An entrepreneur organizes various factors of production like land, labour, capital, machinery, etc. for channelizing them into productive activities. The product finally reaches consumers through various agencies. Business activities are divided into various functions, these functions are assigned to different individuals.
Various individual efforts must lead to the achievement of common business goals. Organization is the structural framework of duties and responsibilities required of personnel in performing various functions with a view to achieve business goals through organization. Management tries to combine various business activities to accomplish predetermined goals.
Present business system is very complex. The unit must be run efficiently to stay in the competitive world of business. Various jobs are to be performed by persons most suitable for them. First of all various activities should be grouped into different functions. The authority and responsibility is fixed at various levels. All efforts should be made to co-ordinate different activities for running the units efficiently so that cost of production may be reduced and profitability of the unit may be increased.
Definition by Experts
Louis Allen, “Organization is the process of identifying and grouping work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.” In the words of Allen, organization is an instrument for achieving organizational goals. The work of each and every person is defined and authority and responsibility is fixed for accomplishing the same.
Wheeler, “Internal organization is the structural framework of duties and responsibilities required of personnel in performing various functions within the company. It is essentially a blue print for action resulting in a mechanism for carrying out function to achieve the goals set up by company management”. In Wheeler’s view, organization is a process of fixing duties and responsibilities of persons in an enterprise so that business goals are achieved.
Koontz and O’Donnell, ‘The establishment of authority relationships with provision for co-ordination between them, both vertically and horizontally in the enterprise structure.” These authors view organization as a coordinating point among various persons in the business.
Oliver Sheldon, “Organization is the process so combining the work which individuals or groups have to perform with the facilities necessary for its execution, that the duties so performed provide the best channels for the efficient, systematic, positive and coordinated application of the available effort”. Organization helps in efficient utilization of resources by dividing the duties of various persons.
Spriegel, “In its broadest sense organisation refers to the relationship between the various factors present in a given endeavor. Factory organisation concerns itself primarily with the internal relationships within the factory such as responsibilities of personnel, arrangement and grouping of machines and material control. From the standpoint of the enterprise as a whole, organisation is the structural relationship between the various factors in the enterprise”.
Spriegel has given a wide definition of the organization. He has described it as the relationship among persons, factors in the enterprise. All factors of production are coordinated in order to achieve organisational objectives.
George Terry, “Organising is the establishing of effective authority relationships among selected work, persons, and work places in order for the group to work together efficiently”. According to Terry organisation is the creation of relationship among persons and work so that it may be carried on in a better and efficient way.
C.H. Northcott, ‘The arrangement by which tasks are assigned to men and women so that their individual efforts contribute effectively to some more or less clearly defined purpose for which they have been brought together”. According to Northcott the purpose of organisation is to co-ordinate the activities of various individuals working in the organisation for the attainment of enterprise goals.
L.H. Haney, “Organisation is a harmonious adjustment of specialised parts for accomplishment of some common purpose or purposes”. Organisation is the adjustment of various activities for the attainment of common goals.
Concepts of Organisation:
- Static concept
- Dynamic concept,
1. Static Concept:
Under static concept the term ‘organisation’ is used as a structure, an entity or a network of specified relationship. In this sense, organisation is a group of people bound together in a formal relationship to achieve common objectives. It lays emphasis on position and not on individuals.
2. Dynamic Concept:
Under dynamic concept, the term ‘organisation’ is used as a process of an on-going activity. In this sense, organisation is a process of organising work, people and the systems. It is concerned with the process of determining activities which may be necessary for achieving an objective and arranging them in suitable groups so as to be assigned to individuals. It considers organisation as an open adoptive system and not as a closed system. Dynamic concept lays emphasis on individuals and considers organisation as a continuous process.
Characteristics of Organisation:
Different authors look at the word ‘organisation’ from their own angle. One thing which is common in all the viewpoints is that organisation is the establishment of authority relationship among persons so that it helps in the achievement of organisational objectives.
Some of the characteristics of organisation are studied as follows:
1. Division of Work:
Organisation deals with the whole task of business. The total work of the enterprise is divided into activities and functions. Various activities are assigned to different persons for their efficient accomplishment. This brings in division of labour. It is not that one person cannot carry out many functions but specialisation in different activities is necessary to improve one’s efficiency. Organisation helps in dividing the work into related activities so that they are assigned to different individuals.
Co-ordination of various activities is as essential as their division. It helps in integrating and harmonising various activities. Co-ordination also avoids duplications and delays. In fact, various functions in an organisation depend upon one another and the performance of one influences the other. Unless all of them are properly coordinated, the performance of all segments is adversely affected.
3. Common Objectives:
All organisational structure is a means towards the achievement of enterprise goals. The goals of various segments lead to the achievement of major business goals. The organisational structure should build around common and clear cut objectives. This will help in their proper accomplishment.
4. Co-operative Relationship:
An organisation creates co-operative relationship among various members of the group. An organisation cannot be constituted by one person. It requires at least two or more persons. Organisation is a system which helps in creating meaningful relationship among persons. The relationship should be both vertical and horizontal among members of various departments. The structure should be designed that it motivates people to perform their part of work together.
5. Well-Defined Authority-Responsibility Relationships:
An organisation consists of various positions arranged in a hierarchy with well defined authority and responsibility. There is always a central authority from which a chain of authority relationship stretches throughout the organisation. The hierarchy of positions defines the lines of communication and pattern of relationships.