Directorate of distance education master of business administration

Self-Assessment Questions 
1. 
Differentiate between formal organization structure and informal 
organization. 
2. 
What are the pre-requisites of a good organization structure?
3. 
How should an organization structure be designed?
4. 
Differentiate staff authority from line authority. 
5. 
Explain traditional types of organization. 
6. 
Suggest organizational structures for HRM department. 
Summary 
Organization structure is the basic framework.  All have to work 
within this frame.  For efficient functioning an effective organizational 
structure is needed. A formal structure arises and is built on the basis of 
hierarchy.  An informal structure arises out of consultation and belief.  
The advantages of a good organizational structure are: i. facilitates good 
management, ii. Helps growth, iii. Gives assistance to technological 
improvement and iv. encourages the personnel. 
Structure facilitates authority relationships, which in turn gives 
control, order, direction and compliance. There are line relationship, staff 
relationship, line and staff relationship.  There is a need for understanding 
and coordination between line and staff personnel. 
The usual types of organization are i. functional type, ii. Product 
type and iii. Matrix type.

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Both the organization and HRD department shall have a good 
organization structure.  The structure may differ according to size, 
geographical spread, nature of product or service. 
Answer key 
1. 
Formal organization – based on hierarchy, while informal organization 
is automatically developed on faith, confidence and skill.  Both 
are essential and the management should also encourage informal 
organization. 
2. 
Pre-requisites – simplicity, flexibility, good line of authority, delegation 
with authority carrying responsibility, different managerial cadres, 
unit of command and good staff function. 
3. 
Various factors to be considered before modeling organizational 
charts. 
4. 
Staff authority – advisory – specialists line authority – direct 
superior and subordinate Advantages of staff authority and needed 
coordination. 
5. 
Traditional – Functional type, product type and Matrix. 
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