Organization

Organisation: Collective group of persons engaged in pursuing specified objectives. May be formal or informal. 

Formal Organisation Structure: Structure of jobs and positions with defined functions and relationships. This type of organization is built by management to realize the objectives of an enterprise.

Can be classified as under:

1. Line organization 
2. Functional Organization 
3. Line and staff organization 
4. Project Management Organization 
5. Matrix Organization 

Line Organization: 

• Oldest pattern of organization. 
• Line functions refer to those employees who have direct responsibility for accomplishing the objective of the enterprise. 
• A supervisor exercises direct supervision over a subordinate and authority flows from the person at the top to the person at the lowest ring 
• Also known as military or scalar type of organization.
• It benefits from unified control and undivided loyalty, therefore gaining discipline. 
• However, it suffers from lack of specialization. 

Functional Organisation:

• The task of management and direction of subordinates is divided according to the type of work involved. 
• The functional organization refers to the structure that is formed by grouping all the work into major functional departments. Related and similar work is done in one department under one executive. 
• Ensures division of labour and specialization. 
• However, it is difficult to establish.

Line and Staff Organization 

• Whereas the line system concentrates on authority too much,  the purely functional plan divides it too much. The line and staff strikes a balance by supplementing the line with staff. The staff refers to officers who aren't line managers but more or less permanently detailed to special services or to the study of some phases of operations. They act as the advisory group adjacent to the line. 
• However, this system often leads to numerous frictions and jealousies. 

Project Management Organization

• Set up within an existing organization for the purpose of completing a project or accomplishing  assigned objectives in time, and within cost and profit goals as laid down by the management in this connection. Project organization is directed by the project manager responsible for project goals. 
• Project management organization is independent and cuts horizontally across the normal organization. 
• Requires prompt decisions and actions from a number of functional areas, flow of information is largely lateral and not vertical. 

Matrix Organization

• Combines functional departmentation with product or project organization.
• The functional departments constitute the vertical chains of command, while project organization or product divisions form the horizontal chains of command. 
• Designed to derive the benefits of both the functional structure and the divisional structure. 
• However, multiplicity of vertical and horizontal relationships impair organizational efficiency. 

Informal Organization

• Relationships between people that isn't based on procedures but personal attitudes, prejudices, likes and dislikes. 
• Developed spontaneously, not established by formal managers. 
• Based on informal authority attached to the person, and not the position. 
• Maintain and continue the cultural values and lifestyle of the group. 
• Resistance to change - tendency for the group to become overly protective of itself in the face of change. 
• Quest for social satisfaction may lead members away from organizational objectives. 

Authority: Right of a manager to command subordinates. 

Responsibility: Obligation on the part of a manager to perform a task - those that accept the task should be held responsible for their performance as well. 

Accountability: Answerability for the accomplishment of the task assigned by the superior to his subordinate. 

Authority vs. Power: Authority may be regarded as the right to command and power as the capacity to influence the behaviour of others. 

Ideally, authority, power, responsibility and accountability should be equal to one another in every position in the firm.

Delegation: Administrative process of getting things done by others by giving them responsibility.

Centralization is the tendency to withhold a larger part of formal authority at higher echelons of management hierarchy.  

Decentralization is delegation of the larger part of the authority to lower echelons so that decisions are made as close to the source of information and action as possible. 

Place of decision making authority in the management hierarchy and degree of decision making power at lower echelons are the two important tests. 

Decentralization shouldn't be confused with delegation of authority. 

Planning

A process whereby the relevant facts are collected and analyzed, the assumptions and premises are made for the future. In light of these assumptions and premises, a plan of action believed necessary to achieve the desired results is visualized and formulated. It involves choosing the proper course of action from among alternatives and calls for decision making. All other functions of management depend on planning. Furthermore, management is a dynamic process and therefore so is planning - the process is continuous in light of overlapping functions and changing environment.

Importance:

1. Makes personnel conscious of enterprise objectives
2. Leads to economy in operations  
3. Precedes control 
4. Precious managerial instrument to provide for the future 
5. Influences efficacy of other managerial functions 

Types of Plans:

1. Business plans - a formal statement of:
1. largely enforced business goals
2. the reasons why they are believed attainable 
3. the plan for reaching those goals 
2. Marketing plans - keep changes in perception and branding as their primary goals 
3. Operational plans - Describe the goals of an internal organization, working group or department 
4. Project plans - goals of a particular project, and its place within the organization's larger strategic goals.
5. Strategic plans - business plans that identify and target internal goals but provide only general guidance on how those plans can be attained. 

Planning Components: 

1. Purposes/ mission 
2. Objectives 
3. Policies 
4. Procedures, methods and rules 
5. Budgets
6. Programme
7. Strategy 

Forecasting: Analysis and interpretation of the future conditions in relation to operations of the enterprise. 

Steps:

1. Identifying and developing the structure 
2. Forecasting future course of business 
3. Analysis of deviations 
4. Improving the existing forecasting procedure 

Decision making: signifies actual selection of a course of action from among a number of alternatives. Various situations can be divided into three possible conditions:

1. Certainty - where the decision maker knows exactly what will happen.
2. Risk - Some information is available but it isn't sufficient to answer all questions about the outcome.
3. Uncertainty - No way of measuring the likelihood of the various alternatives.

Principles of Decision Making

1. Principle of Definition - real problem has to be defined with minute attention.
2. Principle of Evidence - Decisions should be based on evidence and adequate facts to back the judgment. 
3. Principle of Identity - Perspectives on the same fact differ from person to person, and the relative importance of such facts differ from year to year. 

A hierarchy of decisions can be established in terms of the commitment, scope and risk involved in each decision. 

Management

The need for management arises because to maintain effectiveness alongside minimum adverse consequences, group efforts are properly organized, directed and coordinated. The group of people who accept the responsibility of running an organization and directing its activities form the management of that organization.

Objectives of management:

1. Achieving maximum output with minimum effort
2. optimum use of resources 
3. maximum prosperity 
4. human betterment and social justice 

Schools of management:

1. Empirical approach: Understanding of management develops from the study and analysis of cases and from a comparative approach. 
2. Interpersonal Behaviour Approach: Study of management should be based on interpersonal relations.
3. Group Behaviour Approach: Closely related to the interpersonal behaviour approach, but centred on studying the behavioural pattern of members and groups in an organization. 
4. Decision Theory Approach: Rational decision making is the core of management; selection from among possible alternatives of a course of action or policy. 
5. Mathematical Approach: Viewing management exclusively as a system of mathematical models and processes. 
6. Operational Approach: The approach consolidated the vital thinking of all the approaches to management in order to identify and highlight what relates to actual managing and which can be most useful in real life situations. 

Managerial functions can be divided into planning, commanding, controlling, organizing, coordinating.Still another useful method of classifying managerial functions is to group them around the components of planning, organizing, staffing, directing and controlling. While these functions are common to all businesses, the manner in which they are carried out is usually not the same. 

The manager must be an innovator due to constantly changing internal and external business conditions. 

Various Principles of Management

Frederick Taylor

• Popularly known as the father of scientific management.
• His writings reflect practical wisdom and work experience. 
• Triggered a "second industrial revolution" wrt management.
• Stress on time and motion study and efficiency at the shop level.

Henry Fayol

• Father of modern management theory 
• Single administrative science applicable to all types of organizations 

Systems Approach

• Management as a system of interrelationships involving the processes of decision making, communication and balancing.
• Organizations recognized as open, adaptive systems subject to all the pressures and conflicts of the environment.

Contingency Management: Management cannot follow a "one size fits all" approach - the internal functioning of the organization must be consistent with the demands of organization task, technology or external environment and the needs of its members. 

Responsibilities of Management

All three levels of management (top, middle and lower) have obligations towards three social groups:

a) those who have appointed them

b) those whom they manage 

c) the general community 

A manager's role has three phases: interpersonal, informational and decisional. 

Administration vs. Management: Whereas administration is a process of laying down broad policies and objectives of the organization, management directs and guides the operations of an organization towards realizing the objectives set forth by the former.