ORGANIZATIO

N
Process of identifying
activities needed to
accomplish a goal,
subdividing and grouping
these activities into
meaningful units, and
assigning authority and
responsibility to people for
their accomplishment.
The structure must
reflect objectives and
plans because
activities of the
organization are
based on them.

The structure must

reflect authority
given to top and
middle
management.

- Termed as Zoning
- Dividing work and
coordinating divided
work. (Echanis &
Rodriguez)

The organization
structure should
reflect their external
environment.

The organization
must be manned.

Organization is the executive structure of business. It emphasized that the organization is

the executive/main framework by which operations or work is performed, that it clarifies required
channels, points of origin and flow of management direction and control. It also connotes creative
process. This means that organizations being creative process works efficiently and effectively with
their respective tasks through team.

ORGANIZATION CHART

According to George Terry, an organization chart is defined as a

diagrammatical form which shows important aspects of an organization
including the major functions and their respective relationships, the channels
of supervision, and the relative authority of each employee who is in charge
of each function.
It is a drawing that shows the important aspects of an organizational
structure.
It shows the relationship among positions as to authority, accountability and
responsibility and the manpower who staff or occupy these positions.

THE IMPORTANCE OF AN ORGANIZATION CHART

It shows a clear view of the entire firms structure.

It shows the principal divisions and lines of formal authority and
responsibility.
It assists the management to divide different work that needs to be
performed effectively and efficiently.
It shows a clear view of who is in charge for a particular task.
It shows the grouping of departments for easier direction and control of
activities.
It gives access and convenience to the entire organization for the reason that
it could be a way to sort the responsibilities of the position so that time and
effort are not duplicated.
Hence, it provides a way to lessen costs/expenses such as time, money and
opportunity.

THE 3 DIMENSIONS OF AN ORGANIZATIONAL STRUCTURE

1. The bases for grouping activities together.
2. The type of authority relationships among organizational units.
3. The coordination mechanisms used.

ADVANTAGES:

efficiency gains from specialization

order arising from the clarity of job definitions
reduction of unintended gaps or overlaps in the conduct of the activities of
the institution

GROUPING ACTIVITIES IN AN ORGANIZATION

Division of labor creates specialists who need coordination. This coordination is facilitated by
grouping specialists together in departments.

GROUPING BY FUNCTION
Grouping activities by functions performed. Activities can be grouped according to function
(work being done) to pursue economies of scale by placing employees with shared skills and knowledge
into departments for example human resources, IT, accounting, manufacturing, logistics, and
engineering. It can be use in all types of organization.
EXAMPLE

 GROUPING BY PRODUCTS
Grouping activities by product line. Tasks can also be grouped according to a specific product or
service, thus placing all activities related to the product or the service under one manager. Each major
product area in the corporation is under the authority of a senior manager who is specialist in, and is
responsible for, everything related to the product line.
EXAMPLE

GROUPING ACTIVITIES BY AREA OR TERRITORY

Grouping activities on the basis of territory. If an organization's customers are geographically
dispersed, it can group jobs based on geography. It is commonly used by multinational firms or by
government agencies. Other factors that should be considered, under this method, is the culture,
tradition, lifestyles, and others which means a lot of adjustments to undertake externally.
EXAMPLE

Matrix Organization
-Defined as one where there are multiple reporting lines or simply, people have more than one formal
boss.
-

Allows better utilization of personnel.

Provide greater feelings of job security to project personnel who have their functional

departments to return to when the project in which they are assigned is completed.
Satisfy the preference of most technical personnel to be based in a department
composed of members of their own professional group.

Changing the structure of an organization

-Structural change within an organization might stem from internal or external factors.
- As a business expands, contracts or changes its products or services during its life, the
organization structure could change.

Factors That May Cause Change in an Organization

Competition
The entrance of a new competitor into a market can cause a business to change its marketing strategy.

Technology
Innovations in technology can force a business to change just to keep up. Employees who have never
used computers need to be trained to operate the new computer system. A business also can benefit by
implementing a technological change.

Desire for Growth

Businesses that want to attain growth might need to change their method of operations.

Government Regulations
Changes in government regulations can have an impact on how a company does business. Newly
mandated safety procedures can force a factory to change its production process to create a safer work
environment. Businesses that make or distribute consumer goods such as food products might have to
add more quality control measures to ensure consumer safety.

FORMAL RELATIONSHIPS IN ORGANIZATION

Organizing includes not only identification and groupings of various activities but also includes
the assignment of authorities and the definition of relationships among the various units comprising the
organization. There are three types of relationships which may exist between one organizational unit and
another depending on the extent of formal control or authority exercise by one over the other. These
relationships are: (1) Line Authority, (2) Line and Staff Authority, and (3) Functional Authority

First to expound is the line authority. Line Authority is the oldest and simplest form of
organizational structure because it is based on the classical principle of Scalar Chain. It is in the form of
structure, that authority passes responsibility to its immediate superior. In much simpler words, it is a
direct-straight line responsibility and control of the top management to the middle management and to
the lower management. This type of structure is widely used in smaller businesses, entities, and
organization. Example is sari sari store, wherein the owner will only have a few hands, mostly from his
relatives, to give him help. Of course, since almost everything is being taken care of by the manager, he
must be knowledgeable to different business areas such as accounting, management, etc.

INAY

PANGANAY
BUNSO

Second is the line and staff authority. Line and staff authority is the type of organizational structure
that utilizes the assistance of experts and specialists. This form of structure is commonly used by
growing companies or medium sized enterprises. Once business operations expand, operations,
activities, and market expand as well. Therefore, everything becomes complex that the owner will be
needing extra hand from experts and well trained professionals to help performing specific tasks. This is
when you need to utilize the assistance of experts and specialists such as a marketing officer or an
assistant manager to do the job.

INAY
Marketing
Manager

Personnel
Manager

Production
Manager

Engineering
Manager

Finance
Manager

COORDINATING ACTIVITIES
Activities in organization must be coordinated to insure that these are directed at the overall
goals of the organization. The coordination of the various activities in the organization is accomplished
through numerous mechanisms including 1.) The Authority Structure, 2.) Formal Coordination Bodies
and 3.) Information System.

The Authority Structure

The placement of a group of persons under a common superior provides the basic structural
framework for the unified direction of each persons and activities. Moreover, a superior, says a vice
president of production, may supervise directly only a limited number of individuals yet he indirectly
influences all the activities under his subordinates command. In the extreme case, the vice president can
directly command any person under his department since the authority of all persons organizationally
below him in the department hierarchy are delegated authority, that is, such authority devolves from the
authority of the person who is higher in the command structure. The authority structure is thus the basic
mechanism which makes possible the unified direction and coordination of the activities in an
organization.

Formal Coordination Bodies

Committee This is another form of common organizational structure. This is used in situations
where group action and participation/decision is required. It is created to deal with special or unusual
activities and any manager has the right to form a committee if needed.
Committees are classified as:
Ad Hoc Committee undertakes temporary committee;
Standing Committee is sometimes called permanent committee which undertakes
permanent activities.

Information System
Communication is considered as an input or a raw material in an organizations operation. It is as
essential as coordination and cooperation. Information technology nowadays gives an organization a
competitive advantage that can position them strategically in the market.

Classical Principles of Organization

The Organization function follows certain principles that make it effective in running our businesses.
Here are the ff. principles:

(1)

Principle of Unity and Command

This principle simply states that in an organization there must only be one direct superior. A presence of
more than one superior may brought forward confusion, inaction and conflict within the organization
especially if there are inconsistencies between the orders and goals of the superiors.
The Principle of Unity and Command is against BYPASSING.

Bypassing means that a direct superior must not give order to the subordinates of his subordinate.
Because it will undermine the authority of the subordinate involved.

(2)

Parity of Authority

This principle states that if a person is responsible for accomplishing a certain task he/she must be given
a sufficient authority to do the task.

(3)

Absoluteness of Responsibility

This principle states that even if the superior imparts/delegates a portion of authority to his subordinate
he is not exempted in the responsibility or accountability of the tasks under his jurisdiction.

(4)

Checks and Balances

The principle states that the organizational unit in charge to check or to evaluate the activities of another
organizational unit must not have control or supervision of the unit to be evaluated.

(5)

Principle of Specialization

This principle states that an organizational unit becomes more efficient the more it specializes in the
performance of a set of similar or related activities over time.

ORGANIZATI
ON
Group 2
Members:

Christine Isabel Agua

Pauline Shem Atienza
Ranalyn Balingit
Jan Arvie Bayani
Aidalene Bocar
Nadia Calangi
Mariane Carangis
John Christian Karl Ceneta