 Hello. I'm Dr. Prakash Sarunke, working as associate professor in Vulture Institute Technology in the Department of Mechanical Engineering. In the series of industrial management, say today I am continuing with principles of organizing fifth session. In today's session, in continuation with earlier series, earlier slide, students will be able to describe factors affecting decentralization, different forms of organization structure such as the line organization, stop organization, etc. and will explain merits and demerits of them. Now, last time we have seen what is centralization and decentralization. Now, today we shall be discussing the factors which affect this decentralization. So, one of the first, I mean there are several factors, say first factor we discuss is importance of decisions. Normally, as importance increases, there is tendency to take the decisions at the top level, so tendency towards centralization. So, importance such as strategic decision, costlier decision, say long term affecting decision, all such decisions are normally tend to be centralized, that is taken at the top level. Size of the enterprise, so that is say one more. Normally, as the size grows, there is tendency towards decentralization, because it becomes difficult to take all the decisions or I mean concentrate the authority at the top as the size goes bigger. If the size is smaller, otherwise say there is tendency towards decentralization. Third is history of organization. Normally, when the organization grows from within, from expansion and all these things, say then say there is tendency towards centralization. While if the organization grows through mergers and amalgamations of two different units, acquisition of new businesses, so like that then say there are tendencies towards decentralization. So, that is natural, because these units earlier were acting as if independent. So, normally even after amalgamation, though the organization becomes one, say that decentralization say in the units exist. So, one more factor is management, attitude and philosophy. So, that is one of the important factor again. If the management is of autocratic nature, there is tendency towards centralization and if they are having democratic kind of philosophy, say then that will tend towards decentralization. Then status of control techniques. Nowadays, more and more advanced control techniques are available. If they are available and they can be used by the I mean top authorities, there will be tendency towards centralization. Similarly, geographical dispersion is one more factor. If there is more geographical dispersion, there will be more tendency towards decentralization. So, that is natural. The need for uniform policies. If there is need that throughout the I mean all units of the corporate, there should be some uniform policies are to be maintained, then that will lead towards centralization. And one more factor is availability of competent managers. If the competent managers are available, then only we can decentralize. If there are no such I mean availability, then say then the authority will be again say concentrate towards the top or it will lead to centralization. So, these are the different factors. No merits and demerits of decentralization. So, fun is in the merit development of managers. So, there is more scope of I mean development of the managers because say they are given freedom to make decisions. So, decision authorities even to them different. So, they automatically develop. Second quick decisions every time you did not have to refer upwards and wait for them. So, quick decisions are possible. So, that will lead to higher morale of employees because normally when decentralization is there say everybody is happy that I have some authority. I have some decision making scope like that. So, that naturally elevates the morale and retention of talents. Because talented people want to make their own decisions. If they are not given that freedom, say then they will try to live the organization for better I mean prospectors. Then one more advantage is gain from pull of knowledge and expertise. Because there are so many talent that is dispersed throughout the organization in different people. So, we can get advantage of that in the decision making and that definitely I mean benefits the organization. Well, there are certain demerits also. Uniformity of policies and procedures cannot be achieved. So, because every manager or every department or every unit will try to have their own way of working. So, that will hamper. Then better and efficient utilization of resources say that may not be I mean possible say many a times because say the scales so that will be changed. So, that is one more I mean limitation. Then economies of scale for certain processes that cannot be achieved again say in case of decentralization because say quantity is say for different units say will be smaller. If they are I mean taken together in only one say then it will be leading to larger scale and that will actually economies and then limitations for growth. So, limitations for growth in the sense one unit say if you say want to grow so then say there will be same in limitations. So, that way say there are certain demerits also. Now say one more important aspect in the organizing is authorities. Now there are certain types of authorities. So, let us try to understand them. So, first is line authority. It gives a superior and authority over their subordinates to command and control them. It exists in all organization as a series of steps from top to bottom. So, this is the basic form of authority and it exists in every organization. Then another is staff. The nature of staff relationship is advisory. Many times say when organization starts growing say we need some more I mean expert knowledge in certain fields. For example, say quality control. So, that quality improvement say we need some help of expertise people from statistics also, SQC statistical quality control. So, there say that becomes say I mean say they expert in that field. So, they will give the advice in their field to the production manager that is a staff relationship. And the next is function. Functional authority functional of pure staff people is to investigate, analyze, research and advice to line managers. So, this is normal. But when authority is assigned to staff people or so, so then that is known as functional authority. So, functional authority is the right delegated to staff people or department to control special specified activities or tasks being done by persons in other departments. So, it means for example, quality control people directly giving some exercise in some authority over the worker in the production department. So, then that is the functional authority. Then different organization structure. So, this is a pure line organization structure in which you can see say there is a top manager, then there will be assistant manager, below him there are retail stores manager. So, this is nursery manager, greenhouse manager and below them there are worker. So, the authority is flowing from top to bottom in one line here or here. So, that is the line organization structure. Line and staff. So, apart from this line so, there are some staff people. So, they are introduced here. So, which can give the advice to this line manager. So, here that there are special, horticulture specializes, specialized knowledge. So, that will be same in given to them or office management same that accounts. So, related with accounts. So, they will give advice to the line people. So, this is known as line and staff combination. So, this is functional organization. When the different managers are given authority to exercise the same workers related in their areas. For example, manufacturing people they will give orders related with them quality will instruct directly to them, then marketing people finance people. So, this kind of organization. So, where all these are given authorities in their area. So, that becomes a functional organization, especially in educational institute such kind of say nature I mean organizational structure exists. So, where different faculties in their field. So, they will be giving instructions to the students commonly. So, this is functional organization. Now, normally each of this have certain advantages and disadvantages, merits and diminishes. Normally line or authority is necessary to execute the functions and where unity of command principle is I mean exercise or followed. In case of functional organization unity of command say I mean this particular principle is violated and say there may be many a times confusion say for the workers as well as in the managers that who will be exactly giving the orders and whose orders are to be followed first and second priority. So, there will be confusion in the workers. So, that has to be same in managed. However, in certain organizations such as educational institute. So, functional organization is there. Now, there is one more structure. So, it is not committee organization structure. Many a times say in certain organization one person may not be able to make a decision. So, committees are appointed for example, here we can see finance committee, executive committee, purchase committee etcetera. So, this is one more type of organization. So, that way we have seen that there are several types of organizational structure depending upon the nature of the organization and need say there are use of these different types of organizational structure. Now, references for all these we have taken from the book of Essentials of Management by Harold Koons as well as principles of management and administration by D. Chandra Bose. I thank to them and thank to you.