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.

Basic Types of Internal Organization

Five basic types of internal organization are recognized in business literature. We now shall name them, explain them, analyze them, illustrate them in chart form, and note their claimed advantages and possible disadvantages.

          The five basic types of internal organization that we shall examine are:

1.   Line organization (scalar principle, or straight-line,
      organization)
2.   Line and staff organization
3.   Functional organization
4.    Matrix organization (project management organization)
5.   Committee organization

Organization Plan Flexible Enough to make changes without Disruption

This principle reflects another time-honored business concept: The one best way is only a temporary condition. That is, change cannot be avoided in the dynamic world of business. As conditions change, a firm must be able to adjust. According to this management principle, an organization's structure must be flexible enough so that changes can be made without disrupting the company's entire operations.
          Now that we have reviewed the principles of management which apply to internal organization, we can best understand the organizing process by identifying the basic choices available and observing how each operates. But first, we must note that some forms of organization do not comply with all the management principles listed above. In addition, the internal organization of most large business firms tends to include characteristics of several different types. Therefore, in studying the basic of organization, remember that the organization of a specific firm must be adjusted to meet its particular needs and circumstances.

Authority Matches Responsibility

In a large firm, every position is assigned specific responsibilities. This principle means that the authority needed to fulfill those responsibilities must be clearly established. Authority begins with the president and is delegated to vice presidents and to subordinates throughout the organization until it reaches supervisors at the lowest level. No firm can operate without such delegation of authority. This principle merely points out that enough authority must be delegated - and clearly - to accomplish the tasks assigned.

Unity of Objective

Every department, division, and employee of a company should be directed toward the achievement of clear objectives. Only in this way can effective teamwork result. As we have noted, individual employees may have different personal objectives from those of the company. Even so, it is important that all employees know the company's goals so that their combined efforts may be directed toward accomplishing them.