Advantages and DIsadvantages of Horizontal organizational structure

Advantages

a)      It is most logical and natural form of departments.

b)      It brings about specialization which makes optimum utilization of resources.

c)       It lays emphasis on each and every activity.

d)      It enables top management to exercise control over a number of functions.

e)      It facilitates deligation of authority and therefore reduce the work burden of top manager.

f)       It eliminates duplication of efforts which increase efficiency.

Disadvantages

a)      There may be conflict between departments as the responsibilities are interdependent.

b)      There may be difficulty in coordinating the activities of different department.

c)       There is ever emphasis on specialization.

d)      It maximizes supervision cost.

e)      It is non responsive to environmental change.

f)       It does not promote innovation and creativity.

Horizontal organizational structure

Ø   Horizontal organizational structure is concerned with dividing organization into sub units on the basis of convenience. It is to create department on different basis such as functional areas, multidivisional structure, product structure, geographic or territory structure, matrix structure.

    i)             Functional structure: - Functional structure is very much common and simple structure that organization follows. It is to create departments on the basis of functions of an enterprise. Various departments are created on the basis of nature of functions to be performed like production department, finance, marketing, engineering and human resource departments. All department heads are experts and specialists in their areas. When the department becomes too big or work is over loaded it may be classified into sub departments. It gives rise to specialization which makes member more efficient and skilled.

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Geographic structure

Ø  Departments are created under different regions or geographic location. This form of department or structure is applied specially in those organizations that involve in business activity in different geographical location. In other words those organizations which are scattered in different geographical location and region adopt this type of departmentation. The main objective of such departmentation is to give effective service to the people of particular region. Regional managers are free to work.

Advantages

a)      It helps to achieve local cooperation

b)      Local resources are best utilized.

c)       It facilitates the expansion of business into various regions.

d)      It considers the environmental change.

e)      There is better coordination of activities through the setting up of regional divisions.

f)       It can meet the local demand more effectively.

Disadvantages

a)      There may be problem of integration of various regional offices.

b)      There is possibility of duplication of physical facilities.

c)       It is more difficult to maintain central control over regional departments.

d)      There may be lack of skilled and efficient persons to take charge of regional departments.

e)      It is costly method of departmentaion.

Flat organizational structure

Ø  It is modern organizational structure. In flat organizational structure functional area is expanded on flat position on the basis of nature of function. The distance between top level management and low level management is narrow. The structure has few layers of management hierarchy. It has wide span of control on management. Authority is distributed among functional area. The concept of flat organizational structure has been developed due to increment in functional area. For each functional department authority and responsibility is delegated sufficiently. It is suitable for small organization having limited business activities. Main feature are: -

a)      These is high level of decentralization and delegation of authority,

b)      There is wide span of control,

c)       There are more functional departments,

d)      There Is close and personal supervision of top level management to each department.

Advantages

a)      It is less costly because it has only few manager

b)      Decision making process is quick because it has only few levels of management

c)       There are few levels of management so communication is quick

d)      Subordinates are free from strict supervision.

Disadvantages

a)      There is change of lack of discipline due to lose supervision and control,

b)      There may be lack of coordination among the subordinates because there are many subordinates under one manager,

c)       It may not be suitable for complex activities.

Five building block of organizing

1.       Division of work: - Organizing depends on the way the work is divided among the workers. And, for effective management function proper and effective division making is necessary. It makes an organization to run smoothly.

2.       Departmentation: - Activities having similar characteristics and purpose are grouped under one hand a department is created. Here will be a single plan for all those activities. The department is managed and headed by a manager who is known as a departmental manager.

3.       Hierarchy: - A hierarchy of authority establishes a relationship among employees so that they know the boundaries of their responsibilities and reporting relationship. There must be a line of authority and hierarchy of authority in organization. Authority always flows downward from upward.

4.       Coordination: - Coordination is the process of establishing linkage among activities, people, department and unit. Better coordination promotes co-operation and understanding among people, activities and department. Organization believes that only co-ordinate effort can achieve organizational goal.

5.       Allocation of resources: - Organization has limited resources (money, men, material and information). And, they must be allocated rationally among different departments, divisions and units. There must be minimum wastage of resources.

Features of a system

1.       Sub system: - System is composed of different subsystems which are interrelated and interdependent. Organization is also a system consisting of input, process, output and feedback.

2.       Open system: - Organization is an open system which interacts with external environment. Organization gets input from environment and provides output to the environment. A regular interaction takes place between organization and environment.

3.       Closed system: - Closed system is that system which doesn’t interact with external environment.

4.       Synergy: - Two or more subsystems working together produce more than the total of what they produce working alone. Synergy suggests that organizational units or subsystem may often be more successful working together than working alone.

5.       Entropy: - It is a normal process that leads to system decline. When an organization does not monitor feedback from its environment and make appropriate adjustment, it may fail.

6.       System boundary: - Every system has its own boundary which separates it from its environment. In a closed system, boundary is rigid but in open system boundary is flexible.

7.       Flow of information: - Information is vital to support the functioning of system. Information are converted into opportunities and action.

8.       Feedback: - Feedback is the response from the environment. It is the suggestion and advice of environment to improve quality work of organization.

Factors affecting decentralization

1.       Management philosophy: - When management is commitment in decentralization of authority. When top level management is highly supportive in decentralization. When top level management involves middle and lower level management in decision making and planning at that time decentralization is adapted.

2.       Organizational size: - As organizations grow higher and bigger and become more complex to manage decentralization is required.

3.       Organization: - If the organization is adapting decentralization approach from very beginning then it wants to give continuation of decentralization.

4.       Dispersal of organization: - Instead of locating in one or two places if the organization is scattered in various places at that time decentralization is required.

5.       Capacity of lower level: - If the lower level managers are highly competent enough decentralization is needed. But, if lower level management is not competent decentralization is not needed.

6.       Organizational environment: - Technological and competitive forces in the environment affect decentralization. Fast changing environment and complex task need decentralization.

7.       High cost: - Because of high cost decentralization may not be preferred. Therefore, highly economically capable organization applies decentralization.

Emerging management issues and challenges

1.       Globalization: - Globalization phenomenon is getting popular these days. Globalization of business refers to the free flow of goods service, technology, labor, capital information, across the national boundary; it is closer economic integration among different countries in terms of flow of good service, capital labor and technology. Globalization is the tendency of expanding business in different countries. Managers have to work in boundary less world. There is no territory or barrier in export and import business. Globalization invites global competition. Organizations which were competing locally with local competitors now they have to compete with global competitors. It is very difficult to organization to survive and develop in such situation. Organizations should increase quality of product and reduce cost which is a challenge for manager. Many organizations are becoming global these days. They are running their business in different countries with different culture, climate, and geography, political and economic system. It is a challenging work for managers to prepare executives officers who can run business in such countries.

2.       Workforce diversity: - Modern organizations are characterized by workforce diversity. Diversified workforce is the reality of business these days. Organizations are becoming heterogeneous in terms of ethnicity, gender, nationality, age group, etc. People having different religions, different nationality works together under one roof. Different people have different nature and they show different behavior because they come from different background. How to manage such diversified workforce is a great challenge for managers. If such diversified workforce is managed properly, organization will be highly benefited because they also bring diversified skill and knowledge. But, if they are not managed properly, they create serious problem.

3.       Quality assurance and productivity: - Quality is the ability of the product to satisfy customers need. How to improve quality of the product or how to assure customers about the quality of the product has become a great challenge for management. Quality ensures organizations survival and growth. Organizations use quality to compete with competitors. Only improving quality of product organizations can face the global competition. Therefore, there must be continuous improvement in quality. Quality improvement has no boundary. It is the race without final line. It is said that people buy quality not product. And, to improve quality is a really a challenge for management. Along, with increasing quality to increase productivity again is another challenge for management. Organization must try to achieve higher productivity. Higher productivity only helps to reduce cost. Productivity is the ratio between input and output. Improved technology, employees, regular skill development and better utilization of resources helps to increase productivity. Total quality management is the latest approach or needs to improve quality.

4.       Technological advancement: - How to utilize advanced and sophisticated technology has become another challenge for management. Technology has developed beyond the expectation of anybody in the world over last 100 years. Tremendous advancement has been made in production, distribution and information technology. Managers must manage all this technology with the development of computer, the face of information technology has absolutely changed. Introduction of internet, email and other electronic media, have benefitted organizations in the field of productions, distribution and other areas of business. Decision making have been facilitated by information technology. Technological advancement has changed the nature of job. Most of the jobs which were performed by unskilled and semi-skilled labors previously, now they are performed by skilled labors. Number of white collar job is increasing and blue collar jobs are decreasing. Organization must train their employees about new technology. Only with new technology, Organization can compete with other competitors.

5.       Ethics and social responsibility: - Ethics is study of how our decisions affect other people. It is the study of people’s right and duties. The moral rules the people to make decisions and the nature of relationship among people. Ethics is to follow social code of conduct, social norms, values and attitude. The decisions made by managers have a broad reach both inside and outside the organization. So, managers must follow ethical norms and consider social responsibilities. Managerial decision must be based on ethical ground. But, these days ethics id\s decreasing in business world. So, many business organizations have unethical practice. Because of the unethical practice of some business houses, all business world is blamed.

How to fulfill social responsibility is also a challenge for management. The concept of corporate social responsibility has developed. Social responsibility means obligation of business organizations towards society community, people, share holders, etc. To provide quality product at affordable price, to develop more and more employment opportunities, to carry out different development activities in society, to control pollution are some social responsibilities of business organizations.

6.       Innovation and change: - Management must pay attention on innovation and change. Otherwise, they would go out of business. Rapid innovations are taking place in technology, product and service. Product lifecycle is getting shorter and shorter. Product needs continuous improvement if the life span is to be made long. New ideas, new techniques, new methods are being innovated; there must be new inventions of ideas, new invention of product. Old and outdated product cannot satisfy customers.

There is change in external environment, political and legal, socio-cultural, economic and technological environment change rapidly. How to adjust with such change, how to keep pace with such change, how to keep pace with such change that has become challenge for management.

Empowerment: - This is the age of empowerment. Role difference between management and workers has narrowed down. Status between worker and manager is very narrow. Most of the decisions are taken at operating level. Workers are free to plan and schedule their work. They are given more and more autonomy and freedom. They participate in major decision making activities. Joint goal setting and joint performance evaluation has become common. Self managed work team had been established, more and more information are given to employees, and how to manage such empower team has become challenge for managers.

Emerging concept in organizing

1.       Team structure: - Team consists of group of people with diversified skill and knowledge who work together for common purpose. Teams are considered today as the most effective means to organize people and work activities. Team concept is getting popular as it breaks down departmental barriers and decisions are push down to work team. Organization perform complex task through teams. Teams achieve flexibility and increase productivity. Team based environment enhance performance reduce stress and promotes the climate of creativity and innovation in organization. Teams may be of different types.

a)      Problem solving teams: - It is formed from the same department to solve departmental problem.

b)      Cross functional team: - This team consists of members from various departments. Complex task and problems are assigned to this team.

c)       Self managed team: - This is very much powerful team which has well defined responsibility and authority. They have authority to make solution of the problem and implement solution. This team is also called autonomous team.

d)      Quality circle: - This team consists of members from the same department which work for quality improvement for product service and activities. They regularly meet and think about quality improvement. Small organizations themselves are team and in big organization there are teams at operational level.

2.       Virtual organizations: - Virtual organization is a temporary network of companies. They come together to quickly exploit fast changing opportunities. Its foundation is strong information technology platform. The essence of virtual organization is outsourcing. All managerial activities are outsources to other companies. Outsourcing is the process of giving jobs to other companies in contract which were previously performed by organization itself. The objective of outsourcing is to improve quality and reduce cost. Distribution, packaging, accounting, trading, recruitment and selection and even manufacturing. Activities are outsourced what leave them a little. Hence, it is called virtual organization. Management can concentrate on strategy formulation, policy formulation and coordination.

3.       Boundary less organization: - These organizations are known as barrier free or modular organization. A boundary less organization is one in which there are no barriers in information flow where they are best needed. It is not bound by chain of command and span of management. Members of these organizations do not have face to face conversation or contact. They establish relationship through modern important jobs. They are linked basically through computers. People are utilized where there services are needed. But, they are not formal member of organization.

4.       Organizational downsizing: - Organization downsizing is the planned reduction in jobs and positions. Common approach to downsizing improves eliminating functions, positions, hierarchical levels, dropping those products which continuously include loss. It is thus the process of becoming slimmer, smaller and faster by reducing the size of work force or eliminating divisions or business. Therefore, downsizing is the process of eliminating positions, jobs departments and hierarchical levels. The purpose of downsizing is to bring the organization in right size. The methods of downsizing are: -

a)      Firing

b)      Transfer

c)       Reduced work weeks

d)      Early retirement

e)      Lay off

f)       Job sharing

5.       Process reengineering: - The process reengineering emerged in management literature in 1950. Reengineering is a radical redesigning is the part of all business work process to achieve major gains in cost, quality, service and speed. In other words, it is concerned with radical redesigning work process to achieve improvement in critical area such as cost, quality service and speed.

Currently reengineering has become popular, redesigning strategy. It is the popular restructuring organization. When old structure does not function in changing environment, new structure must be designed. The important elements of process reengineering are: -

a)      It focus is on work process,

b)      It is a radical process improvement strategy,

c)       It applies to individual as well as organizational process,

d)      It tries to maximize the value added content and minimize those that does not add value,

e)      It aims to improve performance by redesigning work process.

Barriers in delegation of authority

1.       Reluctance to delegate: - In many cases managers will not be interested to delegate to authority. They will not be willing to give authority to subordinates. They will not make any plan to delegate authority. So, delegation of authority may be failure.

2.       Fear of subordinates: - Managers in many cases fear from subordinates because they think that when there is delegated authority their performance will be superior to the performance of manager and subordinate may pose challenge to the manager.

3.       Lack of trust: - Managers may lack confident or trust on subordinates. They do not think or believe that after delegating authority, subordinates will do better or their performance will improve. Hence, delegation of authority cannot take place.

4.       Incompetence of subordinates: - Subordinates must be competent enough for effective delegation of authority. Subordinate must be willing and competent to accept delegated authority. In many organizations due to the incompetency of subordinates delegation of authority is affected.

5.       Lack of reward: - Delegation of authority also increases responsibility, commitment, duties, etc. For increased responsibility reward must be increased. But, many managers delegate authority to subordinate, increase duties and responsibilities but they do not increase reward. Subordinates do not show any interest to accept authority because of lack of sufficient reward.

6.       Lack of control: - When employees are delegated authority, they will be free to work. They will work autonomously; managers cannot exercise effective control over them. Delegation is affected.

7.       Distorted delegation: - Managers do not delegate sufficient authority on the basis of responsibility. Insufficient authority becomes barrier in discharging responsibility effectively. Hence, delegation is affected. There will be more responsibility and insufficient authority.

Disadvantages of decentralization

1.       Problem of co-ordination and control: - Top management face problem of co-ordination and control. As all divisional and departmental manager are independent to work, make decision and plan their work schedule close direction and control is not possible in such organization co-ordination also becomes difficult as all department work independently.

2.       High cost: - Small organization cannot think about decentralization because of high cost. All divisional, departmental and unit manger have to be paid more and they ask for various benefits and facilities.

3.       Unsuitable for specialized service: - Decentralization is unsuitable for utilization of specialized services like accounting, personal and technical. They should be control by centre.

4.       Not suitable in emergency: - During emergency quick decisions are required and decentralization cannot give quick decision. Hence at the time of crisis and emergency, decentralization may not be suitable.

5.       Lack of managerial capacity: - To exercise authority, manager must be capable and competent enough but in many organizations there will be lack of managerial capacity to exercise authority. Hence decentralization may be infective.

6.       Managerial desires and fears: - Managers will not be willing to distribute authority or managers will not be willing to accept authority because they fear that they will not be in position to exercise authority. Hence decentralization is ineffective.

Disadvantages of centralization

1.       Poor environmental adaptation: - Centralization Is not suitable in dynamic and changing environment. As modern organization have to run in most dynamic and uncertain environment. Centralization cannot co-operate with environmental change and cannot adjust accordingly.

2.       Poor diversification management: - Centralization is suitable only in those organizations which has single business or single product. Diversification of business, product and activities cannot be better managed through centralization. When organization wants to run different business, manufacture different products and start different activities. IN this case centralization becomes ineffective.

3.       Unsuitable for programmed decision: - To take programmed decision which are frequently taken and used in day to day work, centralization is not required.

4.       Poor management development: - Management means developing managers and executives. As all decisions are taken by top level management so middle and lower level management cannot participate and involve in decision making and planning. So, middle and lower level managers are poorly developed.

5.       Low motivation and commitment: - When employees have the authority to make decision, naturally they will be de-motivated at work and their commitment decreases, their moral will be low.

6.       Delayed decision: - Top level management will be overloaded by decision making and decisions cannot be taken at right time.

Barriers in delegation of authority

1.       Reluctance to delegate: - In many cases managers will not be interested to delegate to authority. They will not be willing to give authority to subordinates. They will not make any plan to delegate authority. So, delegation of authority may be failure.

2.       Fear of subordinates: - Managers in many cases fear from subordinates because they think that when there is delegated authority their performance will be superior to the performance of manager and subordinate may pose challenge to the manager.

3.       Lack of trust: - Managers may lack confident or trust on subordinates. They do not think or believe that after delegating authority, subordinates will do better or their performance will improve. Hence, delegation of authority cannot take place.

4.       Incompetence of subordinates: - Subordinates must be competent enough for effective delegation of authority. Subordinate must be willing and competent to accept delegated authority. In many organizations due to the incompetency of subordinates delegation of authority is affected.

5.       Lack of reward: - Delegation of authority also increases responsibility, commitment, duties, etc. For increased responsibility reward must be increased. But, many managers delegate authority to subordinate, increase duties and responsibilities but they do not increase reward. Subordinates do not show any interest to accept authority because of lack of sufficient reward.

6.       Lack of control: - When employees are delegated authority, they will be free to work. They will work autonomously; managers cannot exercise effective control over them. Delegation is affected.

7.       Distorted delegation: - Managers do not delegate sufficient authority on the basis of responsibility. Insufficient authority becomes barrier in discharging responsibility effectively. Hence, delegation is affected. There will be more responsibility and insufficient authority.

Decision making

v  It is another important part of management. Managers are decision makers. Whatever they do they are the outcome of decision making. Managers have to make decisions in various areas. Decision making is the process of selecting best alternative out of available many alternatives. In the absence of alternatives decision making may not be required. The success of manager is measured in terms of how appropriate he can take decision.

The decision making process includes: -

1)      Identifying problems

2)      Developing alternatives

3)      Evaluating alternatives

4)      Selecting best alternative

5)      Putting the decision into action.

Decentralization

  Ø  When decision making power or authority is dispersed or disturbed throughout the organization, it is called decentralization. Supervisors, unit manager, departmental managers and all divisional managers will have sufficient authority. Therefore, decentralization is the systematic effort to delegate to the lowest level all authority except that reach can exercised at central level. It is pushing down authority and power of decision making to the lower level of organizations. The centers of decision making are dispersed throughout the organization. However, the transference of authority from higher level to lower level.

As the organization grows in size and complexities, decentralization tends to increase. The faster the rate of organizational growth the greater the need for decentralization. The top management cannot undertake all the work load. Hence, top management divides top workload into several parts and they are assigned to divisions, departments and units required authority are given to them for the accomplishment of assigned task. Under decentralization departmental managers, unit managers and section heads can take decisions independently. Decentralization particularly is important when business environment is fast changing and decisions must be made quickly as well.

Contributions and limitations of system theory of management

Contributions

1.       Holistic and integrated view: - System theory makes holistic and integrated view. It helps manager to whole organization.

2.       Integrated thinking: - Manager must make integrated thinking of organization. Instead of thinking separate activities, a manager can think as a while and make plan.

3.       Interrelated and interdependent: - Subsystems are interrelated and interdependent. Manager can better understand how a disturbance in one part of organization affects other part of organization and how the whole organization is affected.

Limitations

1.       The theory doesn’t offer specific tools and technique for practicing managers.

2.       System theory is criticized as being too abstract and vague, so it cannot be applied into practical problems.

3. It fails to specify the nature of interaction and interdependence between and organization and its environment.

Contribution and limitations of management science theory

# Contributions

1.       Management science theory has opened new frontiers (ways) for managers.

2.       It provides manager, plenty of decision making tools and techniques.

3.       Enhanced managerial understanding of overall managerial process.

# Limitations

1.       It ignores the people relationship and non quantifiable factors.

2.       It is useful in solving physical problems of organization where measurement if difficult, it has no application.

3.       It cannot account individual behavior and attitude.

4.       It ignores other managerial skills rather than management science technique.

5.       It is useful but it cannot solve all problems.

6.       The quantitative models are not suitable for non routine or unpredictable management decision.

Contingency approach to management

 Ø  This theory recognizes the situational nature of management. According to this theory is based theory, management is absolutely situational. Manager practice depends upon situation. Contingency theory is based upon situation. Contingency theory is based on the nature and condition of situations. Every situation is unique, different situations demand different managerial practice. Managerial practice appropriate in one situation cannot be generalized in other situation. According to this theory, the technique of problem solving appropriate in one situation may not be applicable in other situation. There is no one best method of doing. There is no one best method of planning, organizing, directing and controlling, before managing the organization and before handling the problem. Manager must analyze, situation or conditions according to situation, he \she must apply managerial practice. This theory does not agree with universal application of management principles. Different factors affect this theory or there are 6 major contingency variables. They are: -

     1.       Size of organization

     2.       Task technology

     3.       Environmental uncertainty

     4.       Geographical spread of organization

     5.       The type of work being done

6.        Individual differences.

Centralization

Ø  Centralization means authority is centralized at top level of management. In other words, centralization of authority is the relative retention of decision making authority by top level of management. When top management retains power and authority without delegating to the subordinates in planning and decision making matters. In centralization all units and departmental manager directly report to general manager. The role of subordinates in decision making is minimal in centralized organization is preferred when specialized skills, talent and technologies is too expensive for the organization, to place them in different location.

According to Ricky Griffin, “Centralization is the process of systematically retaining power and authority in hands of higher level manager.”

Types of Authority

1.       Line authority: - Line authority entitles am angers to direct the works of subordinates. It flows from top to bottom in organizational hierarchy. Line authority is the right to make decision use resources, command others, and issue order controls the activities of subordinate. It is the right to reward and punish subordinates who have line authority, they can take decisions without consulting others. Line authority is exercised by line managers and line personnel. Production manager, marketing, financial manger will have line authority.

2.       Staff authority: - Staff authority is expert based authority. Staff authority is exercised by experts and specialist in organization. Staff authority cannot make decision, command others and issue orders. Those who have staff authority they can suggest or advise line managers or line personnel. They can play only advisory role in organization not decisive role legal advisor, human resource manager, production expert; financial expert will have staff authority. The advise or suggestion given by staff authority or personnel is not binding the line manager to imply the decision compulsory.

Authority

Ø     In simple word, authority is the right to make decision and use resources. It is the right to command and give order. It is the right to influence the action of subordinates, those who are at top position; they will have more authority than those who are at lower position. Authority basically rests on position. Authority is required to discharge responsibility successfully; therefore every employee in organization must have sufficient authority.

                                  According to Stephen Robbins, “Authority is the right to act or command others to act,     towards the achievement of organizational goal.”

Advantages of Delegation of authority

1.       Higher productivity: - Subordinates or employees production will increase as they are delegated authority. They can work autonomously. They will have freedom to work. Sense of satisfaction increases and automatically productivity goes up.

2.       Employee development: - Delegation of authority increase the skill, knowledge and expertise of employees. Employee participates in decision making and problem solving. They know how to develop alternatives and make decisions. They know how to solve problem and face challenges. Delegation of authority acts as training and development programs for employees.

3.       Use of expertise: - All subordinates in organization will have their own skill and knowledge. They have their own expertise. If they are delegated sufficient authority then they can we their skill knowledge and expertise while performing their assigned task. Organization will be benefitted from the expertise of subordinates.

4.       Speedy decisions: - When employees are delegated authority the decisions making will be quick. Top management will not be overloaded by decisions. Subordinates can make decision in right time.

Improved organizational climate: - Delegation of authority increases employee’s commitment and loyalty towards work and organization. It improves employee’s performance. Organizational climate will be more favorable. Organizational performance as a whole will increase.

Advantages of decentralization

1.       Quick and better decision: - Departmental manager divisional managers will have authority to make decision. They can use their knowledge, expert, skill in decision making. When the make decision autonomously decision making will be quick and better decisions are possible.

2.       Diversification: - Business of product diversification is possible in decentralization. By using expertise and knowledge of managers various kinds of business can be started, Different products can be launched and different activities can be performed.

3.       Competitive organizational climate: - Decentralization promotes competitive climate of improving performance among division, department and profit part. Comparison of unit wise performance is possible this increases productivity and profitability.

4.       Management development: - Hence, departmental managers have authority to make decisions, make plan and utilize resources. They can improve their talent, skill, knowledge. Managers know how to make decision, how to formulate plan, how to face challenges and how to solve problems. This also promotes innovation and creativity. Potential managers can be developed.

5.       Environmental adaptation: - Modern organization has to run in fast challenging environment. They have to adjust with such changing environment otherwise they will lag behind. Decentralization is an appropriate method/ approach for adjusting with changing environment. Managers know how to work in changing environment, capitalize opportunities and face challenges.

6.       Employees motivation and high moral: - When employees are provided authority to right to make decision, they will be highly motivated at work and their moral will be heightened. Their commitment will increase. Authority is the strong source of motivation.

Reduces burden of top management; - In decentralization most of decisions are push down to low level and middle level manger. Most of the problems are solved by them. Hence, burden of top management will be reduce and they will have sufficient times to formulate policies and strategies.

Advantages of centralization

1.       Specialization management: - Higher the degree of specialization greater the need of centralization. To manage effectively specialization, centralization is preferred. Tall organizational structures with different functional department are better managed by centralization. Effective control and coordination are fascinated by centralization.

2.       Complexity management: - Specialization of job and narrow span of management create complexity in organization and such complexities are better managed by centralization. Uniform policies and practice are better managed by centralization.

3.       Significant non-programmed decision making: - Significant non-programmed decision should be taken by top level management. They are very important from the point of view of organization. They involve high cost.

4.       Environment stability: - Centralizations suitable in stable environment. It is very easy to take decision in stable environment.

5.       Improved capacity at lower level: - When lower level management have less capacity to take decision or when lower level management is not competent enough to take decision and solve problem at that time centralization is preferred.

6.       Crisis management: - Organization faces different crisis and to manage such crisis quick decisions are required and top level management can take quick decision. During the time of emergency quick decisions are required.

Cost-effective: - Centralization is economical and cost-effective. Middle and lower level manager are not given too much facilities as they do not have to take decision and solve problems.

Advantages and disadvantages of matrix organizational structure

# Advantages

a)      Better coordination and control: - This structure is very much suitable to coordinate and control the functional activities and project activities. Project manager has got responsibility to establish better coordination and control system in organization. Functional authority flows downwards and project authority flows horizontally which enables to establish better control and coordination.

b)      Adaptable to dynamic environment: - It is hybrid type of organizational structure which can easily adjust with changing environment at business world. The project managers have functional independently and they can get quickly feedback with information related with project. Along with project mange, employees from different functional area are specialists and adjustment does not become problematic.

c)       Effective utilization of resources: - Project structure makes very  much effective utilization of resources available. The whole staff along with project manager is specialists in various areas. And has to make maximum utilization of resources. They know better hoe to utilize project capacity and time, how to utilize human and financial resources they know better.

d)      Particular management: - In this type of organizational structure people work in project as a team. They participate in decision making and problem solving activity. They make joint team effort. They have authority to carry out day to day activity. Frequent sharing of ideas and opinion with project manager is common.

e)      Sufficient time for top management: - It encourages delegation of authority to project managers. Project managers are responsible for operation of the project. They have authority to take decision about day to day activity of project. Employee working in project will also have sufficient authority. Hence, top management will have sufficient time to think about policy and strategies.

f)       Excellence in inter disciplinary specialization: - In matrix organizational structure experts and specialists from various functional areas are combined together and quality performance becomes possible. All experts from various disciplinary or functional areas interact with each other and they make excellent specialization.

g)      Development of team work: - Team work is facilitating project organization or matrix organization itself is team work. Employees from various functional areas work under the spirit of team and make the project successful. Team effort is made.

# Disadvantages     

a)      Violation of unity of command: - They get command from two superior functional or departmental manager and project manager. He or she has to report superior at a time i.e; project manager and functional manager. He/she will be in confusion. Unity of command hence is violated.

b)      Costly structure: - Matrix organizational structure involves huge overhead cost. There will be much paper work and information collection that involves heavy cost. Most of the worker or employees are specialist and they are given high remuneration and facilities and amount is given to project workers in many cases as incentives.

c)       Problem of overspecialization: - Matrix organizational structure create problem of over specialization in some situations. Specialist from both functional project works gather to show many complex problems of the organization. As many experts gather to solve problems they waste valuable time in supporting their own ideas and sometimes problems remains unsolved. It becomes like the famous saying “Too many cooks spoils the food”.

d)      Difficult to balance: - There will be two types of specialists functional and project specialist. And, to make a balance between these two specialist is a difficult task. Therefore, high level of interpersonal skill or specialists is required to balance these two types of experts and to maintain balance between project authority and functional authority is also difficult task.

e)      Feeling of insecurity: - Those employees who are specially appointed for the projects they feel a sense of insecurity after the completion of the project. This may cause project completion delay. Loyalty and commitment towards project may decrease.

f)       Lack of white coordination: - In a matrix organization there will be a problem of maintaining effective coordination among project workers, functional workers and among the workers from various functional areas. Project manager have to make a high level of exercise to maintain effective coordination in the organization.

Lack of commitment: - In a matrix organization, there wil be lack of commitment among employees towards project. No one will be responsible and loyal to the completion of the project. Due to the lack of commitment project completion delays, project cost increases. Unless and until the project is completed. They will get good amount with salary and benefit, this also decreases their commitment.