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On the basis of relationship, an organisation may of two types—formal and informal.
Formal organisation refers to the structure of well-defined jobs, each bearing a definite measure of
authority, responsibility and accountability.
Informal organisation refers to the relationship between people in the organisation based on personal
attitudes, emotions and prejudices, likes and dislikes.
There are five common forms of organisation structure—Line, Functional, Line and Staff, Committee and
matrix organisation.
(1) Line organisation —In this, there is a chain of authority which flows from upward to down word.
Advantages. Main advantages of this form of organisation are: (i) Simple, (ii) Fixed responsibility, (iii)
Flexibility, (iv) Prompt decision, (v) Unified control, (vi) Well-defined authority, (vii) Fixed channel of
promotions.
Disadvantages— The system claims the following disadvantages: (i) Unitary administration, (ii)
Overloading with work, (iii) Lack of specialisation (iv) Lack of communication (v) Succession
problem, (vi) Absence of conceptual thinking, (vii) Favourities, (viii) No co-ordination.
(2) Functional organisation—In this form of organisation all activities in the organisation are
grouped according to the basic functions, i.e., production, finance, marketing, headed by a specialist.
Advantages- Main advantages of this form are: (i) Specialisation, (ii) Large-scale production, (iii)
Improved efficiency, (iv) Flexibility, (v) Better industrial relations, (vi) Separation of mental and physical
functions.
Disadvantages—Following are the disadvantages of this form of organisation: (i) Multiplicity of
authority, (ii) Indiscipline, (iii) Shifting of responsibility, (iv) Lack of co-ordination, (v) impracticable, (vi)
delay in decision making.
(3) Line and Staff Organisation—In this form of organisation the structure is basically that of line
organisation but functional experts are appointed to advise the line authority in their respective field.
Advantages: (i) Advantages of the line and the functional organisations, (ii) Specialisation, (iii) Sound
decisions.
Disadvantages: (i) Conflicts between the line and the staff executives, (ii) Advice of the staff executives is
ignored, (iii) No demarcation of authority, (iv) Lack of responsibility, (v) uneconomical.
(4) Committee Organisation—Committee is a group of individuals formed permanently or
temporarily for a particular purpose through free interchange of ideas.
Advantages—(I) Pooling of ideas, (2) Co-ordination, (3) Motivation through participation, (4)
Representation of interest groups, (5) Easy communication, (6) No concentration of power, (7) A tool of
management for development.
Disadvantages—(I) Slow decisions, (2) Divided responsibility, (3) Minority tyranny, (4) other abuses. 
(5) Project or Matrix Organisation—In it authority flows vertically within functional departments.
Advantages-It emphasises multiple inter-dependence among various functions, horizontal relationships
and operational flexibility.
Disadvantages—It is of a temporary nature.
