Concept of Organization

Organization

An organization is the co-coordinator of all other factors of production. He has to plan, organize and direct other factors of production, arrange for marketing the produce and take risks and uncertainties.

Functions of Organization

a) Function of initiation: An organization makes proper assessment of markets (both input and output markets) and decides upon what, when and how with regard to production and marketing of a commodity.

b) Function of choice of location: It decides upon the particular place to locate the concern or unit where facilities regarding production and marketing are available.

c) Function of co-ordination: The organization has to co-ordinate, direct and supervise the functioning of other factors of production.

d) Function of innovation: The organization has to introduce new technologies, machinery and tools in order to increase the labour productivity and also to reduce the cost of production.

e) Function of bearing risk and uncertainty: Taking risks means accepting a probability that things will turn out badly. Under risk the occurrence of future events can be predicted fairly accurately by specifying the level of probability, E.g. prediction on monsoon rain, storm, etc. In the case of uncertainty, the future occurrences of an event cannot be predicted accurately. E.g. price fluctuation. In both cases, the entrepreneur may likely to incur losses. So, the organization has to anticipate risk and uncertainties and provide necessary alternatives to face them.