Line Organization

          Line organization is also called scalar principle or straight-line organization. It was the first form of organization to be used in business, and it remains the simpled to understand. When all business firm were small, line organization was the natural way to structure and direct them. Some elements of line organization remain in every large firm even today.
          In line organization there is a recognized, direct chain of command from the top of the organization to the bottom. Every employee has a position in that chain of command, which begins with the president or chief executive officer. The superior manager issues orders to subordinates, when accept responsibility for following them. All management levels receive their orders from the level above, and they communicate orders to their subordinates. Only superiors who are directly above can issue orders. In line organization, authority flows from the top down, while responsibility flows from the bottom up.
          Line organization are effective for many types of firm, because areas of work can be divided into different levels of authority and responsibility. Even relatively large firms like banks, retail stores, single-units factories, and wholesale firms can use line organization to good purpose. However, small or medium sized firms that need quick decisions and centralized control use line organization most effectively.