Formal organization is a group designed for a special purpose and structured for maximum efficiency.
Formal organization is the official organization that top management conceives and builds. A formal organization does not just happen: it is developed by managers through the organizing function of management. The formal organization is developed through a series of organizing steps: (1) consider objectives and plans, (2) determine activities necessary to achieve objectives, (3) classify and group activities (functional, geographic or territorial, product, customer), (4) assign work and delegate authority, and (5) design a hierachy of relationships. The result of this process is a formal organization structure.