teertha722@gmail.

com BBS 1st year

Contents
Unit 1: The Nature of Organizations
Concept of organization. Organizational goals concept, purposes, and types. Features of
effective organizational goals. Goal formulation processes and approaches. Goal succession
and displacement. Problems of goal formulation. Changing perspectives of organization.
Concept of Organization
An organization is formed whenever people join hands to accomplish some tasks. It is therefore,
purposive in nature. It has some specific task to accomplish. A family, a community club, a
school, a factory, a municipality, a hospital are all examples of an organization.
Organizations make possible the complex activities. For instance, a well-organized team of
players can defeat an unorganized group of people playing football. A very small number of civil
servants can manage the activities of the government and the nation. A group of police force can
handle the riots. A small group of mangers can run a large business enterprise efficiently. All this
is possible because of organization.

What is an organization?
An organization is an entity, such as an institution or an association that has a collective goal and
is linked to an external environment.
An organization is the structure or mechanism (machinery) that enables living things to work
together.
An organization is the foundation upon which the whole structure of management is built.

Definitions of Organization
Different authors have defined organization in different ways. The main definitions of
Organization are as follows:
According to Keith Davis, "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."
According to Chester I. Barnard, "Organization is a system of co-operative activities of two or
more persons."

teertha722@gmail.com BBS 1st year

According to Louis A. Allen, "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."
According to Mooney and Railey, "Organization is the form of every human association for the
attainment of a common purpose."

Characteristics of Organization
Social interaction: An organization consists of people. They interact with each other while at
work. This interaction among organizational members leads to the development of a network of
social relations in work places.
Shared Goals or Purpose: An organization has its own definite goals or purposes to attain.
Without shared goals, people rarely come together and establish a definite pattern of interaction.
Division of Work: Division of work means dividing large tasks into smaller package of work to
be handled by one person. An organization, thus, brings different people together into a network
of interaction to perform different tasks.
Coordination of Efforts: Coordination is basically a process of linking the activities of the
various units of the organization. Uncoordinated task may not be goal focused
Hierarchy of Authority: The jobs to be performed in an organization are arranged in ladderlike hierarchy. A clear hierarchy of authority makes direction, supervision and coordination
easier and more effective.
Social Control: Organization maintains their control over the behavior of their members and
regulates their activities. They make use of various rules, norms and standards to ensure
acceptable conduct and behavior.

Types of Organization
Business Organization
Nonprofit social Organization
Mutual Benefit Organization
Commonweal Organization

teertha722@gmail.com BBS 1st year

Types
Business

Nonprofit Social

Primary Beneficiary
Owners

Clients and communities

Example
Travel agencies
Restaurants
Transport Services
Newspaper
Banks
Departmental Stores
Hospital
School and colleges
Welfare agencies

Mutual Benefit

Common Weal

Members

Public at large

Unions
Clubs
Trade association
Cooperative
Political Parties

Objective

Profit Maximization

to provide service to
large number of potential
clients

Must satisfy member needs

Postal Services

Police Departments
Fire Services
Telephone Services

To provide standardized
services to large groups of
people

Organizational Goal
Desired states or outcomes are objectives. Goals are objectives that are scheduled for attainment
during planned period. We will generally use the two terms synonymously with the only
stipulation or rider that goals may be of longer term than objectives. Objectives can sometimes
be purely short term.
Organizational goal is the end point toward which activities are aimed. It is target or ends that
manager want to reach. They are strategic objectives that a company's management establishes to
outline expected outcomes and guide employees' efforts.
Purpose of organizational goals
Goals provide guidance and unified direction for people in the organization. Goals can help everyone
understand where the organization is going and why getting there is important.
Goal setting practices strongly affect other aspects of planning. Effective goal setting promotes good
planning and good planning facilitates future goal setting.

teertha722@gmail.com BBS 1st year

Goals can serve as a source of motivation to employees of the organization. Goals that are specific
and moderately difficult can motivate people to work harder, especially if attaining the goal is likely
to result in rewards.
Goals provide an effective mechanism for evaluation and control. This means that performance can
be assessed in the future in terms of how successfully todays goals are accomplished.
Types of organizational goals
Various organizational goals are classified into three types or categories: strategic, tactical or operational.
Strategic goals are generally long term; tactical goals are similar to strategic goals, but less strategic in
nature; operational goals are purely short term or operational as the name indicates. Example or these
three types of goals are given below.
a) Strategic Goals (5-10 yrs.)
They are developed in view of mission of the organization. They outline overall organizations goals
relating to different dimension of their business like profit making, product development, resource
allocation, human resource development and so on.

Achieving a predetermined overall rate of return on capital borrowed

Becoming a market leader in particular product market group
Increasing shareholders earnings per share as far as possible
Reducing companys dependence on borrowed capital
Improving employee relations (particular focus on industrial relations)

b) Tactical Goals (1-3 yrs.)

Tactical or intermediate goals are set to translate the strategic goals into action. These goals involve
middle level managers.

Increasing market share in some market segments

Opening a subsidiary in particular country within a specific period
Extending the companys range product or brands
Introducing a new technology or new manufacturing process
Revising the organizational structure of one of the companys division

c) Operational Goals (less than 1 yr.)

They are set for lower level management. The main concern here is with shorter term issues associated
with intermediate or tactical goals.

Improving plant utilization

Undertaking cost- cutting programs
Increasing sales during the next quarter
Managing cash inflows/ outflows
Improving credit control or plant utilization measures

teertha722@gmail.com BBS 1st year

Feature of effective organizational goals
Specific: the goals must be precise. Every goal must say specifically what the individual employees and
departments have to do.
Measureable: Each agreed goal must contain details how a particular aspect of performance will be
measured. The categories of measurement could be in terms of quantity, time , cost and quality.
Acceptable: the goal setting process should be teamwork. The manager and his subordinate should sit
together and set realistic goals. All goals should be discussed between the manager and individual
concerned.
Realistic: the goals agreed between the manager and the subordinates must be something that is
achievable. There is no point in setting goals which are impossible to achieve
Time: each agreed goal must contain of how much time would be required to achieve the expected
outcome, usually goal have a time frame.

Note: Goal Formulation, process, approach and problems of Goal formulation are already
discussed and notes are given in the class.
How to overcome the problems of goal formulation?
Goals must be based on reality, they must also be realizable. Employees associated with these
goals must understand the basic purpose of goals.
There must be flexibility in goal setting. It is better to attain some portion of the goal rather than
totally failing in attaining it.
Consistency in goals must be ensured at the stage of their formulation to avoid any problem of
goal conflict. Similarly consistency should also be secured among strategic, tactical and
operational goals.
Goal reward links must be established. It should be ensured that if goals could not be attained due
to forces beyond the control of employees or departments, reward must be assured.
Good communication and participation of employees in the process the result in goal formulation.

teertha722@gmail.com BBS 1st year

Goal Displacement
Goal displacement is defined as an unintentional shift in organizational goals by management

Unintentional approach
Divert organizational resources
Unable to achieve the present goal

Goal displacement may be stated as a situation in which new goals has been developed by
completely disregarding the strategy, operational and tactical goal for survivable of organization.
Goal displacement is the act of unintentional goal in the original goal into a new goal. Such
displacement diverts organizational resources away from the organizational goal. When served
goal become the primary goal in an organization goal displacement takes place.
For example: Many cinema hall in our country have been converted into party palace and go
down due to lack of audience as movies are now a days easily available to cable-TV and in
compact disk.

Reason for Goal Displacement:

1. Goal conflict: When organizational goal conflict with individual goals and personal goal
displacement takes place. It basically occurs when there is absence of compromise in an
organization.
2. Means-End Inversion:
End Goal
Means process, way
End is what is to be achieved and means is how it is to be achieved. When a management
developed strict rule regulation, policies and procedures to perform organizational functions then
employee proper attention to follow these rules and discipline not to the accomplishment of task
due to which goal displacement takes place.
3. Abstract Goal: If original goal are abstract, uncertain and unclear displacement takes place. If
the goals are not made clear then members of the organization cannot achieved it with limited
resources. So, goal must be specific and achievable that can be translated into operational goal,
otherwise it is displaced.
4. Goal Substitution: When long term goal are substituted by short term goal displacement
takes place. For example: Increasing market share by 10% is the long term goal can be
substituted by increases in productivity or sell by 20% which is short term goal.
5. Employee Attitudes: Unproductive attitudes of employee to original goals lead to goal
displacement if employee have a positive goals they can be achieved in an effective way. But if

teertha722@gmail.com BBS 1st year

employee and there union have a negative attitudes towards it; they may not perform effectively
and give priority to personal goal.

Goal Succession
Achievement of goal and modification in goal are called goal succession
Goal succession is the act of intentional review and modification of existing goal by the top
level management.
Organizational goal when once formulated can also be changed due to the changes in the
external and internal environment of organization. When an organization fulfills the goals for
which it was created, it faces the crises of existence. In such case it may change the course of the
business and adopt some other related goals.
For example: A non-governmental organization (NGO) operates in Doti district of Nepal with
the goal of attaining virtual adult literacy. After almost ten years of its operation, it attained its
primary goal of removing illiteracy form the district. But the result in the crisis in NGO, because
its efforts have eliminated its major purpose of existence. The NGO has now shifted its goal to
nutrition and child health care in the same district. The NGO has thus made succession of its
goals and continued its existence.

Reason for Goal Succession:

1. Original goal achieved: When original goal is achieved in a living period of time it
is essential for an organization to set new goal. Setting new goal is necessary for
perpetual existence of an organization.
2. Environmental adaptation: Environment is the dynamic and regularly influences
organizational functioning. So, every organization needs to modify its original goal in
accordance with the environmental changes.

teertha722@gmail.com BBS 1st year

The changing perspectives on organization

The perspective and thinking about organization have changed considerably over the decades.
Traditional view considers an organization as a closed system, operating in predictable and stable
environment. The modern view of organization rejects these thinking about the organization.
Today, organizations are review as a complex entities operating in highly uncertain and instable
environment.
The following are the noticeable views on organization, which have emerged during the course or the
twentieth century.
Organization as Machine
The classical theorist considered organization as mechanical system. They advocated fixed working
hours, production schedules, maintenance schedule, financial and quality control systems, sales targets,
code of conducts and like to ensure economic efficiency and goal attainment. The mechanistic perspective
of organization is widely prevalent even today. However, the later developments in organization theory
have pointed out many limitations of the mechanics view of organization. These are
Mechanistic organizations are suitable for stable environment. They have difficulty in adapting to
changing circumstances.
The features of mechanistic organization are rules and regulation. Over dependence on such
mechanized processes discourages creativity and problem- solving capabilities within the
organization.
Strict discipline and controls employed by mechanistic organization dissatisfy members. This
ultimately leads to undesirable political behavior.
Mechanistic organizations try to fit human beings into the job requirements. The strength and
potential of human beings are not properly used.

Organization As open System

A system is a set of interrelated parts that work together to achieve a goal. A system transform
inputs to outputs by adding value. All the systems, therefore are composed of three basic
elements: input into the system, process of the input and generation of output of the system. The
input, process and output components of the organization system contribute to the achievement
of the established goals of organization.

teertha722@gmail.com BBS 1st year

Organization as political System

Politics refer to the flow of power and influence. It influences the processes within a social
system. Organizations are naturally open to political processes. They have built in hierarchy and
authority relationship. This leads to exercise of power. Therefore, proper understanding of
political nature of organization is important. Without this understanding the decision making
dispute settlement, negotiation, and bargaining processes cannot be known.
Research results have revealed very interesting findings about organizational politics. A few
examples are as follows.
The higher the level of management, the greater the perceived amount of political activity.
The larger the organization, the greater the perceived amount of political activity.
Employees in staff position are viewed as more political than those in line position.
People believe that organization politics help them to advance their career.
Organization politics distracts employees from organizational goals

Organization as cultural system

Organization culture is described as the means through which people in the organization learn
and communicate what is acceptable and unacceptable in the organization. Every organization
has certain patterns or norms of behavior, certain shared values and ways of doing things. It is
these beliefs, rituals values and assumption, which constitute the organizational culture and in
this way two organization have different ways of operating.

Organization as a learning system

This concept describe and organization as a living and thinking open system. Organization like
a human beings, continuously learn from the history, experience and environment and adjust
accordingly. Organization thus engage in complex learning processes, such as anticipating,

teertha722@gmail.com BBS 1st year

perceiving, experimenting and problem solving. Such learning helps the organization to adapt to
their existing environment.