by Nature of an Organization
There are some common features of organization through which a clear idea about its nature can be obtained. These are indicated below:
Process
Organization is a process of defining, arranging and grouping the activities of an enterprise and establishing the authority relationships among the persons performing these activities. It is the framework within which people associate for the attainment of an objective.
The framework provides the means for assigning activities to various parts and identifying the relative authorities and responsibilities of those parts. In simple term, organization is the process by which the chief executive, as a leader, groups his men in order to get the work done.
Structure
The function of organizing is the creation of a structural framework of duties and responsibilities to be performed by a group of people for the attainment of the objectives of the concern. The organization structure consists of a series of relationships at all levels of authority.
An organization as a structure contains an “identifiable group of people contributing their efforts towards the attainment of goals.” It is an important function of management to organize the enterprise by grouping the activities necessary to carry out the plans into administrative units, and defining the relationships among the executives and workers in such units.
Dividing and Grouping the Activities
Organizing means the way in which the parts of an enterprise are put into working order. In doing such, it calls for the determination of parts and integration of one complete whole on the other. In fact, organization is a process of dividing and combining the activities of an enterprise.
Activities of an enterprise are required to be distributed between the departments, units or sections as well as between the persons for securing the benefits of division of labour and specialisation, and are to be integrated or combined for giving them a commonness of purpose.
- Urwick defines organization as: ‘determining what activities are necessary to any purpose and arranging them as groups which may be assigned to individual.
- Accomplishment of Goals or Objectives
An organization structure has no meaning or purpose unless it is built around certain clear-cut goals or objectives. In fact, an organization structure is built-up precisely because it is the ideal way of making a rational pursuit of objectives. Haney defines organization as: “a harmonious adjustment of specialised parts for the accomplishment of some common purpose or purposes”.
Authority-Responsibility Relationship
An organization structure consists of various positions arranged in a hierarchy with a clear definition of the authority and responsibility associated with each of these. An enterprise cannot serve the specific purposes or goals unless some positions are placed above others and given authority to bind them by their decisions.
In fact, organization is quite often defined as a structure of authority-responsibility relationships.
Human and Material Aspects
Organization deals with the human and material factors in business. Human element is the most important element in an organization. To accomplish the task of building up a sound organization, it is essential to prepare an outline of the organization which is logical and simple. The manager should then try to fit in suitable men. Henry Fayol says in this connection: “see that human and material organizations are suitable” and “ensure material and human order”.
From these features of organization, it emerges that, an organization is essentially an administrative ‘process’ of determining what activities are necessary to be performed for the achievement of objectives of an enterprise, dividing and grouping the work into individual jobs and, a ‘structure’ of positions arranged in a hierarchy with defined relationships of authority and responsibility among the executives and workers performing these tasks for the most effective pursuit of common goals of the enterprise.
Characteristics
- Economic activity:
Business is an economic activity of production and distribution of goods and services. It provides employment opportunities in different sectors like banking, insurance, transport, industries, trade etc. it is an economic activity corned with creation of utilities for the satisfaction of human wants.
It provides a source of income to the society. Business results into generation of employment opportunities thereby leading to growth of the economy. It brings about industrial and economic development of the country.
- Buying and Selling:
The basic activity of any business is trading. The business involves buying of raw material, plants and machinery, stationary, property etc. On the other hand, it sells the finished products to the consumers, wholesaler, retailer etc. Business makes available various goods and services to the different sections of the society.
- Continuous process:
Business is not a single time activity. It is a continuous process of production and distribution of goods and services. A single transaction of trade cannot be termed as a business. A business should be conducted regularly in order to grow and gain regular returns.
Business should continuously involve in research and developmental activities to gain competitive advantage. A continuous improvement strategy helps to increase profitability of the business firm.
- Profit Motive:
Profit is an indicator of success and failure of business. It is the difference between income and expenses of the business. The primary goal of a business is usually to obtain the highest possible level of profit through the production and sale of goods and services. It is a return on investment. Profit acts as a driving force behind all business activities.
Profit is required for survival, growth and expansion of the business. It is clear that every business operates to earn profit. Business has many goals but profit making is the primary goal of every business. It is required to create economic growth.
- Risk and Uncertainties:
Risk is defined as the effect of uncertainty arising on the objectives of the business. Risk is associated with every business. Business is exposed to two types of risk, Insurable and Non-insurable. Insurable risk is predictable.
- Creative and Dynamic:
Modern business is creative and dynamic in nature. Business firm has to come out with creative ideas, approaches and concepts for production and distribution of goods and services. It means to bring things in fresh, new and inventive way.
One has to be innovative because the business operates under constantly changing economic, social and technological environment. Business should also come out with new products to satisfy the growing needs of the consumers.
- Customer satisfaction:
The phase of business has changed from traditional concept to modern concept. Now a day, business adopts a consumer-oriented approach. Customer satisfaction is the ultimate aim of all economic activities.
Modern business believes in satisfying the customers by providing quality product at a reasonable price. It emphasize not only on profit but also on customer satisfaction. Consumers are satisfied only when they get real value for their purchase.
The purpose of the business is to create and retain the customers. The ability to identify and satisfy the customers is the prime ingredient for the business success.
- Social Activity:
Business is a socio-economic activity. Both business and society are interdependent. Modern business runs in the area of social responsibility.
Business has some responsibility towards the society and in turn it needs the support of various social groups like investors, employees, customers, creditors etc. by making goods available to various sections of the society, business performs an important social function and meets social needs. Business needs support of different section of the society for its proper functioning.
- Government control:
Business organisations are subject to government control. They have to follow certain rules and regulations enacted by the government. Government ensures that the business is conducted for social good by keeping effective supervision and control by enacting and amending laws and rules from time to time.
- Optimum utilization of resources:
Business facilitates optimum utilization of countries material and non-material resources and achieves economic progress. The scarce resources are brought to its fullest use for concentrating economic wealth and satisfying the needs and wants of the consumers.
