Organization Meaning, Importance & Principles: Study Guide

Summary

An organization is a group of people working together to achieve shared goals. A student learns about the meaning, importance and principles of organizations. This includes how they are structured, and the roles of vision, mission, values and goals.

Meaning of Organization

An organization is defined as a group of people working together to achieve shared goals. It can range from a sole trader to a large corporation. The goals of an organization can be explicit or implicit.

Importance of Organization

Organization is vital for implementing plans and achieving business goals. It allows for specialization, optimum use of resources, teamwork and clear communication relationships.

Principles of Organization

Principles of organization include defining jobs, separating line and staff functions, and establishing a clear chain of command. These principles help in achieving the organization's goals efficiently.

Departmentalization

Departmentalization groups activities into departments to facilitate coordination. This can be done functionally, by product, by customer, by location or by process. Often, organizations use a combination of these methods.

Key terms

Vision

An image of how the organization should work and appear when successful.

Mission

The overall purpose or reason for the organization's existence.

Values

The priorities that guide how the organization carries out its activities.

Strategies

General approaches that an organization follows to reach its goals.

Functional departmentalization

Grouping activities by the functions performed, such as human resources or marketing.

Product departmentalization

Grouping activities by a specific product or service.

Questions this document helps with

• What is the difference between a vision and a mission?
• Why is organization important for implementing plans?
• How does departmentalization help in coordinating activities?

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