IM Unit 2 PDF

# BCA, BBA-ITM & PGDCA PROGRAMME ## BBA-ITM Semester-1 (i) ### Subject:- Introduction to Management (IM) ## Unit 2 Planning and Organizing ### A. Planning 1. Meaning & Definition of Planning 2. Characteristics 3. Importance of Planning 4. Planning Process ### B. Organizing (Organization) 1....

# BCA, BBA-ITM & PGDCA PROGRAMME ## BBA-ITM Semester-1 (i) ### Subject:- Introduction to Management (IM) ## Unit 2 Planning and Organizing ### A. Planning 1. Meaning & Definition of Planning 2. Characteristics 3. Importance of Planning 4. Planning Process ### B. Organizing (Organization) 1. Meaning & Definition of Organizing 2. Guiding Principles of Organizing 3. Process of Organizing 4. Forms of Organizing Structure:- (Line, Functional, Line & Staff, Limited Liability Partnership (LLP), One Person Company (Concept) ## A. Planning :- ### Introduction:- Business is an economic activity, which has the motive of earning profit. Business enterprise has to collect complete information of various activities to be performed well in advance and consider matters like, who will do, what type of work, how, when and to what extent. Thus planning is forecasting the future in present. Planning is a universal process. Whether it is a battle-field, a play ground, a business unit, a political institute, a religious institute or a social institute, planning is required in every field. ### 1. Meaning and Definition of Planning:- **Meaning:-** - What we want to achieve in future and how? For this various alternatives are to be considered and from those the best alternative is to be selected. - Planning is to collect information for the activities to be undertaken in business, consider them in advance and plan out how to do these activities. **Definition :**- - According to Bill Goetz:- "Task of planning is choosing." - According to George R. Terry:- "Function of planning means, assumption for results, policy to follow function, stages and to decide the method to be followed." - Planning is an intellectual process to achieve the goal. ## 2. Characteristics of Planning:- 1. **Universal Process:-** Planning is a universal process. It is present in every field like business, politics, education, religion or a social field. 2. **Primary Function:-** Planning is the primary function of management. Management starts with planning. Other functions of management like organisation, staffing directing, controlling are implemented on the basis of planning. 3. **Conscious and Mental Process:-** Planning is a conscious and mental process because in planning, decisions are taken consciously and on the basis of calculative assumptions. 4. **Flexibility:-** Planning contains various calculations and assumptions. Business enterprise is affected by external factors therefore necessary changes should be made in planning as per time, circumstances and situations. Flexibility is the precondition for planning. Planning is not a static element. 5. **Precise:-** Planning is a process for the future. The matters considered for planning are to be studied exactly. Statistical data, collected information, etc. must be perfect and precise. 6. **Forecasting is Essential:-** Forecasting is done by considering future uncertainties while making a plan for a business unit. Therefore, forecasting and planning are considered as the first function of management. 7. **List of Alternatives:-** Planning in any field includes various plans and alternatives For Example, There can be many alternatives to increase the sales in future like increase in advertisement, reduction in prices, training to salesman or declaration of attractive offers to increase the sale, etc. Selection of the best alternative out of it is to be done. 8. **Concerned with Future:-** Planning presumes uncertainties involved in future. Forecasting and assumptions are done later on. In short, planning is related with future because it is evaluating future at present and accordingly making arrangement for the same. 9. **Continuous Process:-** Planning is a continuous and perennial process. Planning is that process which begins with the establishment of the organisation and continuous till the end. As per time and circumstances, the plans are also required to be changed. 10. **Objective Oriented Activity:-** Planning is made to achieve pre-determined objectives of the business. Management decides future targets as per objectives of business. Accomplishment of objectives become easy if the targets are pragmatic. Thus planning is an objective oriented activity. 11. **Requires Decision Process:-** Planning involves selection of the best alternative. Various alternatives are considered and assumptions are made and the decision is taken to select the best alternative. Thus decision making process is necessary in planning. ## 3. Importance of Planning:- Planning helps an organisation in the following ways: 1. **Planning provides direction:** Planning provides direction and a sense of purpose for the organisation. Without plans and goals, organisations merely react to daily occurrences without considering what will happen in the long-run. Plans avoid this drift situation and ensure that short-range efforts will support and harmonize with future goals. It helps an organisation decide what to do and when to do it. It reduces aimless activity and makes action more meaningful. 2. **Planning provides a unifying framework:** A plan helps people to set priorities and put effort accordingly. A plan tells everyone what the organisation hopes to achieve and what the contribution of each department must be, and who is to utilize resources to achieve the goals. Plans help in coordinating effort at various levels. In the absence of a plan, the organisation would be pulled in different directions, creating confusion and misunderstanding at various levels. 3. **Planning is economical:** Effective plans coordinate organisational work and eliminate unproductive effort. Guess work is banished. Facilities are employed to the best advantage. Waste motions and idle facilities are removed By focusing attention on what is to be done, how and when it is to be done, plans help an organisation to economically utilize the physical and financial resources. This, ultimately, improves efficiency of operations. 4. **Planning reduces the risks of uncertainty:** Planning helps an organisation to cope with an uncertain future. It helps management to anticipate the future and prepare for the risks by making necessary provisions to meet the unexpected turn of events. Planning minimizes the chances of mistakes and unpleasant surprises because objectives, policies and strategies are formulated after a careful scrutiny of internal as well as external environment. Planning, thus, seeks to minimize risk while taking advantage of opportunities. 5. **Planning facilitates decision making:** Decision-making involves searching of various alternative courses of action, evaluating them and selecting the best one. Planned targets serve as the criteria for the evaluation of different alternatives so that the best one may be chosen. If there are no plans for the future, there are few guidelines for making current decisions. For example, decisions have to be made in present for a product to be introduced three years in the future. When future plans exist, decisions consistent with the future plans are made. Further, without plans, people will make decisions according to their own preference rather than those of the organisation. 6. **Planning encourages innovation and creativity:** Planning involves looking ahead and preparing for the future. The process of looking ahead, forces an organisation to be alert of opportunities and threats in the environment. It forces managers to find out new and improved ways of doing things in order to remain competitive and avoid the threats in the environment. It compels the managers to be creative and innovative all the time. Planning helps managers to visualize problems early and take suitable remedial steps. It helps them exploit opportunities and come out as 'winners' in a competitive world. 7. **Planning improves morale:** Once members know what is expected of them, they can contribute better. When goals are properly defined, work assignments can be fixed and everyone can begin to contribute to the achievement of these goals. This produces improvements in morale. Further, planning permits employees to participate in the thinking process. This helps them develop a broad mentality. Also, when the plan is actually translated into action, they feel that it is their own plan. Positive attributes are, thus, developed. 8. **Planning facilities control:** Planning and controlling functions are said to be 'Siamese twins' (inseparable twins). There is nothing to control without planning and without proper control, planning proves to be a wasteful and an unproductive exercise. Plans serve as yardsticks for measuring performance. They help in channelizing behaviour in the right direction. They help in preventing mistakes, oversights and deviations. ## 4. Planning Process :- Planning is an intellectual process. Planning is a map of the future, in which management plays vital role. Future is uncertain therefore decided plan is to be implemented stage wise as given below: 1. **Determination of Objectives:-** The first step in planning is setting the objectives. It is said that, if objectives are determined in proper manner, planning becomes useful to the management. Objectives should be pragmatic, it means they should be realistic and intellectual. 2. **Clarifying Planning Premises:-** After determining the objective, clarification of planning premises is must in the planning process. These premises means assumption or forecasting. Forecasting is made after the consideration of internal and external factors affecting the business unit. If the premises are not clear and precise, there is possibility of the failure of planning. 3. **Collection and Analysis of Information:** After planning premises, necessary information has to be collected either directly or indirectly. After the collection of information, its classification, analysis and interpretation are to be done. It helps to make assumption to get the expected result in future. 4. **Preparation of Alternative Plan:** After collecting, analysing and interpreting informations, alternative plan is to be made. A list of alternatives is to be prepared. **For Example,** to sale the goods either by producing or by purchasing. 5. **Evaluation of Alternatives:** Various alternatives which are considered feasible are taken for detailed evaluation. Factors affecting the business unit and contribution of each alternative is considered. It is an intellectual process. Mathematical and statistical methods are used for the evaluation of alternatives. Business unit prepare an ideal plan as a model with the help of 'Operation Research' [O.R.]. 6. **Selection of the best Alternative:** The various alternatives are evaluated, analysed and scrutinized for the selection of best alternative. 7. **Formulation and Evaluation of Subsidiary Plan:** Different projects or alternatives have to be considered as per basic plan or in support of basic plan. These plans are known as subsidiary derivative plan. **For Example,** A car manufacturing company is taking a decision 'make or buy tyres', then it is known as subsidiary plan. As the subsidiary plan is prepared, it is necessary to evaluate the same so it will not obstruct the basic plan in future. 8. **Evaluation of Plan:** After formulation and evaluation of subsidiary plan, entire plan is evaluated When ever it is necessary, a business unit takes the help of expert and consultant to evaluate the plan. It helps to get correct opinion as well as to take the appropriate decision. When we proceed step by step. the principle of 'Look and Leap' is to be adopted. At every stage evaluation is necessary. ## B. Organisation :- (Organization) ### Introduction The goal of the organization is set by planning. The success of Management is not only based on planning but also on the effective implementation of planning. The formal administrative structure that is formed to enable effective implementation of planning is called Organizing. When more than one persons are working towards the achievement of a common goal, the effective organization is essential. The success and goal achievement of any unit/work depends on proper division of work, distribution of authority and responsibility, delegation of authority among the employees. The objectives which are determined at the time of formation of organizing process, are methodically applied and for the same, organizing is inevitable. Hence it is said that Planning is the Brain of Business Enterprise, Co-ordunation is soul and Organization is its body. ### 1. Meaning and Definition of Organizing:- **Meaning:** - In general words... The structure formed in order to enable delegation of authority and responsibility towards the people actively engaged for common goal is organizing. **Definition:** - As per Chester I. Bernard, "The activity conducted by the co-operation of two or more people and their co-ordination is called Organizing," - As Per Louie Allen, "Organizing is the process of identifying and classifying the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives." ## 2. Guiding Principles of Organizing :- In designing a sound organisation structure, following principles can be helpful: 1. **Unity of Objectives:-** An organisation and every part of it should be directed towards the accomplishment of common objectives. The application of this principle implies the existence of formulated and understood objectives. An organisation structure can be called sound only when it is able to achieve the desired objectives. 2. **Efficiency:-** An organisation is efficient if it is able to accomplish predetermined objectives at minimum possible cost. An organisation should also provide maximum possible satisfaction to its members and should contribute to the welfare of the community. 3. **Division of Work:-** The total task should be divided in such a manner that the work of every individual in the organisation is limited as far as possible to the performance of a single leading function. The activities of the enterprise should be so divided and grouped that there is the most efficient breakdown of tasks. 4. **Span of Control:-** No executive should be required to supervise more subordinates than he can effectively manage. On account of the limitation of time and ability, there is a limit on the number of subordinates that an executive can effectively supervise. 5. **Scalar Principle:-** Authority and responsibility should be in a clear unbroken Line from the highest executive to the lowest executive. There must be a clear chain of command. Every subordinate must know who his superior is and to whom policy matters beyond his own authority should be referred for decision. 6. **Delegation:-** Authority delegated to an individual manager should be adequate to enable him to accomplish results expected of him. Authority should be delegated to the lowest possible level, consistent with necessary control so that coordination and decision-making can take place as close as possible to the point of action. 7. **Functional Definition:-** The duties and authority-relationships of different Individuals must be clearly defined so that there is no confusion or overlapping. The relationships between various jobs should also be clearly defined. 8. **Absoluteness of Responsibility:-** The responsibility of the subordinate to his superior absolute. No superior can escape responsibility for the organizational activities of his subordinates. Similarly, subordinates must be held responsible for the performance of tasks assigned to them. 9. **Correspondence:-** Authority and responsibility must be coterminous and co-extensive. The responsibility exacted from a position should be commensurate with the authority delegated to that position, and vice versa. 10. **Unity of Command:-** Each person should receive orders from only one superior and be accountable to him. This is necessary to avoid the problems of conflict in Instructions and divided loyalty and to ensure the feeling of personal responsibility for results. 11. **Unity of Direction:-** There must be one head and one plan for a group of activities directed towards the same objective. 12. **Balance:-** The various parts of an organization should be kept in balance and none of the functions should be given undue emphasis at the cost of others. In order to create organizational or structural balance, it is necessary to maintain a balance between centralisation and decentralisation, between narrow span of management and long lines of communication, between line and staff, etc. 13. **Exception Principle:-** Every manager should take all decisions within the scope of his authority and only matters beyond the scope of his authority should be referred to higher levels of management. This principle is also known as authority level principle. 14. **Coordination:-** There should be an orderly arrangement of group effort and unity of action in the pursuit of a common purpose. The purpose of organizing is to secure unity of effort. 15. **Flexibility:-** The organization must be free from complicated procedures and red tape. Devices, techniques and environmental factors should be built into the structure to permit quick and easy adaptation of the enterprise to changes in its environment. 16. **Continuity:-** Change is the law of nature. The organization should be so structured as to have continuity of operations. Arrangements must be made to enable people to gain experience in positions of increasing diversity and responsibility. ## 3. Process of Organizing :- The formation of organizing is a scientific process. **According to Peter F. Drucker,**"The lack of proper formation of organization can not sustain for longtime. Hence, the unit is slowly destroyed." It is through ensuring proper steps of the formation of organizing that the functional relations are established in a proper manner which should be done properly. 1. **Clarification of Objectives:** Before formation of organizational structure, it is necessary to have the clearly defined goals and its proper understanding. The main and the sub goals should be properly interpreted and on the basis of which organization is formed. Hence the establishment of proper goals and with proper clarity is the first step towards proper organizing. 2. **List of Functions:** After having clearly defined goals, with the help of organizational structure, the list of work to be done is prepared. At the time of preparing such a list it is ensured that not a single task is left or is repeated, and a special care is taken for the same. Hence the list of functions should be prepared on the basis of its proper consideration and the final distribution should be done. 3. **Departmentation of Function:** Once when the list of functions is prepared, the work area similar in nature are classified and similar functions are placed together, then the division of work is done accordingly. Work is divided as per purchase area, sales area, accounts area, etc. and then work division and specialization is planned. The division is planned according to nature of unit, geographical area, work area, etc. **For Example,** the division of business unit selling products in entire country, zone wise division of selling as per south, east, west, north zones. In the same way, work based distribution as per advertising task, packing task, distribution task etc. in sales department is also considered at the time of division of work. 4. **To Determine Departmental Position and Abilities:** Once when the work is departmentalized properly, the task to have proper persons to handle the responsibilities are created as per positions and abilities are planned accordingly. **For Example,** sales officer for sales department. At the same time, the sub posts or categories as per the persons to be appointed. 5. **The Delegation of Power and Responsibilities:** Divisional heads, sub divisional heads and skill based heads are finalized and then all the heads should be given power and responsibilities so that they can perform their work well. In addition to that, clarification should be done of each person's post. So that each person will get the idea of the responsibilities assigned. It is also necessary to have the proper proportion of power and responsibilities. 6. **Establishment of Inter Relationship:** After the proper distribution of work, and delegation of power and responsibilities among different departmental personnel, the formation of inter relations should be made clear. With the help of departmentalization, the power and responsibilities are decentralized but the same can be centralized with the help of formation of inter relations. 7. **To Prepare Organizational Chart:** In order to enable the people to have the perfect idea of each one's positions, a proper map should be prepared. Such a chart should be properly prepared and the same should be displayed on the notice board. ## 4. Forms of Organizing Structure:- (Line, Functional, Line & Staff, Limited Liability Partnership (LLP), One Person Company (Concept) ### LINE ORGANIZATION: Line organization-is the traditional type of organization. If refers to a direct chain of command from top to bottom. In the line organization lines of direction are straight and vertical. Authority and responsibility flow vertically in an unbroken straight line from line level to another, hence the name line or scalar organization. Every superior has complete command over his subordinates and every subordinate is directly accountable to only one superior immediately above him. There are no separate staff officers or departments. All persons on the same level of authority are Independent of one another. A simple line organization has been shown below in the figure - Managing Director - Production Manager - Piant Superintendent - Foreman Shop A - Foreman Shop B - Foreman Shop C The figure shows that each executive works directly under the command of his superior. He performs both the line function of directing his subordinates and the staff for (service function, e.g., engineering, quality control, repairs and maintenance, etc. Foreman of Shop A has no authority over workers in Shop B and C, and so on. In the pure line organization, the activities at any one level are the same and divisions are created simply for the convenience of direction and control. In the departmental line organization, work performed in each department (is of a different type. Line organization is sometimes called military organization as it originated in the army. But the term is misleading as today's armies are not organized on-scalar/principle. They have staff wings like intelligence, medical, etc. **Merits. Line organization offers the following advantages:** 1. **Simplicity.** Line organization is the simplest and the oldest form. Due to the direct authority relationships, there is no confusion or misunderstanding. Everyone knows clearly his position in the organization. Itis, thus, easiest to establish and simple to understand. 2. **Flexibility.** As each executive has full authority and responsibility for his job, required changes cambe made quickly and easily. 3. **Quick Decisions.** Managers can take decisions quickly and act promptly as no staff officers are to be consulted and there is adequate authority at every level. Communication is easy and quick, 4. **Executive Development.** As both thinking and doing functions are combined at each level of authority it provides opportunity for development of all-round executives. 5. **Unified Control.** All activities affecting a department are under the control of one executive. This makes for unified and effective control. 6. **Fixed Responsibility.** Every person knows from whom he gets orders and to whom he is accountable. Unity of command avoids buck passing. Every executive can be held fully responsible for the action of his subordinates. 7. **Effective Disciplino.** Unity of command and unified control promote discipline. Employees react more favorably to a single rather than multiple centres of command. There is no division of loyalties and no danger of conflicting orders. 8. **Economy.** Line organization is less expensive in terms of overhead costs as there are no staff specialists. **Demerits: Line organization suffers from the following disadvantages:** 1. **Over burdening.** In line organization, key executives are overloaded with administrative work. Reflective thinking is absent as energies are consumed in operating details. Top executives have to be 'superman' to effectively control diverse activities. As the business grows in size, executives find it impossible to cope with their duties in the absence of staff. assistance. 2. **Instability.** The success and survival of the enterprise depends upon a few individuals. There is little scope for expansion of business beyond their capabilities. Loss-of-key executives may put the future of the concern in jeopardy. 3. **Lack of Specialisation.** There is no scope for specialisation as one individual cannot be expert in all functions. Lack of specialisation and overdependence on subordinates' lower efficiency of operation. Every executive is likely to become a "jack-of all trades but master of none". 4. **Autocratic Control.** As each department is under the complete control of one executive, there is danger of authoritarian rule. There is possibility of favoritism. 5. **Difficulty in Staffing.** Executives in a line organization are required to have knowledge of diverse functions. It is difficult to recruit and train such executives. 6. **Inadequate Communication.** Subordinates are afraid of the boss. They hesitate to offer suggestions and to criticize a wrong decision taken by the superior. There is practically no upward communication. As a result, managers are deprived of the new ideas from the lower ranks. **Due to these limitations, the line organization is suitable in the following cases:** (i) in small enterprises with a small number of employees, (ii) in routine type operations, (iii) in continuous process industries, and (iv) in industries where automatic machinery is used so that foreman-is not called upon to exercise his judgment frequently. ### FUNCTIONAL ORGANIZATION: In functional organization, the enterprise is divided into a number of functional departments. Every functional department serves the rest of the organization For example, the purchase department handles purchase on behalf of the entire concern. The person in charge of a function follows it wherever it goes throughout the organization and controls all individuals working in that functional area. Every subordinate gets orders from several superiors. For example, an operator in the factory is responsible to the purchase manager for the use of materials, to maintenance engineer for repairs, etc. to his supervisor for output, and so on. Functional organization is based on the concept of EW Taylor's "Functional Foremanship" under which the work of every worker in the factory is controlled and guided by eight specialists: four concerned with planning of work and four with its execution. The eight specialists are as under: - **Office Specialists.** They are concerned with the design, scheduling, recording and planning of work. They consist of: - Order of Work or Route Clerk. He determines the number and sequence of operations to be performed. He lays down path of material through various stages of production. - Instruction Card Clerk. He lays down detailed instructions to be followed in the execution of work according to the prescribed route. He determines the tools to be used- and the exact method of doing a piece of work. - Time and Cost Clerk. He lays down the standard time for the completion of work and calculates the cost of that piece of work. - Shop Disciplinarian. He enforces rules and regulations. He handles problems of absenteeism and indiscipline. - **Shop Specialists.** They guide and supervise operations in the factory to execute the work as planned. They include: - Gang Boss. He is responsible for assembling and setting machines, tools and other facilities to workers. - Speed Boss. He determines the speed at which machines are to be run. - Repair Boss. He looks after repairs and maintenance of machines so that they are kept in proper working conditions. - Inspector. His duty is to see that work performed conforms to prescribed standards of quality and workmanship. **Figure below depicts the functional foremanship, This shows that there is a separate specialist for each function having control over that function throughout the organization. A worker is under the command of several superiors at a time He is responsible to a different superior for each function.** - Managing Director - Works Manager - Plant Superintendent - Route Clerk - Instruction Card Clerk - Time and Cost Clerk - Discipli-narlan - Gang Boss - Speed Boss - Repair Boss - Inspector - Workers **Advantages:** (i) **Specialization.** There is complete specialization of work and every workers gets the expert knowledge and guidance of several specialists. (ii) **Easier Staffing.** As an executive is required to have expertise of one function only, it is easier and economical to recruit and train executives. (iii) **Simplified Control.** One-man control is done away with. Burden on top executives is reduced and control becomes creative. Expert knowledge of the functional managers facilitates effective supervision. (iv) **Better Supervision.** Each supervisor being an expert in his area of work, planning and supervision are likely to be efficient. Executives have ample time for creative thinking. (v) **Scope for Expansion.** The success and growth of the concern is not limited to the capabilities of a few line managers. Standardization and specialization facilitate-mass production. (vi) **Higher Efficiency.** Separation of mental and manual operations results in higher degree of efficiency. **Disadvantages** (i) **Poor Discipline.** There is lack of unity of command. Due to diffusion of authority; effective control becomes difficult. Multiple lines of command weaken discipline and create friction. Functional organization is very complex and workers cannot understand it easily. (ii) **Divided Responsibility.** Lack of unity of command and multiple subordination encourage buck passing. It is not possible to fix responsibility for unsatisfactory results. (iii) **Low Morale.** Workers find it difficult to satisfy several bosses. They get frustrated and their morale goes down. (iv) **Lack of Executive Development.** Narrow specialisation hampers development of generalists or all-round executives. Succession to top management becomes difficult. (v) **Lack of Coordination.** Each specialist tends to magnify the importance of his function and has a natrow outlook. He thinks only in terms of his functional area rather than of the whole enterprise Conflicts arise between specialists of equal rank. There is lack of overall perspective in dealing with business problems. (vi) **Delayed Decisions.** Decisions involving more than one specialist cannot be taken quickly as consultation of different bosses is necessary. (vii) **Uneconomical.** Functional organization is not only complex in operation but also expensive. Several specialists have to be maintained at heavy overhead costs. Clerical work is also increased. The pure functional organization as developed by Taylor is rarely used in practice today. However, the functional basis is used in big concerns for division of work at the top level of management. ### LINE AND STAFF ORGANIZATION: Line organization concentrates control too much; the functional organization divides it too much. Line and staff is a combination of both. It seeks to combine the advantage of division of work with unity of command. The line portion serves to maintain unity of command and discipline whereas the staff portion provides expert knowledge and advice in the solution of managerial problems. Line executives are responsible for the execution of work and for the realisation of major objectives. Staff is auxiliary or adjunct to line. It provides advice, information and assistance to line executives to enable them to work more efficiently. Each staff officer has command over subordinates in his own department only. His advice and counsel is not binding on line executives and he cannot directly order subordinates in line departments. Thus, unity of command is maintained and the expert assistance is also available to line managers. In line authority relationship, a superior exercises direct command over his subordinates while a staff relationship is one in which a specialist provides advice and service to another person. **Types of Staff. Staff may be of three types:** (i) **Personal Staff** which consists of personal assistants attached to individual line executives. Personal staff is employed to carry out those responsibilities of an executive which he cannot or does not, want to delegate to others. Personal staff is an extension of line manager's personality. A personal assistant or a private secretary serves only one line executive. Personal staff is generally employed by top executives to carry out routine work. For example, the managing director of a company may employ a private secretary to handle his correspondence and typing work. (ii) **Specialised Staff** consists of specialists in different functional areas, e.g., personnel, accounting, legal public relations, etc. A specialised staff department serves as the fountain head of expertise for the entire concern. For instance, the personnel department recruits, selects and trains employees for all departments in the organization. (iii) **General Staff** includes group of experts attached to the central office. It provides general advice-mostly to top management. - Managing Director - Personal Assistant - Personnel Manager - Works Manager - Chief Accountant. - *Quality Control Inspector* - Plant Superintendent - Foreman Shop A. - Foreman Shop B - Workers - *Repairs and Maintenance Officer* - Foreman Shop C **Advantages:** 1. **Planned Specialisation.** Line executives get expert advice from staff specialists on various problems. They are relieved of the housekeeping job for which they lack time and expert knowledge. Line can concentrate on executive functions. Thus "it is based on planned specialisation and it brings expert knowledge to bear upon management. 2. **Discipline.** Unity of command is maintained as staff is not given executive authority. 3. **Staffing and Development.** Separation of functions facilitates selection and training. Due to larger number of posts opportunity for promotion is greater, and staff service is an excellent training ground for line managers, 4. **Balanced Decisions.** With information and advice provided by staff specialists, line executives can take better and sounder decisions. 5. **Flexibility.** There is greater scope for growth and expansion as staff is available to enable line to cope with greater work. 6. **Undivided Responsibility.** Each line officer is fully accountable for the activities of his department. Unified control and undivided responsibility are maintained throughout the organization. **Disadvantages** 1. **Conflicts.** Staff may undermine line authority while line may ignore staff. This may lead to friction between them. 2. **Lack of Coordination.** The allocation of responsibility between line and staff may not be very clear. Staff advice may be confused with line authority creating confusion and disorder. 3. **Ineffective Staff.** Staff is not responsible for results. They may not, therefore be careful in their job. Staff may also be ineffective in the absence of authority to implement the suggestions. 4. **Expensive.** Line and staff organization is expensive in terms of overheads as two separate sets of personnel are required. In practice, line and staff is the most common type of organization in large firms because the complex problems of management require the expert knowledge which can be provided by staff officers. Often an enterprise begins with line organization and adds up staff as the business expands. The striking feature of line and staff organization is that each person receives specialised service and advice without being asked to be accountable to more than one superior. ### Limited Liability Partnership (LLP) **Introduction** - LLP was governed under LLP, Act 2008.05 - LLP bill was presented on 12 December,2008 - This Act was enforced from March 31,2009 - When this Act was enforced it has 81 sections and 4 Schedules. **LLP (Limited Liability Partnership)** - LLP is a new form of legal business Entity with limited liability. - It refers in that form of Business Organisation which has the features of both the Partnership Organisation and Company. **Characteristics / Features of LLP** - Partner - Contribution - LLP Agreement - Designated Partner - Director Identification Number - Digital Signatures - Umited liability - Participation - Separate Legal Entity - Creation - Perpetual Succession - Body Corporate - Common Seal **1) Partner** - For the establishment of LLP the minimum number of partners has to be not less than two. There is no limit imposed on the maximum number of partners. The following can be partners in an LLP: - Individuals - LLP - Company: If a company becomes a partner of LLP, it has to nominate one of its members for this purpose. **2) Contribution** - There is no practice of Share Capital in LLP. But all the partners contribute to LLP in some or the other form. Contribution can be of several forms, namely, cash, movable or immovable property. **3) LLP Agreement** - A written agreement is a must among the people interested in establishing an LLP. Such an agreement is known as 'LLP Agreement. - This Agreement is in two parts. In the first part the agreement done among the partners is shown; while in the second part the agreement done between the partners and L.L.P is indicated. **4) Designated Partner** - In LLP there should be at least two designated partners. One of them must be Resident in India. - A designated partner is one who has been designated through Incorporation Document. The designated partners are responsible for implementing all the Provisions of LLP Act 2008 in the L.L.P Organisation. **5) Designated Partner Identification Number (DPIN)** - Every designated partner has to obtain an Identification Number from the Central Government. We call it DPIN. If a partner has already got DPIN, he can use it in LLP. **6) Digital Signatures** - For the registration of LLP several forms like e-Form 1, e-Form 2. e-Form 3, etc. are filled up. - These forms are sent ON LINE. They have the signatures of designated partners. It is not possible to put signatures manually on the forms to be sent ON LINE. Therefore, it is necessary that the signatures of the designated partners should be obtained in the Digital Form. **7) Limited Liability** - The liability of partners in LLP is limited. Every partner has his liability limited to the investment made by him. Besides, every partner is responsible for any of his misconduct rather than any other partner. **8) Participation** - Contrary to a company Organisation, in LLP all partners, apparently, can be partners in a partnership business. In a company, apparently, the shareholders can not be partners in the company business. The company business is looked after by the Directors. **9) Separate Legal Entity** - LLP has a separate legal entity. It implies that LLP and its members both have a separate entity. It means that the partners of a firm, neither individually nor collectively, are responsible for the liabilities created by the activities of the firm. Also, it implies that a firm can have assets in its own name, it can file a suit and a suit can also be filed against it. **10) Creation** - The LLP is created by law and its registration is a must. The registration is done in accordance with the provisions of Limited Liability Partnership Act, 2008. **11) Perpetual Succession** - LLP has a perpetual succession. Its existence is not affected by the quittance of old partners or entry of new partners. **12) Body Corporate** - LLP is a Body Corporate. Body corporate refers to an organisation having a separate legal entity. On this very basis, the following can be called as Body Corporates: - A Company - A Foreign Company - A Corporation - A Statutory Company - A Limited Liability Partnership - LLP **13) Common Seal** - LLP is an artificial person by law, cannot put its signature. That's why LLP has its common seal. So Common seal is the official signatures of LLP and it is affixed on all the important documents of LLP. ### One Person company (Concept) The Companies Act, 2013 completely revolutionized corporate laws in India by introducing several new concepts that did not exist previously. On such game-changer was the introduction of One Person Company concept. This led to the recognition of a completely new way of starting businesses that accorded flexibility which a company form of entity can offer, while also providing the protection of limited liability that sole proprietorship or partnerships lacked. Several other countries had already recognized the ability of individuals forming a company before the enactment of the new Companies Act in 2013. These included the likes of China, Singapore, UK, Australia, and the USA. **Definition of One Person Company** Section 2(62) of Companies Act defines a one-person company as a company that has only one person as to its member. Furthermore, members of a company are nothing but subscribers to its memorandum of association, or its shareholders. So, an OPC is effectively a company that has