Fundamentals of Organizing | MGT 213

This unit covers organizing concepts, principles and process, approaches to organizing, departmentalization, delegation, and authority–responsibility relationships.

Concept and Principles of Organizing

Meaning of organizing

• Organizing is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships so people can work together effectively to accomplish objectives.

• It's essentially about creating an organization's structure—deciding how best to group activities and resources. All the tasks needed to achieve goals get assigned to people, and authority-responsibility relationships are created among them.

• Organizing involves pulling people into the organization, identifying job responsibilities, grouping jobs into work units, allocating resources, and creating work conditions so people and things work together for maximum success.

Notable definitions

1. Louis Allen: Organizing is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for enabling people to work most effectively together in accomplishing objectives.

Principles of organizing

1. Unity of goals/objectives: Different departments and sections should have harmony in their objectives. Even though departments have different objectives, each individual contributes toward a single common objective.

2. Specialization: Each individual should be given specific work based on their ability, so they can concentrate on a single task and perform with greater efficiency.

3. Balance/coordination: Different departments have people doing different types of work. Coordination helps achieve the common goal by communicating and integrating the work performed.

4. Delegation of responsibility and authority: When someone is made responsible for a function, they should get the authority needed to complete it. There must be a balance between authority and responsibility.

5. Chain of command and unity: Each employee should report to only one supervisor. Receiving orders from many superiors creates confusion about which orders to prioritize.

6. Scalar chain: All employees are linked in a hierarchy or superior-subordinate relationship. It's the root of communication from top level to lower level and vice-versa.

7. Span of control/supervision: There should be a limited number of subordinates under a supervisor so work can be supervised effectively. The optimum span ensures close supervision.

8. Exception: Complex and exceptional problems should be handled by top-level management, while routine and regular work goes to lower-level management.

9. Efficiency: The organization should attain its mission and objectives at minimum cost through optimum utilization of resources.

10. Balance (of work): Work should be divided equally across departments and assigned based on capability, with an appropriate combination of centralization and decentralization.

11. Flexibility: The structure should be flexible enough to cope with environmental changes. A strict structure creates problems in grabbing opportunities from environmental changes.

12. Simplicity: All members must understand the organizational design and their line of authority and responsibility. Effective leadership and communication are easier in a simple structure.

13. Unity of direction: One head and one objective for a group of activities with the same objective. Many objectives under one boss creates disorder.

Approaches to Organizing

Three main approaches

1. Classical approach: Focuses on efficiency and suggests managers increase organizational efficiency to boost production. Key contributors are F.W. Taylor, Henri Fayol, and Max Weber. It includes scientific management, administrative management, and bureaucratic management. Its assumptions are that structure can be built as a hierarchy of rights, that a "one best way" of managing can be found through scientific inquiry, and that the organization is directed by definite rules and regulations.

2. Behavioral approach: Focuses on developing work groups and interpersonal relations, placing high value on people at the workplace. It combines psychology and sociology. Main contributors are Abraham Maslow, Douglas McGregor, Elton Mayo, and Frederick Herzberg. Its perspectives: organizations exist to fulfill human needs, organizations and people need each other, and a proper fit between individual and organization benefits both.

3. Contingency approach: Studies the situational nature of management and views the organization in interrelationship with its environment. There is no "one best way" to manage because circumstances vary, and desired outcomes can be achieved in several ways.

Why contingency is often considered superior

• Today's business environment is dynamic and complex, so managers must adapt to changing situations to get the best result. Organizational design and managerial systems must fit specific situations. Tools and techniques highly effective in one situation may not work at all in another.

Process of Structuring an Organization

Steps of the organizing process

1. Determination of objectives: Every organization is established to achieve certain objectives. Objectives should be specific, measurable, achievable, realistic, and time-bound.

2. Division of work: Breaking down a complex job into small, manageable units. This makes individuals responsible for a limited set of activities rather than the whole job. develops specialization, and maximizes productivity.

3. Identification and grouping of activities: All activities are identified and classified by nature into groups or subgroups. This involves creating departments and sections and assigning responsibility to specialized members. Common bases include purchase, production, finance, marketing, and human resources.

4. Delegation of authority: Individuals can't complete their responsibilities unless given authority. There must be a balance between authority and responsibility. Adequate authority builds confidence and a sense of self-responsibility.

5. Coordination of activities: Different departments perform different activities, so managers must communicate with subordinates and fellow managers regularly. Coordination develops mutual relationships, group effort, and team spirit toward mutual objectives.

Departmentalization

Meaning of departmentalization

• Departmentation is the systematic sub-division of activities into individual jobs, regrouping jobs into work units, and integrating them into departments. It's the process of grouping similar work into manageable units to coordinate all the organization's activities.

• It makes a manager independent and responsible for a particular job so their efficiency can be fully used. It simplifies administration and increases efficiency by placing the right person in the right job.

Notable definition

1. Y.K. Bhusan: Departmentation is the process of grouping activities into manageable units for the purpose of administration.

Types/bases of departmentalization

1. By function: All functions are grouped into departments like production, finance, credit, human resource management, and marketing. A manager is appointed to regulate all activities of the concerned department.

2. By product/service: A separate department is formed for each type of product. Each is independent and responsible for its own operation. This suits manufacturing companies producing different types of products.

3. By location/territory/geography: Activities are categorized by geographical area and assigned to a department head, grouped into regions, zones, districts, or branches. It suits large-scale enterprises distributing products widely. Examples include cold drinks, tobacco, and insurance markets.

4. By time or shift: A separate department is created for each shift with a head appointed to handle it. Hospitals, hotels, and colleges use this type in Nepal.

5. By number: Employees are grouped by number—for example, employees 1 to 20 in one unit and 21 to 40 in another, each headed by an independent head.

Delegation of Authority

Meaning of delegation

• Delegation of authority is the process of assigning specific work to individuals within the organization and giving them the right to perform that work. It's how management gets work done through other people.

• Managers delegate some of their authority to subordinates. When subordinates get authority, it develops dedication to the work, minimizes the top managers' workload, and develops the overall working efficiency of the organization.

Notable definition

1. Ricky Griffin: Delegation is the process by which managers assign a portion of their total workload to others.

Related concepts

1. Authority: The right to make decisions, direct subordinates, take action, and use organizational resources to achieve objectives. Every manager needs adequate authority to perform assigned duties.

2. Responsibility: The obligation of a person to fulfill the duty assigned to them. When authority is delegated, responsibility is transferred along with it.

3. Scalar chain: The principle that links all employees in a hierarchy or superior-subordinate relationship. It's the route of communication from top to bottom and must be clear and short for effective communication.

4. Span of control: The number of subordinates a manager controls or supervises. Effective span is affected by the manager's ability, nature of work, and the qualifications and competencies of employees.

Features of delegation

1. Transfer of authority: Authority is passed from superior to subordinate to complete specific jobs.

2. Responsibility remains with delegator: Delegating authority does not mean delegating responsibility—the delegator stays accountable.

3. Individualistic process: It generally involves a superior and their immediate subordinate.

4. Essential for structure: Delegation is essential to get things done; otherwise it becomes difficult to assign responsibility.

Advantages of delegation

1. Reduces workload of managers: Managers can't supervise every task, so they delegate routine work and focus on managerial and creative work, improving their efficiency.

2. Benefits of specialization: Delegation lets individuals become specialists in particular work. Assigning work to those with the ability and knowledge improves quality and overall efficiency.

3. Training and development: It gives subordinates a chance to use initiative and show talent. This builds their confidence to take on further responsibilities, making it the best way to develop employees.

4. Facilitates growth and expansion: When power is delegated, a person has authority to make decisions. This provides flexibility in structure, allowing adjustments for expansion. and diversification.

5. Quicker and better decisions: When subordinates get authority over their own work area, they make quick, practical decisions without wasting time consulting superiors, because they know the reality of their work situation.

Barriers to delegation of authority

1. Fear of losing importance and control: Managers feel delegation decreases their importance and prefer holding authority themselves, delegating only what relates to subordinates' job responsibilities.

2. Reluctance to delegate: Some managers think they can make better decisions than subordinates. This is often seen in recently promoted managers with an ego, which leaves subordinates with less work and less commitment.

3. Lack of control: Unskilled or incapable managers lose control over delegated duties and feel unsure they'll achieve results if they delegate.

4. Lack of proper trust: When managers lack confidence and trust in subordinates, they hesitate to delegate. A manager who can't make sound decisions won't take the risk of getting the job done through others.

5. Inability of subordinates: Managers fear that capable subordinates may perform better and threaten their careers. Such managers have low self-confidence and want to dominate subordinates.

Ways to eliminate obstacles to delegation

1. Understand the need and objectives: Managers should recognize they should do the activities subordinates cannot, which develops capabilities and overall efficiency.

2. Develop confidence and motivation in subordinates: Train and develop subordinates so they build confidence, and allow them to learn from mistakes. Managers should trust employees.

3. Develop effective communication: Two-way communication between managers and subordinates encourages subordinates to accept more responsibilities.

4. Motivation: Motivate subordinates through autonomy, reward, and recognition so they're ready to accept extra responsibilities.

5. Choose the right person for the right job: Delegation works best when the selected person can perform the assigned task.

6. Clarify tasks through training: Clearly define delegated tasks with expected outcomes so subordinates know what's expected and perform better.

Centralization and Decentralization

Meaning of centralization

• Centralization is the systematic reservation of decision-making authority at the top level of management. This system is appropriate for small organizations operating in a competitive environment.

Meaning of decentralization

• Decentralization is the tendency to disperse decision-making authority to the lowest levels in the organizational structure. When the environment is complex and uncertain, decision-making authority is delegated to lower levels who need to implement those decisions.

• The philosophy is that top management reserves limited authority and delegates maximum authority to operating levels. Decentralization is the result of effective delegation of authority at the working level.

Notable definition

1. Louis A. Allen: Decentralization is the systematic and consistent delegation of authority to the level where the work is performed.

Advantages of decentralization

1. Relief to top management: As the organization grows in size and complexity, routine responsibilities are delegated to middle and lower levels, letting top managers focus on strategy and policy.

2. Better and quicker decisions: It facilitates consultative and quick decisions. Supervisors closest to operations better understand the complexity of problems.

3. Facilitates management development: Delegating authority to lower-level managers lets them develop skills, make decisions, and exercise judgment for future growth.

4. Higher morale and motivation: It gives subordinates a sense of honor and power. Being trusted and given authority develops a feeling of recognition and commitment.

5. Facilitates diversification: When a firm expands its activities or product lines, decentralizing authority to departmental managers helps meet the challenge of diversification successfully.

Disadvantages of decentralization

1. Costly method: It involves heavy overhead expenses, requires better-trained employees, and needs a new information processing system with larger networking, making it costly and time-consuming.

2. Difficulty in uniformity: When each department head has freedom to formulate policy in their own way, it creates problems of uniformity in action across departments.

3. Chances of misuse: When decision-making is dispersed to unqualified subordinates, wrong decisions can cause misuse of power and resources, and increases cost and risk.

4. Can increase decision risks: Subordinate managers have authority only for routine decisions, not complex or emergency situations, which can delay important decisions.

5. Difficulty in communication and coordination: Different units work independently and in different locations, making it hard for top management to coordinate and stay in touch with day-to-day activities.

Factors affecting decentralization

1. History of the organization: If the organization grew within the control of the owner, there tends to be centralization, following past trends and avoiding delegation.

2. Philosophy of management: The ideology of top management matters. If management is liberal in delegating, subordinates get more freedom; larger organizations tend toward greater decentralization.

3. Size of organization: Small organizations have fewer activities, so the owner controls everything directly. Large organizations with complex activities require a higher degree of decentralization.

4. Availability of competent employees: Highly experienced and competent subordinates allow a higher degree of decentralization, since authority can't safely be delegated to incompetent employees.

<div style="text-align: center;">Delegation vs decentralization</div>

Organic and Mechanistic Views of Organization

Organic view

• The organic view is a modern, highly adaptive and flexible form of organization structure. Its flexible structure allows it to change rapidly as required.

• Employees tend to be professionals who are technically proficient and trained to handle diverse problems. They need few formal rules and little direct supervision because their training has instilled standards of professional conduct.

• The organic organization is low in centralization, so professionals can respond quickly to problems.

<div style="text-align: center;">Organic vs mechanistic organization</div>

Traditional Organizational Structures

Types of traditional structures

1. Simple structure: A basic structure typically with a business owner and few management levels, suited to small organizations.

2. Functional structure: Activities are grouped by function such as production, finance, and marketing, with a manager regulating each department.

3. Divisional structure: The organization is divided into divisions based on products, services, or territories, each responsible for its own operation.

Flat structure (a related traditional concept)

• A flat organizational structure has few or no middle management levels between staff and executives. It typically includes a business owner and one level of managers, far fewer than vertical or matrix structures.

• It gives employees more autonomy, increased responsibility, and decision-making authority, ensuring open communication and low hierarchy between executives and frontline employees.

Main benefits of flat structure:

1. Employee autonomy: Employees are empowered to make decisions, increasing job satisfaction and motivation.

2. Transparency: Free flow of information builds trust and helps employees align their work with company goals.

3. Reduced cost: Fewer middle managers means lower costs on remuneration, benefits, and pay.

4. Organizational agility: The structure is flexible and adaptable, allowing quick responses to market shifts.

5. Creativity and innovation: Higher autonomy and cross-functional teams drive creative ideas and innovation.

Modern Organizational Structures

Types of modern structures

1. Matrix structure: A project-type structure where subordinates report to both functional managers and project managers. Its disadvantages include violation of unity of command (orders from more than one superior) and feeling of job insecurity once a project ends.

2. Team organizational structure: Focuses on project-type teams with no functional hierarchy. Work is divided into projects handled by dedicated teams (problem-solving, self-managed, cross-functional, and virtual teams). Merits include collective goal setting, effective communication, complementary skills, and flexibility. Demerits include conflict, difficulty coordinating, weak control, and complex decision-making.

3. Network organizational structure: An alliance of several organizations to produce a product or provide a service, also called virtual or modular structure. It eliminates unnecessary departments and performs specialized work through outsourced experts. Merits include minimized administrative cost and flexibility; demerits include lack of secrecy, difficulty coordinating, increased dependency, and loss of control.

4. 360-degree organizational structure: A feedback system that collects evidence about an employee's job performance from peers, subordinates, line managers, customers, and suppliers, usually anonymously. Merits include self-awareness, transparency, and focus on strengths. Demerits include distrust, being time-consuming, and biased opinions.

Cross-functional teams

• Cross-functional teams consist of members from different work areas but at the same level, brought together to accomplish a specific task. Members are experts in various specialties who develop new ideas, solve problems, exchange information, and coordinate complex projects.

Virtual organization concept

• A virtual organization is a temporary network of companies that come together to exploit market opportunities. They link through computers and the internet, so information technology is the main foundation.

• They combine skills and resources to reach global markets and gain competitive advantage. They never meet face-to-face but work through understanding and network relationships.

Emerging Concepts in Organizing

Modern approaches to organizing

1. Work team concept: Teamwork is an important element of organizational effectiveness. Team members are empowered to plan, implement, and evaluate their performance, allocate resources, and control activities—useful for new product development and innovation.

2. Boundaryless concept: Boundaryless organizations are free from barriers in information flow and not bound by traditional hierarchy, chain of command, or span of management. This emphasizes flexibility so the structure can be modified for changing situations, generally involving highly skilled people.

3. Learning organization concept: Based on knowledge and learning, a learning organization develops the capacity to learn, adapt, and change with the environment. Common features are shared vision, knowledge updating, creativity, flexibility, and a knowledge workforce.

4. Organizational downsizing concept: The process of forming a smart structure by reducing positions, workforce size, or eliminating divisions to minimize operating cost. Methods include firing, transfers, reduced workweeks, early retirement, and layoffs.

5. Virtual organization concept: Temporary arrangements among members who join to meet a changing competitive environment through a strong network of relationships. It outsources many functions and relies on information technology (computers and the internet).

6. Reengineering process concept: The dramatic redesign of business processes to reduce cost and improve quality, service, and speed. It involves changes in structure, technology, and people, redesigning processes like product development, order fulfillment, and customer service from scratch.

Important Questions and Solutions

Exam-style questions with solutions for this unit.

1. Sketch the diagram of geographic departmentation. (2083)

2. What is organizational structure? Discuss the major modern organizational structure. (2083)

Organizational structure is the overall framework of authority–responsibility relationships, hierarchy and rules within an organization. It is created through the organizing function, which decides how activities and resources are grouped, which jobs are assigned to which people, and how those people relate to one another. A flexible structure suits a dynamic environment, while a rigid structure suits a stable one.

Traditional structures include the simple, functional and divisional forms. Today’s dynamic environment, however, has given rise to the following modern structures:

1. Matrix structure: this is a project-type structure in which each subordinate reports to two managers at the same time: a functional manager (such as the production or finance head) and a project manager. Functional specialists are drawn into project teams for the duration of a project. For example, a construction company may run several projects at once, each drawing engineers and accountants from their departments.
2. Demerits of the matrix structure: it violates the principle of unity of command, because employees receive orders from more than one superior, which creates confusion. Employees may also feel job insecurity once a project ends.
3. Merits of the matrix structure: it makes efficient use of specialists across projects, allows the organization to respond flexibly to many projects, and develops cross-functional skills.
4. Team organizational structure: this structure is built around project-type teams instead of a functional hierarchy. Work is divided into projects, and each project is handled by a dedicated team.
5. Types of teams: this structure uses four kinds of teams:
   a. problem-solving teams, which work on specific issues;
   b. self-managed teams, which plan and control their own work;
   c. cross-functional teams, whose members come from different areas;
   d. virtual teams, whose members work together through technology.
6. Merits and demerits of the team structure: its merits are collective goal setting, effective communication, complementary skills and flexibility. Its demerits are conflict among members, difficulty in coordination, weak control and complex decision making.
7. Network organizational structure: this is an alliance of several organizations that together produce a product or provide a service. It is also called a virtual or modular structure. It eliminates unnecessary departments, and specialized work such as manufacturing, delivery or IT is outsourced to expert firms.
8. Merits and demerits of the network structure: its merits are lower administrative cost and greater flexibility. Its demerits are lack of secrecy, difficulty in coordination, increased dependency on partner firms and loss of control.
9. Virtual organization: this is a temporary network of companies that join together to exploit a market opportunity. Its members link through computers and the internet, so information technology is its foundation. They combine skills and resources to reach global markets and gain a competitive advantage, and they work through a network of understanding without meeting face to face.
10. Cross-functional teams: these teams consist of members from different work areas who are at the same level and are brought together to accomplish a specific task. As experts in various specialties, they develop new ideas, solve problems, exchange information and coordinate complex projects.
11. Flat (boundaryless) tendency: modern structures reduce middle management levels and remove barriers to the flow of information. Boundaryless organizations are not bound by the traditional hierarchy, chain of command or span of management. This gives employees autonomy, transparency and agility, and reduces cost.
12. 360-degree organizational structure: this is a feedback-based system that collects evidence about an employee’s job performance from all around, including peers, subordinates, line managers, customers and suppliers. The feedback is usually collected anonymously.
13. Merits of the 360-degree structure: it builds self-awareness, increases transparency and focuses attention on employees’ strengths.
14. Demerits of the 360-degree structure: it can create distrust, it is time-consuming and some opinions may be biased.
15. Choosing the right structure: following the contingency approach, there is no one best structure. A Nepali firm should choose the structure that fits its size, environment, technology and the competence of its employees, for example a matrix structure for project-based work or a network structure for an e-commerce startup that outsources delivery.

Modern organizational structures replace rigid hierarchy with flexibility, teamwork, technology and networks. This helps organizations adapt quickly to a dynamic and competitive environment.

3. Mention four obstacles for delegating authority. (2081)

Delegation of authority often faces certain barriers that prevent managers from delegating effectively. Four of them are:

1. Fear of losing importance and control: managers feel delegation reduces their importance, so they prefer holding authority themselves.
2. Reluctance to delegate: some managers believe they can make better decisions than their subordinates.
3. Lack of proper trust: managers who lack confidence in their subordinates hesitate to delegate work to them.
4. Inability of subordinates: managers fear that capable subordinates may perform better and threaten their careers.

4. Explain the barriers to delegation of authority. (2080)

Delegation of authority is the process of assigning specific work to subordinates and giving them the right to perform it, but managers often face barriers that hold back effective delegation. These barriers, along with the ways to overcome them, are explained below.

The barriers to delegation are:

1. Fear of losing importance and control: managers feel that delegation decreases their importance, so they hold on to authority and delegate only what directly relates to subordinates' job responsibilities.
2. Reluctance to delegate: some managers think they can make better decisions than subordinates — often seen in recently promoted managers with an ego — leaving subordinates with less work and commitment.
3. Lack of control: unskilled or incapable managers lose control over delegated duties and feel unsure whether results will be achieved.
4. Lack of proper trust: when managers lack confidence and trust in subordinates, they hesitate to delegate, unwilling to risk getting the job done through others.
5. Inability of subordinates: managers fear that capable subordinates may outperform them and threaten their careers, so those with low self-confidence want to dominate subordinates instead.

The ways to eliminate these barriers are:

1. Understand the need and objectives: managers should recognize they must do what subordinates cannot, which develops overall capability and efficiency.
2. Develop confidence and motivation in subordinates: train and develop subordinates, trust them, and allow them to learn from mistakes.
3. Develop effective communication: two-way communication encourages subordinates to accept more responsibilities.
4. Motivation: motivate subordinates through autonomy, reward, and recognition so they are ready to take on extra responsibility.
5. Choose the right person for the right job: delegation works best when the selected person is capable of performing the assigned task, and tasks should be clarified through training with expected outcomes.

In conclusion, delegation is obstructed by fear, reluctance, lack of trust, and weak subordinate ability, but managers can overcome these through trust, training, communication, motivation, and proper task assignment.

5. Organizational effectiveness depends on proper organizational structure. Discuss the statement and explain the process of structuring an organization. (2079)

Organizing is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships so people can work together to accomplish objectives — and a proper structure is central to organizational effectiveness. The statement and the process of structuring an organization are discussed below.

Discussion of the statement:

1. Structure provides framework: a proper organizational structure creates a clear framework of jobs, authority, and relationships that lets people work together toward common goals.
2. Enables specialization: a good structure divides work so each person concentrates on a specific task, improving efficiency and productivity.
3. Clarifies authority and responsibility: proper structure balances authority with responsibility, so everyone knows their duties and reporting lines.
4. Ensures coordination: it integrates the work of different departments toward the common objective, avoiding duplication and confusion.
5. Supports communication: a clear scalar chain establishes the route of communication from top to bottom and vice-versa.
6. Provides flexibility: a well-designed structure can adapt to environmental changes and grab new opportunities.
7. Conclusion of discussion: since structure determines specialization, coordination, authority, and adaptability, organizational effectiveness clearly depends on having a proper organizational structure.

The process of structuring an organization involves the following steps:

8. Determination of objectives: every organization is established to achieve certain objectives, which should be specific, measurable, achievable, realistic, and time-bound.
9. Division of work: the complex job is broken down into small, manageable units, making individuals responsible for limited activities and developing specialization.
10. Identification and grouping of activities: all activities are identified and classified by nature into departments and sections — such as purchase, production, finance, marketing, and human resources — with responsibility assigned to specialized members.
11. Delegation of authority: individuals are given the authority needed to fulfill their responsibilities, maintaining a balance between authority and responsibility.
12. Coordination of activities: managers communicate regularly with subordinates and fellow managers to develop mutual relationships, group effort, and team spirit toward common objectives.
13. Result of the process: following these steps produces a clear, coordinated structure in which resources and people work together effectively.
14. Role in effectiveness: each step directly strengthens efficiency, so a well-structured organization performs better than a poorly structured one.
15. Overall assessment: the statement is valid — organizational effectiveness genuinely depends on a proper structure built through a systematic organizing process.

In conclusion, a proper organizational structure is the foundation of effectiveness, and it is achieved through the organizing process of setting objectives, dividing work, grouping activities, delegating authority, and coordinating activities.

6. State and explain different types of modern organization structures. (2078)

Modern organizational structures are flexible, technology-driven designs developed to meet the needs of a dynamic and competitive business environment, moving beyond traditional hierarchies. The different types are explained below:

1. Matrix structure: a project-type structure in which subordinates report to both a functional manager and a project manager, combining functional and project lines of authority.
2. Drawbacks of matrix structure: it violates unity of command because orders come from more than one superior, and it can create a feeling of job insecurity once a project ends.
3. Team organizational structure: it focuses on project-type teams with no functional hierarchy, with work divided into projects handled by problem-solving, self-managed, cross-functional, and virtual teams.
4. Merits of team structure: collective goal setting, effective communication, complementary skills, and flexibility.
5. Demerits of team structure: possibility of conflict, difficulty in coordination, weak control, and complex decision-making.
6. Network organizational structure: an alliance of several organizations to produce a product or service (also called virtual or modular structure), which eliminates unnecessary departments and uses outsourced experts for specialized work.
7. Merits of network structure: minimized administrative cost and high flexibility.
8. Demerits of network structure: lack of secrecy, difficulty in coordination, increased dependency, and loss of control.
9. 360-degree organizational structure: a feedback system that collects evidence about an employee's performance from peers, subordinates, line managers, customers, and suppliers, usually anonymously.
10. Merits and demerits of 360-degree structure: merits include self-awareness, transparency, and a focus on strengths, while demerits include distrust, being time-consuming, and biased opinions.

In conclusion, modern structures such as matrix, team, network, and 360-degree designs give organizations the flexibility, coordination, and responsiveness needed to succeed in today's complex business environment.

7. What is organic views of organization? (2078)

The organic view of organization is a modern, highly adaptive, and flexible form of organizational structure whose flexible design allows it to change rapidly as required. In such organizations, employees tend to be professionals who are technically proficient and trained to handle diverse problems, so they need few formal rules and little direct supervision. The organic organization is low in centralization, which lets professionals respond quickly to problems.

8. Define centralization and decentralization. Which approach is appropriate for the family-owned small business? Give reasons. (2077)

Centralization and decentralization describe where decision-making authority is located within an organization, and both have their own suitability. Their meanings and the appropriate approach for a family-owned small business are explained below.

1. Meaning of centralization: centralization is the systematic reservation of decision-making authority at the top level of management, and it is appropriate for small organizations operating in a competitive environment.
2. Meaning of decentralization: decentralization is the tendency to disperse decision-making authority to the lowest levels of the structure, where top management reserves limited authority and delegates maximum authority to operating levels. According to Louis A. Allen, decentralization is the systematic and consistent delegation of authority to the level where the work is performed.
3. Nature of the family-owned small business: such a business is small in size, has few activities, and is usually controlled by the owner or family members.

For a family-owned small business, centralization is the appropriate approach, for the following reasons:

4. Small size and few activities: small organizations have limited activities, so the owner can directly control everything without dispersing authority.
5. Owner's direct control: family businesses grow within the control of the owner, so decisions are naturally kept at the top, following past trends and avoiding delegation.
6. Quick decisions: with authority centralized, the owner can make fast decisions suited to a competitive environment.
7. Lower cost: centralization avoids the heavy overhead, extra trained staff, and information systems that decentralization requires, which suits a small budget.
8. Uniformity of action: keeping authority at the top ensures consistent policy and uniform action across the small business.
9. Limited competent staff: small family businesses may lack highly competent employees to whom authority could safely be delegated, making centralization safer.
10. Suitability confirmed: since the business is small, owner-controlled, and cost-sensitive, centralization fits its situation better than decentralization.

In conclusion, centralization reserves authority at the top while decentralization disperses it, and for a family-owned small business centralization is the appropriate approach because of its small size, owner control, need for quick and uniform low-cost decisions, and limited competent staff.