Subject Principle Of Management Business Essay


An organisation is a social entity that has a collective goal and is linked to an external environment .There are various types of organisations such as corporations, government ,non governmental organizations ,international organisations and charities .In a narrow sense, organisation is a framework of duties and responsibilities through which an enterprise functions .In other words, organisation defines the scope of activities of the enterprise by laying down the structure of relationships .In the social sciences, organisation are the object of analysis for a number of disciplines, such as sociology ,economics , political science, psychology, management.

If organisation is merely recognised as a structure, it will be viewed as a static thing used to explain formal relationships. But an organisation is a dynamic entity consisting of individuals, objective and relationships among the individuals. an organisation is certainly more than a chart .It is the mechanism through which management directs, coordinates and controls the activities of the enterprise. Thus, organising is the structuring of co-ordinated system of authority relationship and task responsibilities which involves enumeration and identification of activities dividing them among various members of departments and establishing authority relationship among them for the accomplishment of certain objective.

Organisation Structure

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An organisation structure is a set of planned relationships between groups of related functions and between physical factors and personnel required for the performance of the functions. The organisation structure is generally shown on an organisation chart .It shows authority and responsibility relationships between the various positions in the enterprise by showing who reports to whom .organisation structure lays down the pattern of communication and coordination in the enterprise.

Though organisation structure is very important, It is not an end in itself. According to peter F. Drucker," Organisation is not an end itself, but a means to the end of business performance and business results .Organisation structure is an indispensable means; and the wrong structure will seriously impair business performance and may even destroy it Organisation structure must be designed so as to make possible the attainment of the objectives of the business for five, ten, fifteen years hence".

Organisation is a process by which management coordinates the activities of the group of persons for the achievement of certain predetermined goals. Through organising the duties of various members of the group are determined and assigned and responsibilities fixed so that the necessary work is performed with speed ,accuracy and economy .The process of organising involves following steps:-

Determination of objectives.

Division of activities.

Creating and grouping of jobs.

Assignment of groups of job.

Elements of organisation





Authority refers to the right of an individual to command his subordinates and to take action within the scope of his position. The concept of authority arises from the established scalar chain which links the various job positions and levels of an organisation .Authority also refers to the right to take decisions inherent in a managerial position to tell people what to do and expect them to do it. In the formal organisation authority originates by virtue of an individual's position and the extent of authority is highest at the top management levels and reduces successively as we go down the corporate ladder .Thus, authority flows from top to bottom, that is the superior has authority over the subordinate.

Authority determines the superior subordinate relationship wherein the superior communicates his decision to the subordinate expecting compliance from him and the subordinate executes the decision as per the guidelines of the superior. The extent to which a superior can exact compliance also depends on the personality of the superior .It must be noted that authority is restricted by laws and the rules and regulation of the organisation which limit its scope. However, as we go higher up in the management hierarchy, the scope of authority increases.


Responsibility is obligation of a subordinate to properly perform the assigned duty .it arises from a superior -subordinate relationship because the subordinate bound to perform the duty assigned to him by his superior .Thus, responsibility flows upwards i.e, a subordinate will always be responsible to his superior.

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An important consideration to be kept in view with respect to both authority and responsibility is that when an employee is given responsibility for a job he must also be given the degree of authority necessary to carry out .Thus, for effective delegation the authority guaranteed must be commensurate with the assigned responsibility. If authority granted is more than responsibility, it may lead to misuse of authority, if responsibility assigned is more than the authority it may make a person ineffective.


Accountability implies being answerable for the final outcome. Authority undoubtly empowers an employee to act for his superior, but superior would still be accountable for the outcome. Once the authority has been delegated and responsibility accepted, once cannot deny accountability .it cannot be delegated and flows upwards i.e,a subordinate will be accountable to a superior for a satisfactory performance of work .It indicates that the manager has to ensure the proper discharge of duties by his subordinates . In conclusion it can be stated that while authority is delegated, responsibility is assumed, accountability is imposed. Responsibility is derived from authority and accountability is derived from responsibility.

ABB Limited

ABB is a multinational corporation in Zurich, Switzerland operating in robotics and mainly in power and automation technology areas.ABB is one of the largest engineering companies as well as one of largest business firm consisting of several different companies in the world .ABB has operated around 100 countries.


Publicly-traded limited company

Traded as

ABB Ltd.


ABB logo.svg


1988 through merger of ASEA (1883) of Sweden and Brown, Boveri & Cie (1891) of Switzerland


Zürich, Switzerland

Area served


Key people

Joe Hogan (CEO), Hubertus von Grünberg (Chairman)


Power technology, Industrial automation


US $40 billion (2011)[1]

Operating income

US $4.667 billion (2011)[1]


US $3.168 billion (2011)[1]

Total assets

US $36.30 billion (2010)[1]

Total equity

US $15.46 billion (2010)[1]


145,000 (June 2012)[2]


Organizational structure of ABB LTD.

ABB is world's largest of electricity grids .It is also active in many sector, its core business being in power automation technologies. The company has one corporate division and productions divisions since recorganisation in January.

Power systems

Power systems offer turnkey systems and service for power transmission and distribution grids, and for power plants. Electrical substations and substation automation systems are key areas including flexible AC transmission systems, high voltage direct current (HDVC) systems and network management systems.

Power products

Power products are the key components for the transmission and distribution of electricity .The division incorporates ABBs manufacturing network for transformers, circuit breakers, cables. It also offers maintenance services. The division is sub divided in to 3 sub units i.e, HVP, MVP and transformers.

Process Automation

The main objective of ABB Ltd. Is to provide systems for control, plant optimization and industry specific automatic application to customers, the industries include also oil and gas, power, chemicals.

Corporate and Other

The corporate and other department of ABB deals with the overall management and function of the company as well as asset management and investment.

Low voltage products

The low voltage products division manufacturers low voltage circuit breakers, switches, control products, wiring accessories, enclosures & cable systems to protect people, installations and electronic equipment from electrical overload. The division further makes KNX system that integrate & automate a building electrical installations, ventilation system.


On july17, 2008, Mr Joseph Hogan announced as a chief executive officer and member of the executive committee of the ABB group.

Present CEO of ABB is JOE Hogan.

The board of directors is chaired by Hubertus von Greenberg. He took over the position in May, 2007.

Primary Investors

The largest single stake in the firm is held by the Swedish investment company Investor AB, controlled by the Wallenberg family.

Procter and Gamble CO. (P & G)

Cincinnati, Ohio based Procter & Gamble Company Is a Fortune 500, American Multinational Corporation based in Cincinnati, Ohio, that manufactures a wide range of consumer goods. The current Chairman and CEO of P & G is Robert A. "Bob" McDonald, who replaced AG Lafley in 2009.

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Ariel is a brand of washing powder/liquid, available in numerous forms and scents.

Duracell is a brand of batteries and flashlights.

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Gillette is safety razor manufacturer.

Head & Shoulders is a brand of shampoo.

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Pringles is a famous brand of potato chips.

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Vicks is a brand of over the counter medicines.

Organizational Structure of P & G company

P & G has undertaken many structural changes over the past century, but that discussed in this study is the current structure of P & G. The main structure and partial organisation structure of P & G are shown in figure.

Factors effecting choice of organizational structure

External factors

Those from enabling environment which are not under the control of the organisation but affects its structure and development it includes:-

Economic factors such as wood demand, wood supply, forest/land market, role of certificate, level of wages etc. for example high level of wages, add pressure on forest manager to improve management of the forest.

Socio-economic factor such as forest ownership structure, size of forest holding, occupation of owner, residence of owner, involvement of groups organizations in political process and decision making.

Internal factors

Purpose of the organization such as interest representation, information, economics, supply, production management, combination such as organization purposes may also consist of combinations of interest representation, information task on economic objective.

Organization instruments such as:-


Formal organization and informal organization

Legal form

Membership type

Member group

2. Centralisation/Decentralisation

3. Structure type

4. Technological approach

5. Participation and delegation.

Individual choice factors

Factors effecting evaluation of expected benefits

Factors effecting evaluation of effective cost of membership

Issues regarding becoming a member.