Journal of Management (JOM)
Volume 7, Issue 1, January – February 2020, pp. 21–26, Article ID: JOM_07_01_004
Available online at http://www.iaeme.com/jom/issues.asp?JType=JOM&VType=7&IType=1
Journal Impact Factor (2019): 5.3165 (Calculated by GISI) www.jifactor.com
ISSN Print: 2347-3940 and ISSN Online: 2347-3959
© IAEME Publication
TYPES OF ORGANIZATIONAL
MANAGEMENTS
Parimal Vasavada
FCS, LLB, PGDIBM (CSUAMA)
INTRODUCTION
During my career I had an opportunity to work with most of the basic models of organization
viz. Government Secretariat, PSU (Jt. and 100%), Private Sectors – Small, Medium,
Reasonably large, my own practice and one of the finest and largest multi-national giants.
Sitting back this lead me to think how human kind has evolved itself to organizing and
managing its transactions.
It’s believed that the idea of division of labour and reward existed in pre homosepiens
time. Irrigation and pottery of Mesopotamia and Egypt could have founded the roots of
structured work. Humans learnt to write some 4500 years before or so.
I was wondering from those ancestral pre-nomad days and later barter how humans learnt
and developed systematic art of carrying out and managing activities in an organized way and
to what scale and complexity, more specifically business. It’s very interesting. Let’s muse.
TYPE 1: PRIVATE SECTOR
1. Private Single Owners
This is normally a small set up where command and response are at the same point. Limited
business, often first generation kind with limited sustainability, growth and returns. Also
known under legal terms as sole proprietorships. Most basic and common convenient small
trade format. Millions of shops or individual business persons we see around are of this type.
Liability is direct and unlimited. Possibility of passing the business to next generation.
Normally do not sustain beyond 2 /3 generations.
2. Family Business
This is extension of the first kind. With potential expansion single owner seeking help of
other family members being group of first trust. Also known as closely held businesses these
are multiple generations and grow much high and create good wealth. Cater to many families.
Successful to some extent in proper distribution of command and resources. Liability is direct
and unlimited. They are also commonly known as pedhis and shethjis.
Limited by feuds and beyond a point limitation of growth and doom they often face
multiple commands and overriding egos leading to chaos and factions. With the advent of
time a view exists that this format may no longer be very effective in modern times and need
to be revamped.
http://www.iaeme.com/JOM/index.asp
21
editor@iaeme.com
Parimal Vasavada
3. Partnerships
Where one has potential to grow but limitations of resources this form of management comes
up. It’s registered under law, tested but not much trusted. It means more than one owner
sharing duties responsibilities, resources and command. More often than not they fall apart
and partners compete with each other. It’s a non family formal model of second type of
business, first one is sole proprietorship. Liability is direct and unlimited. We also know them
as firms.
TYPE 2: CORPORATE SECTOR
A ‘Company’ is an association of persons coming together for a common objective, an entity
registered under law. A company is an artificial person having its own independent identity
with perpetual existence in legal terms.. Owners and company are two different entities.
Cessation of a member does not amount to cessation of a company. It’s formed by creation of
capital in the form of shares subscribed by the members called shareholders. There is a Board
of Directors one or more of them could be Managing Director/s who runs day to day
operations. Companies are Limited companies (Ltd.) meaning the liability of the members or
shareholders are to the extent of unpaid amount on the shares. Liability of the company is not
liability of the members. It’s mandatory to write Limited or Ltd. at the end of the
approved/registered name of the company to show to the world what type of organization it is.
Companies could be classified as.
1. Private Companies
Minimum 2 or more people come to gather, create a separate legal entity known as a
company, with maximum 200 members. The founder member owners are directors. Capital
funds known as equity is divided into shares and buyers of the shares are deemed owners of
the entity. The shares are not freely transferable. Limited growth, resources and constrained
by feuds. Nevertheless it’s more reliable partnership where rules are more clearly laid and
attracts compliance of law. One may say a private company is a partnership atone a corporate
blazer- privately held business. It’s mandatory to write Private Limited or Pvt.Ltd. at the end
of the approved/registered name of the company.
2. Limited Liability Partnership (LLP)
It’s a balance between Partnership and Private Company. New concept becoming reasonably
popular.
3. Public Companies
When a private business has grown or potential to grow more it needs resources and
reliability. Here comes the model of public companies. Public Companies again enacted under
Companies Act have a minimum 7 members, no limit on maximum shareholders. Shares are
freely transferable. The shareholders/owners have no say in day to day business of the
company which is vested with the Board of Directors, minimum 3 directors. The founder
entrepreneurs remain on board and management. Reliability, sustainability and strong
resources are some of the virtues. A public company will mention only Limited or Ltd. at the
end of the approved/registered name of the company.
http://www.iaeme.com/JOM/index.asp
22
editor@iaeme.com
Types of Organizational Managements
4. Listed Companies
Public Limited Companies when they want to invite more capital they issue public offer of
subscribing to shares/equity. This process needs to be registered at the Stock Exchange/s and
are subject to multiple norms and regulations of Stock exchanges. They are listed on the stock
exchanges. They enjoy very high confidence and get financial, business and government
advantages.
It’s strongly governed by laws, norms and regulators including SEBI, Stock Exchanges
etc. because the interest of public at large (the investors) is at stake.
All the companies could be classified as Small, Medium, Large, Very large.
All business formats can be classified into these categories in consideration of their
produce, set ups and financial strength.
5. Joint-Ventures, Mergers, Acquisitions, Amalgamations etc.
While initially all companies are incorporated by some people, business are then expanded,
reshuffled, shrugged off through practices like
Joint Ventures (two companies coming to gather to form a third venture with common
objective, the original companies retaining its identity).
Mergers (two or more companies merging to create either a separate entity or one company
losing its identity), Acquisitions (a company taking over majority ownership and management
of some other company by force or arrangements where acquired company may not lose its
identity). Such arrangements are commonly known as Mergers and Acquisitions (M&A).
Amalgamations (two companies willingly amalgamating into single venture).
6. Holding Companies and Subsidiary Companies
Big companies create separate companies for various specific objective or reasons like region,
product, market etc. Such companies are known as subsidiary companies to the holding
companies. Holding companies have up to 100% share holding and has complete control over
management and operations.
7. Multi National Companies
This creature also known as Global Enterprises/Transnational Corporations/Multi National
Enterprises originated in just few developed nations they now across globe and changing from
products to services. The mega moth corporate dinosaurs, a demy bureaucrats and non owned
professional ownerships emit more, eat more, move slow and can really row over many and
any lands.
They are by character very complex but highly systemized managements. They can be
further classified into various organizational structures i.e. Ethnocentric (Centralized
Command), Polycentric ( Host Country flavors) Geocentric ( best of the world) and Region
centric ( region based divisions). Then they can have international organizational structures,
product based, function based, international division based or region based.
http://www.iaeme.com/JOM/index.asp
23
editor@iaeme.com
Parimal Vasavada
TYPE 3: GOVERNMENT SECTOR
The Government -A management by non owners.
1. Democracy
Known as a Government by the people, of the people, for the people- elected by people, their
representatives (Members of Parliament, Legislative Assembly) formulate policies, enact laws
within the stated objectives in Constitution (can compare to Memorandum of Association of a
company?) and implement their ideas through administrative system of secretariat and its
agencies- In Indian context we call them Loksabha , Vidhansabha (can we call them their
board rooms?) aided by Sachivs or Secretaries (seating in Sachivalays, North/South Blocks
(Corporate office?) . Some large departments have their own bhavans e.g. Rail Bhavan,
Yojana Bhavan, Antariksh Bhavan .These secretaries are administrative heads of each
department. They are from All India Services viz.Indian Administrative Services , Indian
Foreign Services etc.( IAS ,IRS IFS etc) aided hierarchically by basically two types-the local
heads viz. Collectors, District Development Officers , Taluka Development Officers etc,
which to certain level are again in the hierarchy from All India Services , and subject experts
like engineers, forest , police etc.
A government is a nonprofit organization purely of service type with objective to resolve
problems of the citizens and develop state/nation. No one really owns anything. It has
enormous powers and works at micro and macro levels. In many cases they are just catalysts.
There are innumerable checks and balances to ensure nothing goes wrong. Auditor General
/Accountant General are some critical examples of independent checks. Just like an Auditor’s
Report need to be placed before a general meeting in a company, reports of AGs needs to be
placed before legislative houses for discussion and compliance. It’s huge. It’s slow, nay very
slow. It has to be to some extent like that. It’s governance by letters. Because it everything has
to be documented, shown and retained. The labyrinth of power points and isles are muzzler
than the skymaze. It’s here there everywhere. It’s one management which has more debt than
earning and still goes on and on and on. It’s management by remote. The elected
representatives change after a certain period of time and they can be reelected, the basic
system remains unchanged. However the policies and objectives may change.
2. Dictatorship
These are limited governments with a single or a group of persons in complete and permanent
command till he/she is overthrown. It has quick fix directives.
We had earlier kings. We can compare this with dictatorship.
3. Communist
Propounded by German thinker historian and economist Karl Marx who co- authored with
Freidrich Engels ‘The Communist Manifesto’ and ‘Das Capital’ later extended by Vladimir
Lenin in Russia, spread over to China and other communist countries, the idea of communism
is common wealth, a socioeconomic order structured upon the ideas of common ownership of
the means of production and the absence of social classes, money and the state. A system
of government in which the state plans and controls the economy and a single - often
authoritarian - party holds power; state controls are imposed with the elimination of private
ownership of property or capital while claiming to make progress toward a higher social
order.
http://www.iaeme.com/JOM/index.asp
24
editor@iaeme.com
Types of Organizational Managements
4. Local Self Government
These are miniature Governments. Only difference is the power centers are just few and
effective. These are municipal corporations, municipalities, panchayats etc.
Thus a Government is a mix of two types of organization structures.. One is elected
representatives i.e. MPs, MLAs, District /Taluka/ Gram Panchayat members, Corporators (
Legislatives Arm) aided in parallel by official recruited government services like Secretaries ,
Collectors, DDOs, TDOs, Engineers ,Police with all their hierarchical set up (Executives
Arm)
5. Boards and Corporations
These are enacted by an act of law passed by Legislative authorities. E.g. Water Supply
Board, Electricity Board, Dairy Development Board, Company Law Board etc. Most of them
are not companies. Rules and regulations as well as management are governed by Act and the
rules framed there under, for the particular entity. Many decisions are referred to government
and various reports need to be placed before legislative authorities where they are discussed.
Normally the word Corporation is allowed only to a Government company.
6. Authorities
Now these are extended arms of the government. They exist under legislative acts and have
quasi judicial authorities. They are meant to regulate and ensure fair private operations. e.g.
Airport Authority of India, Insurance Regulatory and Development Authority (IRDA),
National Highway Authority of India (NHAI) , Real Estate Regulatory Authority (RERA).
There are hundreds of Boards, Corporations, Commissions, Authorities, Bureaus,
Directorates within central and state governments under various departments.
TYPE 4: PUBLIC SECTOR
Largely we understand them as Government Companies, Corporations.
It’s Government in Business. For some tasks which government thinks are essential for
various objectives, Government creates independent companies .Our local darlings of the
passing time..some of them could be desi MNCs, do their business and often losing more
than earning but still trying to create some valuable competition and service to citizens and
state e.g. Energy , Aviation, Aeronautics , Mining, Infrastructure etc. A PSU is a company of
the government, incorporated by Government for a public cause. Government is owner. The
stake could be up to 100%. They can be listed also. One or more directors represent
government on boards and committees. Many times certain decisions go to Government for
approval and annual reports are placed in state legislative assemblies or parliament if it’s a
central government PSU.
TYPE 5: JUDICIARY
Courts are one of the three arms of a State-Legislative, Executive and Judiciary. Judiciary is
an independent arm to provide justice to people based on laws enacted by legislature and
implemented by executives as also legal disputes among people. We know them by Supreme
Court -the highest apex judicial body, the High Courts with all their hierarchies.
TYPE 6: AGENTS
These are intermediaries or representatives of original businesses. They can be wholesalers,
retailers, distributors, agents as also can be franchise holders, license holders etc.
http://www.iaeme.com/JOM/index.asp
25
editor@iaeme.com
Parimal Vasavada
TYPE 7: COOPERATIVES
Derived from Latin word ‘co’ ‘operari’ (work with). A cooperative organization is an
association of persons, usually of limited means, who have voluntarily joined together to
achieve a common economic end through the formation of a democratically controlled
organization, making equitable contribution and distributions to the capital required, and
accepting a fair share of risk and benefits of the undertaking. Some of the features are
voluntary and open membership association, essentially non-profit, self help and mutual help,
pooling individual resources for group benefits. One of the largest employer and contributor
to economy. Cooperative Society is a State Subject and also Central Subject in case of multi
subject cooperatives. A cooperative society need to register itself as such. Some classic
examples are workers cooperatives, housing cooperatives, consumers’ cooperatives,
producers cooperatives and so on. Some stark examples are Amul, KRIBHCO, Lijjat Pappad ,
IFFCO.
TYPE 8: NON GOVERNMENT ORGANIZATIONS (NGOS)
These are organizations for charity, philanthropic and support purposes-activities not for
profit. Red Cross, Rotary Club, HelpAge, AkshayPatra etc. There are thousands of them.
Most of the basic impersonal formal transactions and activities we see around are
managed through one of these. However there is no end to ever evolving human ingenuity.
http://www.iaeme.com/JOM/index.asp
26
editor@iaeme.com