- oriented behaviour. FORMS OF ORGNAZATIONAL STRUCTURES There are many forms of organizational structures found on their importance and need some of these are fallows. Line Structure: Line and Staff Structure: Functional structure Market Structure Product structure Matrix structure I. Line Structure: This has a very specific line of command. The approvals and orders in this kind of structure come from top to bottom in a line. Board of directors Managing director/General manager Production Works Manager Foreman supervisor worksmen Marketing manager Finance manager II. Line and Staff Structure Line and structure combines the line structure where information and approvals come from top to bottom, with staff departments for support and specialization. III. Functional structure This kind of organizational structure classifies people according to the function they perform in the organization. Chief Executive Board of Directors Production Marketing Accounts Personnel IT IV. Market Structure market structure is used to group employees on the basis of specific market the company sells in a company could have three different markets they use and according to this structure, each would be a separate division in the structure. Departmentation The process of grouping of activities into units for the purpose of administration is called departmentation. as the process by which activities or functions of enterprise are grouped homogeneously into different groups. followings are the basis of departmentation: Functional Departmentation: Products Departmentation : Territories Departmentation : Customers Departmentation : Functional Departmentation This is the simplest form of Departmentation when grouping of departments is done on the basis of functions such as production finance marketing sales purchase and personnel etc, Advantages: Advantage of specialization Easy control over functions Pinpointing training needs of manager It is very simple process of grouping activities. Disadvantages: Lack of responsibility for the end result Overspecialization or lack of general management It leads to increase conflicts and coordination problems among departments. Products Departmentation departments formed are given name on the basis of products manufactured in an organization. It is applied where there is a large range of products are manufactured. Advantages It ensures better customer service Unprofitable products may be easily determined It is flexible and new product line can be added easily. Disadvantages is expensive as duplication of service functions occurs in various product divisions Customers and dealers have to deal with different persons for complaint and information of different products. Territories Departmentation : The grouping of all activities of those organizations which are physically spread over a large area are called territories departmentation. Advantages Help to cater to the needs of local people more satisfactorily. It facilitates effective control Assists in development of all-round managerial skills Disadvantages Communication problem between head office and regional office Coordination between various divisions may become difficult. Distance between policy framers and executors Customers Departmentation : When departments are formed to cater different kind of customers it is known as customer departmentation Customers classified according to buying capacity or nature like whole sale, retail and export or government Advantages It focused on customers. Better service to customer. Development in general managerial skills Disadvantages Sales being the exclusive field of its application, co-ordination may appear difficult between sales function and other enterprise functions Delegation of Authority Allowing someone to act on your behalf to perform tasks (consume resources) that are available to you Delegator should be empowered to delegate to anyone he needs to, subject to certain organisation controls (i.e. the organisations Delegation Policy) Steps of delegation of authority Determination of result expected Division of task Assignment of duties. Granting authority Creation of obligation. SPAN OF CONTROL This is the number of individuals who report to a specific manager. Required Contact Degree of Specialization Ability to communicate FORMAL AND INFORMAL ORGANIZATION well defined jobs with authority,relationship between people on the basis their personal attitudes