Which type of organisation structure clearly lays down the boundaries of authority and responsibility relationship in the organisation?

Formal Organisation

The correct answer is Option (1) - Formal Organisation.

Formal organisation refers to the organisation structure which is designed by the management to accomplish a particular task. It specifies clearly the boundaries of authority and responsibility and there is a systematic coordination among the various activities to achieve organisational goals. The structure in a formal organisation can be functional or divisional. 

* A functional structure leads to occupational specialisation since emphasis is placed on specific functions. This promotes efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve performance.

* Divisional structure-  Divisional structure groups activities on the basis of products. The advantages are integration, product specialisation, greater accountability, flexibility, better coordination and more initiative. The disadvantages are departmental conflicts, costly process, ignoring of organisational interests, increase in requirements of general managers. The divisional head gains experience in all functions related to a particular product. Product specialisation helps in development of varied skills and prepares employee for higher position.

* Informal organisation- Interaction among people at work gives rise to a ‘network of social relationships among employees’ called the informal organisation. The standards of behaviour evolve from group norms rather than officially laid down rules and regulations.