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Business Jargons

A Business Encyclopedia

Organization

Definition: Organization refers to a collection of people, who are involved in pursuing defined objectives. It can be understood as a social system which comprises all formal human relationships. The organization encompasses division of work among employees and alignment of tasks towards the ultimate goal of the company.

It can also be referred as the second most important managerial function, that coordinates the work of employees, procures resources and combines the two, in pursuance of company’s goals.

Process of Organization

  • Step 1: Determination and classification of firm’s activities.
  • Step 2: Grouping of the activities into workable departments.
  • Step 3: Assignment of authority and responsibility on the departmental executives for undertaking the delegated tasks.
  • Step 4: Developing relationship amidst superior and subordinate, within the unit or department.
  • Step 5: Framing policies for proper coordination between the superior and subordnate and creating specific lines of supervision.

Organization is a goal oriented process, which aims at achieving them, through proper planning and coordination between activities. It relies on the principle of division of work and set up authority-responisbility relationship among the members of the organization.

Types of Organization Structure

  1. Formal Organization Structure: The organization structure of jobs and positions, with specified activities and relationships, is known as formal organization structure. It is created by management, to attain the objectives of the company.
    • Line Organization: Line organization is the oldest and simplest pattern of orgnization, wherein the supervisor has outright supervision over the subordinate. The flow of authority is from the top level executive to the person at the lowest level of the organization’s echelon.

    line organization

    • Functional Organization: As the name suggests, functional organization structure is one in which the thorough task of managing and directicting the employees, is grouped as per the functions or type of work involved.

    functional organization

    • Line and Staff Organization: This type of organization structure is an improvement over the traditional line organization. In line and staff organization primary and supportive activities are related to the line of supervision by appointing supervisor and specialist, who are linked to line authority.

    line and staff organization

    • Project Management Organization: Project Organization is not an independent organization, like the organization structure discussed above. Instead it is a set up within an organization, so as to accomplish a project or firm’s objectives. It is led by project manager, who is responsible for project objectives.
    • Matrix Organization: Matrix organization is the emerging structure of the organization, which is a combination of functional organization and project organization. In such an organization, the functional departments such as production, accounting, marketing, human resource, etc. constitute a vertical chain of command, while project division consitute horizontal line of authority.
  2. Informal Organization Structure: The relationship between the employees, that relies on personal attitudes, prejudices and interests rather than procedures. It is system of personal and social connection, whose creation is not needed by formal organization.

The organization structure is a basic idea, which depends on the activity authority relationship in the company. It is designed in such a way to realise business objectives.

Related terms:

  1. Internal Environment
  2. Supervision
  3. Organizing
  4. Non-Profit Organization
  5. Strategic Business Unit (SBU)

Reader Interactions

Comments

  1. gullu says

    October 4, 2019 at 1:33 pm

    great

    Reply
  2. Nandkishore kumar says

    June 3, 2020 at 7:45 am

    Interesting

    Reply
  3. Paltu Gorain says

    July 4, 2020 at 5:22 pm

    Helpful article.

    Reply
  4. john j chilanga says

    August 26, 2020 at 7:47 pm

    I’m trying to open any organization and I need to know how the board of the organisation works

    Reply
  5. Jennelyn Bautista says

    October 9, 2020 at 7:47 pm

    Good day!

    I’d like to know who is the author of this topic Organization and other details such as Year , City, Publisher , volume, attached as reference .

    Thank you

    Reply
    • Surbhi S says

      October 10, 2020 at 9:31 am

      The author of this article is Surbhi S. and it was published in July 1, 2017

      Reply
  6. Adekunle hannah says

    June 12, 2021 at 7:51 pm

    I REALLY LOVE THIS, THANK YOU !!!.

    Reply
  7. Yusuf Umar says

    September 14, 2021 at 1:21 pm

    Very interesting concept. I love it

    Reply
  8. Afutu Gabriel hmeek says

    December 4, 2021 at 5:34 pm

    Good experience here, thank you.

    Reply
  9. Arjun Bhandari says

    February 24, 2022 at 2:28 pm

    writer and date of published should be published. it will beneficial to cite.

    Reply
    • Surbhi S says

      June 16, 2023 at 4:33 pm

      The writer of this article is Surbhi S. and it was published on July 1, 2017

      Reply
  10. Oyeye Gift Eseoghene says

    May 20, 2022 at 2:04 pm

    Very helpful, thanks

    Reply
  11. Abdulkarim dalhatu kurebe says

    November 7, 2022 at 1:26 pm

    This is so remarkable and elucidative concepts to me. I really appreciate and enjoy reading it. Thank you for this greatest achievement.

    Reply
  12. David Oyeleke says

    February 11, 2023 at 4:17 pm

    Concise and very educative
    Thanks
    David

    Reply
    • Langoya Alfred says

      September 2, 2023 at 4:41 pm

      I would like to know the author, the year publishing

      Reply
      • Surbhi S says

        September 6, 2023 at 11:24 am

        The name of author is Surbhi S. and it was published in July 1, 2017

        Reply
  13. Bercilio says

    February 25, 2023 at 1:02 pm

    interesting information. I hope you keep doing good jobs for people.

    Reply
    • Eljane Payod says

      August 22, 2023 at 1:39 pm

      Thank you very much it really helps a lot in my homework

      Reply
  14. Mudassir Abbas says

    September 1, 2023 at 5:30 pm

    Please explain vertical and horizontal chain of command

    Reply

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