Structure of an Organisation & Types of organizational structure for Class 12 Business Studies (Ch-5)
Structure of an Organisation notes are available at Takshila Learning. Takshila Learning regularly gives you different blogs and articles on Business Studies Class 12 as demanded by students as per the syllabus of CBSE Business Studies Class 12. An Organisation supplies the nucleus around which human efforts revolve for a common purpose. By means of organizing, various abilities are utilized and interests are fused together. We are trying to explain below- the structure of organisation and types of structures of BST Class 12.
Structure of an organisation
An organization structure is a framework of authority and responsibility relationships between various positions in the organisation and also clarifies who reports to whom. It is a set of planned relationships between groups of related functions and between physical factors and personal required for the achievement of organisational goals.
The organisation structure is generally shown on an organisation chart. It represents authority relationships between various positions in the organisation by showing who reports to whom. Organisation structure is developed to attain the objectives of the enterprises. For instance, if an enterprise is in the production line, the dominant element in its organisation chart would be manufacturing and assembling. The organisation structure of a medium-sized industrial firm is shown below:
Types of organizational structure
The type of structure adopted by an enterprise will vary with the nature, types, and volume of its activities. Two commonly adopted organisational structures are:
- Functional structure
- Divisional Structure
Functional structure– In Functional structure, activities are grouped and departments are created on the basis of specified functions to be performed. Activities related to a function are grouped into a single unit with a view to give a well-defined direction to the whole group. For instance, in an industrial enterprise, the major functions like production, finance, marketing, and personnel may be grouped into different departments as shown below:
Suitability of functional structure: The Functional organisation is highly suitable for an enterprise engaged in the production and distribution of a single product or a small number of products. It is very useful where it is desired to introduce specialisation in the performance of various functions like production, finance, marketing, etc. But where it is required to handle a large number of products, functional organisation may prove to be insufficient.
Divisional Structure: – The Divisional structure is formed by creating a set of autonomous units or divisions which are coordinated by the central headquarters. For example, a company may have three divisions to manage garments, cosmetics, and leather goods as shown below in the chart. But to coordinate their functioning, certain essential services such as Corporate Planning, Finance, Marketing, Research, and development are organised at the headquarters. This structure is popular with giant firms dealing with multiple products and operating in different geographical regions.
In a Divisional structure, each division is semi-autonomous and has its own resources and facilities. Each division is put under the charge of a separate divisional manager who has complete control over the division and is responsible for its performance. Further, each division is multi-functional, i.e., within each division, functions like production, marketing, finance, and personnel are performed for its effective working. However, functions may vary across divisions in accordance with the particular product line. In India, many big companies like Century Mills, Gwalior Rayons follow divisional structure to organise their operations.
The divisional structure may be based on the following two criteria: Product Divisionalisation and Territorial Divisionalisation. For more details enroll in Business Studies Class 12
Suitability of Divisional Structure– Divisional structure is suitable for the firms having several products and each product is characterized by different technology, resources, production process, and market. It is suitable for firms having coverage of wide geographical area or having different market segments.
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