ACEBA Systems Technology Institute Inc.

Senior High School

Organization and Management (Quarter 1)
Academic Track

MODULE 7

CHAPTER 4
ORGANIZING

Objectives
At the end of this chapter, the students are expected to:
1. Define the meaning of organizing
2. Cite the reasons for organizing
3. Compare different organization structure and its determinants
4. Analyze the nature of organizations and types of organization structures.

INTRODUCTION
The manager needs to acquire various skills in management, including those for
organizing business activities. In this highly competitive environment, the unskilled
manager may not be able to bring his unit, or his company, as the case may be, to
success.
Skill in organizing is a very critical factor in the accomplishment of the objectives
of many organizations, whether they are private businesses or otherwise. The positive
effects of business success become more pronounced when they come as a result of
international operations.

WHAT IS ORGANIZING?
Organizing is the function of management which follows planning. It is a function
in which the synchronization and combination of human, physical and financial
resources takes place. All the three resources are important to get results. Therefore,
organizational function helps in achievement of results which in fact is important for the
functioning of a concern. According to Chester Barnard, “Organizing is a function by
which the concern is able to define the role positions, the jobs related and the co-
ordination between authority and responsibility.

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 ACEBA Systems Technology Institute Inc.
Senior High School
Organization and Management (Quarter 1)
Academic Track

  The identification of the grouping of work to be done, the delegation of authority

and responsibility to the employees, and the establishment of relationships among the
personnel in order to use to maximum advantage the company’s basic material
resources in the accomplishment of a common goal. The process of grouping together
of men and establishing relationships among them, defining the authority and
responsibility of personnel by using the company’s other basic resources to attain
predetermined goals and objectives.
Hence, a manager always has to organize in order to get results. A manager
performs organizing function with the help of following steps

1. Identification of activities - All the activities which have to be performed in a

concern have to be identified first. For example, preparation of accounts, making sales,
record keeping, quality control, inventory control, etc. All these activities have to be
grouped and classified into units.
2. Departmentally organizing the activities - In this step, the manager tries to
combine and group similar and related activities into units or departments. This
organization of dividing the whole concern into independent units and departments is
called departmentation.
3. Classifying the authority - Once the departments are made, the manager likes to
classify the powers and its extent to the managers. This activity of giving a rank in order
to the managerial positions is called hierarchy. The top management is into formulation
of policies, the middle level management into departmental supervision and lower level
management into supervision of foremen. The clarification of authority help in bringing
efficiency in the running of a concern. This helps in achieving efficiency in the running of
a concern. This helps in avoiding wastage of time, money, effort, in avoidance of
duplication or overlapping of efforts and this helps in bringing smoothness in a concern’s
working.
4. Co-ordination between authority and responsibility - Relationships are
established among various groups to enable smooth interaction toward the achievement
of the organizational goal. Each individual is made aware of his authority and he/she
knows whom they have to take orders from and to whom they are accountable and to
whom they have to report. A clear organizational structure is drawn and all the
employees are made aware of it.

The Nature of Organizing

1. Organization as a Process

The concept of organizing can be considered as a process, because a large

number of events or activities are done under the process of organizing with-a-view to
accomplish the preset goals in an appropriate way. In fact, organizing involves division

Prepared by: Rea Mariz I. Jordan/ Gumaca SHS-Teacher / 09.07.2020

 ACEBA Systems Technology Institute Inc.
Senior High School
Organization and Management (Quarter 1)
Academic Track

of works, determination of activities, grouping of activities, delegation of authority and

the establishment of proper co-ordination and balance among various departments of
individuals towards the attainment of predetermined goals. On the whole it is clear that
the objectives of business firm cannot be obtained by doing single activity, so organizing
is set to be a process.

2. Organization as a Structure of Relationship

Organization refers to a structure of relationship due to involvement of a large

number of groups. In fact, under the process of organizing the relationship of
departments to departments, groups to groups and individuals to individuals are
analyzed carefully through the process of communication system with a view to
establish proper unity and co-ordination among them. So that everyone can take
initiative for the welfare of enterprise. Thus it is clear that Organization can be
considered as a structure of relationship.

Why Organize?
Managers have to organize the activities they want to perform for the following reasons:
 Divide the work according to the nature & similarity of tasks.
 To pool resources & increase the efforts which lead to efficiency.
 Build continuity & synergy.

A manager who wants to organize his/her department must address these issues:
 Determine what is to be done
 Assigning tasks
 Decide how to achieve coordination
 Decide on a span of management
 Decide how much authority you should designate
 Draw an organizational chart

THE FORMAL ORGANIZATION

After the business plan is adapted, management will proceed to form an organization to
carry out the activities indicated in the plan.

The formal structure is described by management through:

1. Organizational Chart – a diagram that illustrates the relation of reporting
relationships, functions, departments, divisions and even individual position within
organizations.
-‘skeleton’ representation of organizational structure

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 ACEBA Systems Technology Institute Inc.
Senior High School
Organization and Management (Quarter 1)
Academic Track

2. Organization Manual- provides written descriptions of authority relationships, details

the functions of major organizational units, and describes job procedures.

3.Policy Manual- describes personnel activities and company policies.

INFORMAL GROUPS
Formal organizations require the formation of formal groups, which will be assigned to
perform specific tasks aimed at achieving organizational objectives. The formal group is
a part of the organizational structure. There are instances , however, when members of
an organization spontaneously form a group with friendship as a principal reason for
belonging. This group is referred to as an informal group. It is not a part of the formal
organization and it does not have a formal performance purpose.
What is an Organizational Structure?
 Shows the flow of interactions within the organization
 Specifies its division of work activities and shows how different functions of
activities are linked
 Shows level of specialization of work activities
 Indicates the organization’s hierarchy and authority structure
 Shows organization’s reporting structure
The determinants of an organization structure are:
1. Strategy or plans for achieving the company’s objectives
2. Technology that will be used in carrying out the strategy
3. People employed at all levels and their functions and
4. Size of the organization

Organization Structure Design

1. Traditional design- focuses on performance improvement of people in firms.
2. Modern design - focuses on team work, flexibility, and problem solving.

LEVELS OF MANAGEMENT AND SUPERVISION

The management and supervision of an organization may be done through levels of
hierarchy, which may be flat or tall.

Figure 18

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 ACEBA Systems Technology Institute Inc.
Senior High School
Organization and Management (Quarter 1)
Academic Track

Tall Structure

Tall Structure- This type of organizational structure has many layers and narrow span
of control. It has the following advantages:
a. Since the average span of control is narrower, the supervisory load is less for
each manager;
b. There are more opportunities for promotion because there are more levels of
positions;
c. Managers are provided with opportunities to specialize;
d. There is less demand for managers with multiple skills; and
e. Managers are afforded with more time to attend to other important problems.

Tall structures are also saddled with disadvantages such as the following:
a. Communication tends to be slower and distorted because of the number of
levels it has to pass through;
b. The number of management levels also hinders effective decision making
rendering such activity slower and less accurate; and
c. It is more expensive to maintain as there are more managers to compensate.

Figure 19
Flat Structure

Flat Structures- This type of organizational structure has few layers and wide span of
control. This characteristic provides it with the following advantages:
a. Communication is generally faster and less distorted
b. Decisions can be made quickly; and
c. Supervisors’ salaries are limited.

Disadvantages
a. They require managers with experience in the various tasks;
b. A manager may have little time for all subordinates;
c. When the manager is out, the group is without a leader; and
d. Managers may have little time to anticipate problems.

BASIC ELEMENTS OF ORGANIZATIONAL STRUCTURE

In designing the organizational structure, certain basic elements are considered. These
are as follows.

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 ACEBA Systems Technology Institute Inc.
Senior High School
Organization and Management (Quarter 1)
Academic Track

1. Work specialization -Dividing duties into simpler, more specialized task.

Managers and employees are assigned and perform duties based on
specialization and personal expertise

Advantages
a. Increase productivity
b. Foster specialization – simplify task, easily understood and completed
quickly
c. Assign task based on individual talent, interest and position

Disadvantages
a. Lower sense of control by managers
b. Create dissatisfaction and boredom – esp. routine and specialized task

2. Departmentation- is a process of grouping jobs into separate units activities or

tasks that are proposed.

There are six (6) types of Departmentalization/Organizational Structure

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 ACEBA Systems Technology Institute Inc.
Senior High School
Organization and Management (Quarter 1)
Academic Track

A. Functional structure- Used mainly by smaller firms that offer a limited line of
products because it makes efficient use of specialize resources. This method
eliminates overlapping in the execution of organizational activities.

Figure 22
Functional Structure
Advantages:
• Staffed by experts of each functions
• Easier supervision
• Easy to coordinate activities

Disadvantages:
• Difficult to get quick decisions or actions on a problem or situation
• Difficult to monitor performance, especially among individual

B. Product structure- Grouping the activities and functions on a basis of products

manufactured by the company.

Figure 23
Product Structure

Advantages:
• Activities can be easily focuses and coordinated
• Enhance speed and effectiveness of decision making
• Easy to assess performance and identify accountability/liability

Disadvantages
• Focus only on own products

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 ACEBA Systems Technology Institute Inc.
Senior High School
Organization and Management (Quarter 1)
Academic Track

• Increase the administrative costs

C. Customer structure - is the grouping of activities to reflect the interests of different

customers

Figure 23
Customer Structure

Advantages:
• Encourage concentration on customers’ needs
• It gives customers the feeling that they have an understanding supplier
• It develops expertise in the customer handling
Disadvantages:
• Difficult to coordinate operations between competing customer demands
• Requires managers & staff expert in customers’ problems

D. Geographical structure- A company or a part of it is organized around the places

where operations are located. It is commonly found in sales or manufacturing
operations.

Figure 24
Geographical Structure

Advantages:
• It offers better services at low cost
• It place emphasis on local markets & problems
• It offers better face to face communication with local interests
Disadvantages:
• It requires more staff with general manager abilities

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 ACEBA Systems Technology Institute Inc.
Senior High School
Organization and Management (Quarter 1)
Academic Track

• Top management has less control of the regional managers since they are
independent

E. Matrix structure- Also known as Multiple Command System

-Focus on two or more dimensions at the same time

Figure 25
Matrix Structure
Advantages:
• More efficient use of resources than single hierarchy
• Flexibility, adaptability, to changing environment

Disadvantages:
• Frustration & confusion from dual chain of command
• High conflict between 2 sided of matrix
• More meetings, more discussion than action

F. Network structure- Disaggregates major functions into separate companies that

are brokered by a small headquarter organization

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 ACEBA Systems Technology Institute Inc.
Senior High School
Organization and Management (Quarter 1)
Academic Track

e.g. manufacturing, engineering, sales & accounting is provided by separate

organization which specialized on that areas

Figure 26
Network Structure

Advantages:
• Global competitiveness
• Workforce challenge
• Reduce administrative cost
Disadvantages:
• No hands-on control
• Can lose organization part
• Employee loyalty weakened

3. Pattern of Authority- as an element in designing organizational structure refers to

the extent by which organization members are allowed to make decisions without
getting the approval of another member.
The appropriate pattern of authority. The environments of organizations differ and
so no single pattern of authority is appropriate for all. Instead, the pattern of authority
must match the organization’s environment. Centralized authority is better suited for
stable environments, while decentralized authority is for complex and changing
environments.
Decentralized authority offers the following advantages:
1. Efficiency
2. Flexibility
3. Initiative
4. Development

Disadvantages

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 ACEBA Systems Technology Institute Inc.
Senior High School
Organization and Management (Quarter 1)
Academic Track

1. Control
2. Duplication
3. Centralized Expertise
4. Competency

4 Span of Control-is another consideration in designing the organizational structure. It

refers to the number of subordinates reporting to a single supervisor.

The span of control may either be narrow or wide. It is narrow when there are few
subordinates reporting to a single supervisor. The narrow span of control is
characterized by the following:
1. There is closer relationship between manager and subordinates
2. There is less delegation of authority
3. Controlling activities is more tight; and
4. There is more time for rewarding behavior

Span of control is wide when there are many subordinates reporting to a supervisor.
The following characteristics are inherent to an organization with wide span of
control:
1. Employees work with little supervision
2. There is a high level of delegation of authority
3. Controlling is lighter; and
4. There is less time for rewarding behavior

5. Coordination – This term refers to the linking of activities in the organization that
serve to achieve a common goal or objective.

Prepared by: Rea Mariz I. Jordan/ Gumaca SHS-Teacher / 09.07.2020

 ACEBA Systems Technology Institute Inc.
Senior High School
Organization and Management (Quarter 1)
Academic Track

ACTIVITY 1
Name 10 organizations/companies and give their slogan. Write your answer in a piece
of yellow pad paper.
Example: BDO – “We find ways”

ACTIVITY 2
Act like an ideal organization leader trying to organize and influence your subordinates
to work towards the achievement of their organization’s or company’s vision, mission,
goals, and objectives by formulating your own organization vision, mission
statements, slogan and values and planning means to disseminate these to them.
Write your answer in a piece of yellow pad paper.
Name of Organization:
Vision:
Mission Statements:
Slogan:
Values:
Means for Disseminating Vision, Mission, Slogan, and Values:

ACTIVITY 3
Briefly explain the importance of developing organizing skill. Write your answer in a
piece of yellow pad paper.

ACTIVITY 4
Considering you are owner of a business. Prepare your own organizational chart and
compare it with the chart of other firm. Comment on the similarities and/ or differences of
the two charts.

Prepared by: Rea Mariz I. Jordan/ Gumaca SHS-Teacher / 09.07.2020