what type of organisation to choose

What Type of Organisation to Choose


Some of the important factors to be considered are briefly discussed below.

(a) Size and nature of the business. The most important factor influencing the types of organisation is perhaps size of the business. In a business concern of small size the problems of management are few and a simple type of organisation like line organisation may be successfully applied. Whereas a large concern with complexities of departments and varied type of functions will require a more complex type of organisation like Functional or line and Staff Organisation.

(b) Continuity of Business. The type of organisation suitable for an enterprise with steady flow of business throughout the year will be different form the type found suitable for an enterprise where flow of business fluctuates from season to season. The former will naturally require a more permanent and complex type of organisation than the latter.

(c) Geographical Location. The geographical location of the various division so units of the enterprise is also important factor in choosing the type of organisation. If the unit (e.g., factory, sales and marketing division, etc.) are located in the same premises or a close proximity to one another, a comprehensive but more complex type of organisation will be suitable. But if the units are located in separate buildings situated miles apart, separate organisation based on line and staff type may be more suitable.

(d) Staff ratio and degree of mechanisation. The degree of supervision needed and the placement of different functions at different levels will depend on the ratio of unskilled to supervisory staff. Again the degree of mechanisation (ratio of machines to operatives) is also an important factor. Both these factors will have to be taken into consideration in choosing the type of organisation.