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Revision Notes for CBSE Class 12 Business Studies Chapter 5 - Free PDF Download

The syllabus of Business Studies for Class 12 is designed to prepare students with the groundwork for the undergraduate commerce specialized courses that they may pursue after class 12. It helps them in understanding the basic concepts that are required for comprehending advanced topics of the subject. Chapter 5 of Class 12 Business Studies is ‘Organisation’ and it is an important chapter of the syllabus. 

The chapter goes into detail regarding the definition of organisation, its significance, advantages, and methods for attaining organisational structure. Students can refer to the Business Studies Class 12 Chapter 5 revision notes compiled by Vedantu's subject-matter specialists in a comprehensive way. These revision notes will help them in understanding the various key points of organising and they will be able to answer the questions from the chapter with ease in their exams. Students can access the Organising Class 12 Business Studies revision notes online at any time as well as download them for their offline reference, for free from Vedantu.

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Access Class 12 Business Studies Chapter 5 - Organising Notes

Organising refers to the process of the identification, classification and coordination of work to be performed by establishing reporting relationships between the people, setting up their responsibilities and authorities so as to collectively integrate the human efforts for the successful achievement of organisational objectives.

Hence, Organising is responsible for:

Implementation of plans into action.

It decides by whom, how and where a particular task will be performed.

Steps in The Process of Organising

Steps in the process of organising

Identification and division of work: Identifying and dividing work to be done into smaller and manageable tasks.

Departmentalization: Grouping of activities similar in nature as department.

Assignment of duties: Allocating work according to the skills and abilities of employees.

Establishing reporting relationship: Defines the authority, responsibility, relationship clearly stating for each employee from whom they have to take orders and to whom they are accountable.

Importance of Organising

Importance of organising

Benefits of specialization: Work is divided into smaller tasks and each task is performed by those employees who possess the required skills. Performing similar tasks leads to specialization.

Clarity in working relationships: It removes ambiguity and miscommunication as working relationships are clearly stated.

Optimum utilization of resources: It avoids duplication and overlapping of work which leads to minimum wastage of resources.

Adaptation to change: It tries to incorporate the changes in the business environment by modifying organizational structures and revising interrelationship at managerial levels as and when required.

Effective administration: Clarity in working relationships and proper execution of work brings effective administration.

Development of personnel: Proper delegation reduces employer’s burden, stimulates creativity and motivates them to complete tasks efficiently.

Expansion and growth: It helps in growth and expansion by incorporating changes in the business environment.

Organisational Structure

Organisational structure refers to the structure or a framework within which various operational and managerial tasks are performed. 

It aids in the proper coordination of human, physical and financial resources in the organization to successfully achieve the organisational objectives.

It is an indispensable means without which an organisation cannot work.

The organisational chart shows the organisational structure of an enterprise.

Span of management is the number of subordinates that a superior can manage.

Organizational structure ensures a smooth and efficient flow of operations within an enterprise.

Types of Organisational Structure

These are divided into two types:

1. Functional structure: 

Organisational structure where business is managed in the form of a separate department created on the basis of function each department performs. Suitability

Functional structure is suitable for large scale businesses providing specialised services or performing diversified activities.

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Specialisation: Employees perform similar tasks within a department and are able to improve performance which leads to occupational specialisation.

Coordination: Similarity in the task being performed remote control and coordination.

Operational efficiency: The managerial and operational efficiency reduces cost and results in higher profits. Division of work into smaller tasks leads to minimal duplication and lowers cost.

Makes training easier: The range of skills are focused which makes training of employees easier.

Higher Focus: Individuals performing similar and smaller tasks can focus better on the activities they are responsible for.

Disadvantages

Deviation in interests: Department interest may be pursued at the cost of organisational interest to create a functional empire.

Conflicts: Departmental interests may lead to conflicts of interest among departments and hinder interaction between them.

Lack of Coordination: Conflicts of interest among departments may lead to problems in coordination.

Rigidity: Employees performing similar tasks may not be open to ideas or newer methods resulting in lack of flexibility.

2. Divisional Structure: 

Divisional structure is a type of organisational structure which works as separate units or divisions. 

There are many units and divisions that deal with various products. 

Each division is accountable for its own job and must consider its own profit and loss. 

Each division has its own divisional manager who oversees and has power over the entire unit. Suitability

Divisional structure is suitable for organisations producing a variety of products for performing diversified activities.

Advantages: 

Product Specialisation: Product specialisation contributes to the development of diverse abilities in a divisional head, preparing him for higher roles. This is due to the fact that he obtains experience in all functions relating to a specific product.

Accountability: Divisional heads are held accountable for profits since revenues and costs associated with various departments are clearly identifiable and attributed to them. This gives a solid foundation for measuring performance. It also aids in the assignment of blame in times of poor division performance, allowing appropriate corrective action to be performed.

Flexibility: It encourages flexibility and initiative because each division operates as an autonomous unit, resulting in faster decision making.

Expansion: It allows for expansion and growth by allowing for the addition of new divisions without disrupting present operations by simply adding another divisional head and personnel for the new product line.

Prepare for future positions: Experience in a variety of operations prepares managers for higher positions.

Better Initiatives: Dependent and independent functioning of divisions encourages managers to take initiatives to find better means and ways to perform the best.

Conflicts: Conflicts may emerge between different divisions on the allocation of cash, and a specific division may aim to maximize its profits at the expense of other divisions.

Duplication of efforts: It may result in cost increases due to duplication of efforts across products. Providing each division with its own set of equivalent functions raises costs.

Misuse of power: It gives managers the authority to oversee all activities relating to a specific division. Over time, such a manager may develop influence and, in an attempt to establish his independence, may disregard organizational interests.

Difference between Functional Structure and Divisional Structure:

Formal and Informal Organizations

a. Formal organisations: 

Formal organisation lays down job descriptions, rules and procedures for each task to be performed in an organisation.

It coordinates, interlinks and integrates the efforts of various departments and different activities to achieve organisational goals.

It clearly specifies the formal relationships between the employees, who has to report whom, the nature and extent of their relationship etc,

It prioritizes work over interpersonal and informal relationships.

Easy to fix responsibility.

No ambiguity in instructions.

Maintains unity of command.

Focus on organisational goals.

Provide stability.

Procedural delays due to long formal chains of communication.

No recognition for creativity, as everyone has to follow a certain specified structure.

No understanding of human relationships.

b. Informal organisation

Informal organisation is a structure formed as a result of a network of social relationships among employees.

It allows employees to interact beyond officially defined roles.

It originates within the formal organisation as frequent interaction among employees in formal organisation creates informal organisation.

Quick communication and faster feedback due to informal communications.

Fulfills social needs of friendship and affinity.

Makes up for inadequacies of formal organization.

Disrupts the formal setups.

Resistance to change.

Group interest may supersede organisational interest.

Difference in opinion of people in an informal group may lead to conflicts and clashes.

Difference between Formal and Informal Organisation

Delegation refers to the downward transfer of authority from a superior to a subordinate to enable subordinates to perform their responsibilities effectively and efficiently.

Elements of Delegation

Delegation means assigning responsibility and authority to subordinates and creation of accountability for work.

Authority: It refers to the right of an individual to command his or her subordinate and take action within the scope of his or her position. Authority flows in a downward direction, that is top to bottom, as the superior has authority over his subordinate. Also the level of authority increases as one moves higher in the management hierarchy.

Responsibility: Responsibility is the obligation of a subordinate to properly perform the duties assigned by the superior. It always flows in upward direction, as the subordinate is responsible for his superior.

Accountability: Accountability means being answerable for the outcome of the assigned work. It flows from bottom to top, that is in upward direction, as a subordinate is accountable for his work and performance to his superior.

Difference between Authority, Responsibility and Accountability

Importance of Delegation

Effective management: Sharing responsibilities with subordinates allows managers to concentrate on important matters.

Employee development: Provides opportunities for employees to develop their skills to handle complex tasks and to improve their career prospects.

Motivation of employees: Receiving responsibilities and authority from superior builds confidence and motivates subordinates to perform well.

Facilitation of growth: Receiving responsibilities from superior trains and prepares the subordinates for new projects or ventures.

Basis of management hierarchy: The degree and flow of authority and responsibility provides the basis for management hierarchy.

Better Coordination: Predetermined authority, responsibility and accountability of each position bring clarity and avoids duplication which leads to coordination.

Centralisation

All powers and authority of decision-making is retained with the top level management in this concept. 

All the decisions are taken by the higher level management in a centralised firm.

Though an organisation cannot be completely centralised, as it may disrupt the production efficiency as well as discourage departments and employees to perform to the best of their abilities. Hence for this a balance between centralisation and decentralization is needed.

Decentralisation

The power and decision-making authority are delegated or shared among all the levels of management and all departments.

Initiative: Develops initiative among subordinates as they feel motivated to take decisions on their own. It gives lower management levels a sense of autonomy by allowing them to make their own decisions. Furthermore, it fosters a sense of self-confidence and self-reliance in them. When power is given to lower-level managers, they learn to face new difficulties and solve problems on their own. 

Managerial Competence: Decentralisation allows them to demonstrate their abilities and prepare for higher-level positions, and develops managerial talent for the future, as the subordinates focus on developing their skills, and take decisions based on their knowledge. This helps in shaping their professional careers.

Quick decision making: It facilitates quick decision making as no formal structure, or long formal chains of approval needs to be followers while taking decisions.

Control: Decentralisation aids in better evaluating the organization's effectiveness. Decentralisation aids in the analysis and evaluation of each department's performance separately. As a result, the level of achievement of each department, as well as their contribution to the general objectives of the organization, can be clearly analyzed.

Growth: Decentralisation helps to increase managerial efficiency to a considerable extent. Lower-level managers gain more authority as a result of decentralisation. It encourages healthy competition among managers from various departments. In a contest to exceed one another, they give it their all, increasing overall productivity and efficiency. The organization benefits from improved overall performance and so grows.

Reduced Workload of Top Managers: Delegation of authority gives top-level managers more latitude. It assists them in delegating work to subordinates and allows them to focus on more critical and higher priority tasks, such as policy decisions. Furthermore, direct monitoring by top-level management is reduced as subordinates are given the authority to make their own judgments.

Difference between Delegation and Decentralisation

Difference between Centralisation and Decentralisation

Overview- Revision Notes Class 12 Business Studies Chapter 5

Class 12 notes ‘organising’.

This chapter discusses the fundamentals of organisation, beginning with its definition. These Class 12 revision notes Chapter 5 have discussed the topic in a straightforward and methodical manner, allowing students to master every aspect of the subject. The specialists have divided the issue into sections, and each component is presented with pertinent labelled diagrams, flowcharts, and tables. Let's look through these editing notes in detail now.

Class 12 Business Studies Chapter 5 revision notes will explain in detail the term organising and the steps involved in organising. The steps have been explained by breaking them down into points that are easy to understand and memorise. Examples provided with the topics and sub-topics make it easier for the students to develop a conceptual understanding of the concepts effectively.

The method that leads to the establishment of an organisational structure with clearly defined duties for each member is known as organising. These responsibilities are then assigned or filled by persons who are well suited for them. An organisational structure also aids in establishing the link between these positions so that each employee is clear about his or her responsibilities. To learn more about this structure and its construction, consult the Class 12 Business Studies Organising revision notes.

Organisation is very important as it not only helps in defining the roles of individuals but it leads to an effective administration and utilisation of various resources also. These revision notes will explain clearly the other areas in which organisation plays a critical role. 

NCERT Solutions Chapter 5 Class 12 Business Studies revision notes will aid the students in understanding how an organisational structure provides the framework for managerial and operational responsibilities. Students can refer to the revision notes for understanding further in detail the different types of organisational structures and how they are formed.

Every kind of organisational structure has its distinct features, advantages, and disadvantages. Students will be able to get a comparative overview of functional and divisional structure along with the difference between formal and informal structure of organisations. 

Students will also comprehend the idea of delegation, which is the transfer of authority from seniors to subordinates, by referring to Class 12 Business Studies revision notes answer chapter 5. These revision notes will expand on the principles of organisational authority, responsibility, and accountability. The importance of delegation has been explained clearly in a comprehensive and easy to understand language.

Another important aspect of organisation covered under these revision notes is decentralisation. NCERT Class 12 revision notes Business Studies Chapter 5 solution will give the students a clear idea about the importance of organising and its importance along with detailed points of difference between delegation and decentralisation.

Some of the important topics or concepts discussed in this chapter are listed below:

Meaning of organising

Steps in the process of organising

The importance of organising

Organisational structure

Types of organisational structures

Difference between functional structure and divisional structure

Formal and informal organisation

Difference between the formal and informal organisation

The importance of delegation

Difference between authority, responsibility, and accountability

The importance of decentralisation

Difference between delegation and decentralisation

Difference between centralisation and decentralisation

CBSE Class 12 Revision Notes and Key Points

CBSE Class 12 Revision Notes on Business Studies Chapter 5 is one of the best study materials for the students to revise the concepts related to organising. All the concepts of the chapter covered under Revision Notes of Chapter 5 are explained in a very simple manner so that the students can easily understand the deeper meaning of the concept. If you have finished reading the chapter from the textbook, then go through the revision notes to complete your preparation for the exam. 

You can access the free Pdf version of the Revision Notes on Chapter 5 Class 12 Business Studies by clicking on “Download PDF”. You can also download the other chapters of CBSE Class 12 Business Studies revision notes available in free pdf format from our website. Also, check out other important study materials such as NCERT Solutions of Class 12 Business Studies and Important Questions on Class 12 Business Studies from Vedantu’s website or download the app to access the best study materials.

Other Chapter Links On CBSE Class 12 Business Studies Revision Notes

Chapter 1 - Nature and Significance of Management Notes

Chapter 2 - Principles of Management Notes

Chapter 3 - Business Environment Notes

Chapter 4 - Planning Notes

Chapter 5 - Organising Notes

Chapter 6 - Staffing Notes

Chapter 7 - Directing Notes

Chapter 8 - Controlling Notes

Chapter 9 - Financial Management Notes

Chapter 10 - Financial Markets Notes

Chapter 11 - Marketing Notes

Chapter 12 - Consumer Protection Notes

Chapter 13 - Entrepreneurship Development Notes

CBSE Class 12 Revision Notes on Business Studies Chapter 5 is one of the greatest study tools for students to revise organising principles. All of the ideas discussed in Chapter 5 Revision Notes are taught in a very basic manner so that students can readily comprehend the deeper meaning of the concept. Once you have done reading the chapter from the textbook, look through the revision notes to finalise your test preparation.

You can access the free Pdf version of the Revision Notes on Chapter 5 Class 12 Business Studies by clicking on “Download PDF”. You can also download the other chapters of CBSE Class 12 Business Studies revision notes available in free pdf format from our website. Also, check out other important study materials such as NCERT Solutions of Class 12 Business Studies and Important Questions on Class 12 Business Studies from Vedantu’s website or download the app to access the best study materials .

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FAQs on Organising Class 12 Notes CBSE Business Studies Chapter 5 (Free PDF Download)

1. Why should students refer to the Chapter 5 Class 12 Business Studies revision notes?

The Class 12 Business Studies Chapter 5 revision notes have been compiled by subject-matter experts and covering the topic of ‘Organisation’ in detail. Easy to understand language, tabular format for explaining the differences between the sub-topics, flowcharts, and pointwise explanations make for an interesting read and easy learning. Class 12 Business Studies Chapter 5 revision notes will help the students in preparing for the exams as they will be able to cover the entire chapter in less time without missing out on any important topic. 

2. What is the organisational structure?

Class 12 notes ‘Organising’ aim to help the students in understanding the importance of organisational structure and how it can be achieved. The revision notes explain its importance, the types, and classification of structures namely: formal and informal, functional, and divisional structure. The tabular description of the features, advantages, and disadvantages of each will help the students in understanding and memorising the concepts.

3. Are the Class 12 revision notes Chapter 5 helpful for the exam preparation?

Yes, the Class 12 revision notes Chapter 5 are helpful for the exam preparation. These notes will work as a good study resource for students and help them in covering the syllabus since the topics are explained in a question and answer format.

4. What is the underlying concept of Chapter 5 of Class 12 Business Studies?

Chapter 5 of Class 12 Business Studies talks about the concept of organising, which is the next step after planning for the proper functioning of the organisation. The chapter briefs us about various concepts and features that are involved in the step of organisation. Some of the prominent concepts that are covered in the chapter are the meaning and process of organising, the importance of organising, organisational structure, and the type of organisational structure. For a better understanding of these concepts, you can visit NCERT solutions.

5. What is the importance of organising according to Chapter 5 of Class 12 Business Studies?

organising is an essential step in any organisation in order for its smooth functioning. The process of organising helps workers to have clarity of work relationships and creating a hierarchical order in the organisation. The organisation helps in the appropriate work which reduces the workload and increases the efficiency of the workforce. It also helps in the effective administration and optimum utilisation of resources. organising is a flexible process that helps an organisation to adapt to change and helps in the expansion of the enterprise.

6. How does NCERT revision notes help in securing good marks in Chapter 5 of Class 12 Business Studies?

NCERT revision notes for Chapter 5 Organising, with valuable facts and information, is included in the syllabus provided by the CBSE. These revision notes consist of all the prominent concepts mentioned in the prescribed textbook in a simple and student-friendly language. The concepts are explained in the form of a flow chart to make the process of understanding and learning easy and quick. NCERT revision notes are organised in the same sequence as the NCERT book to avoid unnecessary confusion for the students. The notes and solutions are present on Vedantu's official website (vedantu.com) and mobile app for free of cost.

7. What is the importance of delegation in Chapter 5  of Class 12 Business Studies ?

Delegation helps the manager to utilise their time on matters of higher priority. It helps to establish effective management and motivate the workers. Employees with time to work on projects of importance improves their working skills and sharpens their logical thinking. Delegation of authority to the subordinates gives them a chance to display their work skills and efficiency. For a detailed answer, you can refer to the NCERT Solutions available on Vedantu’s official website or on the Vedantu learning app.

8. Is Chapter 5 of Class 12 Business Studies difficult to learn?

Students often find chapters difficult because of the doubts  or misunderstanding of the concepts. Organising is a chapter that talks about the basics of an organisation in a firm. Students can refer to the NCERT Solutions for a better understanding of the difficult concepts. There are important questions and extra questions for practice that will prepare the students for any kind of possible questions in the examination. Difficult terms such as delegation, decentralisation, and centralization, etc. are explained in a detailed and simple manner for students to understand and learn.

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CBSE class 12 Business Studies Organizing class 12 Notes Business Studies in PDF are available for free download in myCBSEguide mobile app. The best app for CBSE students now provides Organizing class 12 Notes Business Studies latest chapter wise notes for quick preparation of CBSE board exams and school based annual examinations. Class 12 Business Studies notes on chapter 5 Organizing are also available for download in CBSE Guide website.

CBSE Guide Organizing class 12 Notes Business Studies

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12 Business Studies notes Chapter 5 Organizing

Download CBSE class 12th revision notes for chapter 5 Organizing in PDF format for free. Download revision notes for Organizing class 12 Notes and score high in exams. These are the Organizing class 12 Notes Business Studies prepared by team of expert teachers. The revision notes help you revise the whole chapter 5 in minutes. Revision notes in exam days is one of the best tips recommended by teachers during exam days.

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CBSE Class 12 Business Studies Revision Notes CHAPTER – 5 Organizing class 12 Notes Business Studies

Meaning of Organizing

•nce the objectives and plans are laid down, management has to identify and establish productive relationships between various activities and resources for implementing plans. In general words organising refers to arranging everything in orderly form and making the most efficient use of resources. The aim of organizing is to enable people to work together for a common purpose.

‘Organizing is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.’

Steps Involved in the Process of Organizing

1. Identification & Division Of Work: – The total work to be done should be divided into specific jobs as according to predetermined plans. – Job = a set of related tasks that can be performed by an individual. It should have specific and definite tasks to be performed. As far as possible, it should define expected results along with the job. – Division of work → specialization of efforts and skills + avoids duplication of work. – Management must ensure that all the activities required to achieve organizational objectives are identified.

2. Departmentalization: – Grouping similar and related jobs into larger units called departments, divisions or sections and placing them under a department head. It facilitates specialization. – The departments are linked together and are interdependent. – Aims at achieving co-ordination and facilitate unity of action. Departmentation can be done on the basis of: •Functions: marketing, personnel, finance etc. •Products: Textiles, chemical, power division etc. •Territories: Western, northern, central, eastern etc.

3. Assignment Of Duties: – Define the work of different job positions and allocate work accordingly. – Once departments are formed, the dept is placed under the charge of an individual. – Jobs are assigned to an individual best suited to perform it. – Qualifications, experience, ability and aptitudes of people should be matched with duties. – E.g. activities of finance should be assigned to persons having qualifications and experience in finance e.g. C.A‘s.

4. Establishing Reporting Relationships: – Granting requisite authority to enable employees to perform the job satisfactorily. – Superior subordinate relations between different people and job positions created, so that everybody knows from whom he is to take orders and to whom he can issue orders. – Creates management hierarchy = a chain of command from the top manager to the individual at the lowest level. – This helps in coordination.

Importance of Organizing

1. Benefits of specialization: In organizing every individual is assigned apart of total work and not the whole task. This division of work into smaller units and repetitive performance leads to specialization. Thus organizing promotes specialization which in turn leads to efficient & speedy performance of tasks.

2. Clarity in working relationship: It helps in creating well defined jobs and also clarifying the limits of authority and responsibility of each job. The superior-subordinate relationship is clearly defined in organizing.

3. Effective Administration: It provides a clear description of jobs and related duties which helps to avoid confusion and duplication. Clarity in working relationships enables proper execution of work which results ineffective administration.

4. Optimum utilization of resources: The proper assignment of jobs avoids overlapping/duplication of work. This helps in preventing confusion and minimizing the wastage of resources and efforts.

5. Adoption to Change: A properly designed organizational structure is flexible which facilitates adjustment to changes in workload caused by change in external environment related to technology, products, resources and markets.

6. Development of Personnel: Sound organization encourages initiative and relative thinking on part of the employees. When managers delegate their authority, it reduces their workload so they can focus on more important issues related to growth & innovation. This also develops the subordinates’ ability and helps him to realize his full potential.

7. Expansion and growth: It helps in growth & diversification of an enterprise by adding more job positions, departments, products lines, new geographical territories etc.

Meaning of Organizational Structure

It seeks to establish relations among all the persons working in the organization. Under the organizational structure, various posts are created to perform different activities for the attainment of the objectives of the enterprise. Relations among persons working on different posts are determined. The structure provides a basis or framework for managers and other employers for performing their functions. The organization structure can be defined as the frame work within which managerial and operating tasks are performed.

Relation between Span of Management and Organization structure:

Suitability

(1) Large organizations producing one line of product.

(2) Organizations which require high degree of functional specialization with diversified activities.

1. Specialization: Better decision of labour takes place which results in specialization of functions and its consequent benefits.

2. Coordination is established: All the persons working within a departmental are specialists of their respective jobs. It makes the co-ordination easier at departmental level.

3. Helps in increasing managerial efficiency: Managers of one department are performing same type of function again and again which makes them specialized and improves their efficiency.

4. Minimizes cost: It leads to minimum duplication of effort which results in economies of scale and thus lowers cost.

Disadvantages

1. Ignorance of organizational objectives : Each departmental head works according to his own wishes. They always give more weight to their departmental objectives. Hence overall organizational objectives suffer.

2. Difficulty in Inter-departmental Coordination : All departmental heads work as per their own wishes which leads to coordination within the department easier but it makes inter-departmental coordination difficult.

3. Hurdle in complete development – because each employee specializes only in a small part of the whole job.

(B) DIVISIONAL ORGANIZATION STRUCTURE

Suitability: This structure is suitable in organizations producing multi product or different lines of products requiring product specialization. Also growing companies which intend to add more lines of products in future adopt this structure.

1. Quick decision-making : Divisional manager can take any decision regarding his division independently which makes decisions quick and effective.

2 . Divisional results can be assessed : Division results (profit/loss) can be assessed easily. On this basis any unprofitable division can be closed.

3. Growth and Expansion : It facilitates growth and expansion as new divisions can be added without disturbing existing departments.

1 . Conflicts among different divisions on allocation of resources.

2. Duplicity of Functions : Entire set of functions is required for all divisions. It gives rise to duplicity of efforts among divisions & increases cost.

3. Selfish Attitude : Every division tries to display better performance and sometimes even at the cost of other divisions. This shows their selfish attitude.

FORMAL ORGANISATION

– Refers to the org. structure that is designed by the management to accomplish organizational objectives..

– It specifies clearly the boundaries of authority & responsibility and there is a systematic coordination among the various activities to achieve organizational goals.

– Louis Allen – System of well defined jobs, each bearing a definite measure of authority, responsibility & accountability. .

1. It is deliberately created by the top management.

2 . It is based on rules and procedures which are in written form.

3. It is impersonal i.e. does not takes into consideration emotional aspect.

4 . It clearly defines the authority and responsibility of every individual.

5 . It is created to achieve organizational objectives.

1. Easier to fix responsibility since mutual relationships are clearly defined.

2. No overlapping of work – because things move according to a definite plan.

3. Unity of command through an established chain of command.

4. Easy to achieve objectives – because coordination and optimum use of human and material resources.

5. Stability in the organization – because behavior of employees can be fairly predicted since there are specific rules to guide them.

1 . The Work is based on rules which causes unnecessary delays.

2 . Lack of initiative: The employees have to do what they are told to do and they have no opportunity of thinking.

3. Limited in scope: It is difficult to understand all human relationships in an enterprise as it places more emphasis on structure and work.

INFORMAL ORGANISATION

An informal organization is that organization which is not established deliberately but comes into existence because of common interests, tastes and religious and communal relations. The main purpose of this organization, structure is getting psychological satisfaction. For example, employees with similar interest in sports, films, religion etc. may form their own informal groups.

1 . It originates from within the formal organization as a result of personal interaction among employees.

2. It has no written rules and procedures.

3. It does not have fixed lines of communication.

4 . It is not deliberately created by the management.

5 . It is personal means the feelings of individuals are kept in mind.

1. Speed : Prescribed lines of communication are not followed which leads to faster spread of information.

2. Fulfillment of social needs – enhances job satisfaction which gives them a sense of belongingness in the organization.

3. Quick solution of the problems – because the subordinates can speak without hesitation before the officers, it helps the officers to understand the problems of their subordinates.

1. It creates rumours : All the persons in an informal organization talk careless and sometimes a wrong thing is conveyed to the other persons.

2. It resists change and lays stress on adopting the old techniques.

3. Priority to group interests : Pressurizes members to conform to group expectations.

Difference between Formal Informal Organisation

Delegation of Authority

Meaning : It means the granting of authority to subordinates to operate within the prescribed limits. The manager who delegates authority holds his subordinates responsible for proper performance of the assigned tasks. To make sure that his subordinates perform all the works effectively and efficiently in expected manner the manager creates accountability.

Process/Elements of Delegation

1. Authority : The power of taking decisions in order to guide the activities of others. Authority is that power which influences the conduct of others.

2. Responsibility : It is the obligation of a subordinate to properly perform the assigned duty. When a superior issues orders, it becomes the responsibility of the subordinate to carry it out.

3. Accountability : When a superior assigns some work to a subordinate, he is answerable to his superior for its success or failure.

Principle of Absoluteness of Accountability : Authority can be delegated but responsibility/accountability cannot be delegated by a manager. The authority granted to a subordinate can be taken back and re-delegated to another person. The manager cannot escape from the responsibility for any default or mistake on the part of his subordinates. For example, If the chief executive asks marketing manager to achieve a sales target of sale of 100 units/day. The marketing manager delegates this task to deputy sales manager, who fails to achieve the target. Then marketing manager will be answerable for the work performance of his subordinates. Thus, accountability is always of the person who delegates authority.

Process of Delegation of Authority

Difference between Authority, Responsibility and Accountability

Importance of the Delegation of Authority

1. Reduction of Executives’ work load : It reduces the work load of officers. They can thus utilize their time in more important and creative works instead of works of daily routine.

2. Employee development : Employees get more opportunities to utilize their talent which allows them to develop those skills which will enable them to perform complex tasks.

3. Quick and better decision are possible : The subordinate are granted sufficient authority so they need not to go to their superiors for taking decisions concerning the routine matters.

4. High Morale of subordinates : Because of delegation of authority to the subordinates they get an opportunity to display their efficiency and capacity.

5. Better coordination : The elements of delegation – authority, responsibility and accountability help to define the powers, duties and answer ability related to various job positions which results in developing and maintaining effective coordination.

Decentralization

• Decentralisation of authority means dispersal of authority to take decisions throughout the organization, upto the lower levels.

• It implies reservation of some authority with the top level management and transferring rest of the authority to the lower levels of the organization. This empowers lower levels to take decisions regarding problems faced by them without having to go to the upper levels.

According to Allen,‘ Decentralisation refers to systematic efforts to delegate to the lowest level, all authority except the one which can be exercised at central points.‟

Centralization = authority retained at top level and Decentralization = Systematic delegation of authority at all levels and in all departments of a firm. Firm needs to balance the two.

• In case of a decentralized firm, Top level retains authority for:

o Policies and decisions w.r.t the whole firm

o Overall control and coordination

• Middle and lower levels have authority to take decisions w.r.t tasks allocated to them

Centralization and Decentralization : represents the pattern of authority among managers at different levels. Centralization of authority means concentration of power of decision making in a few hands. In such an organization very little authority is delegated to managers at middle and lower levels. No organization can be completely centralized or decentralized. They exist together and there is a need for a balance between the two. As the organization grows in size, there is tendency to move towards decentralization. Thus, every organization is characterized by both.

Importance of Decentralization

1. Develops initiative amongst subordinates : It helps to promote confidence because the subordinates are given freedom to take their own decisions.

2. Quick and better decisions : The burden of managerial decisions does not lie in the hands of few individuals but gets divided among various persons which helps them to take better and quick decisions.

3. Relieves the top executives from excess workload : The daily managerial works are assigned to the subordinates which leaves enough time with the superiors which they can utilize in developing new strategies.

4. Managerial Development : It means giving authority to the subordinates up to the lower level to take decisions regarding their work. In this way the opportunity to take decisions helps in the development of the organization.

5. Better Control : It makes it possible to evaluate performance at each level which results in complete control over all the activities.

Difference between – Delegation and Decentralization

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CBSE Class-12 Revision Notes and Key Points

Organizing class 12 Notes Business Studies. CBSE quick revision note for class-12 Business Studies, Chemistry, Math’s, Biology and other subject are very helpful to revise the whole syllabus during exam days. The revision notes covers all important formulas and concepts given in the chapter. Even if you wish to have an overview of a chapter, quick revision notes are here to do if for you. These notes will certainly save your time during stressful exam days.

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Organising Class 12 Notes

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  • Updated on  
  • Jan 18, 2024

Organising Class 12 Notes

Organising is indeed one of the most important functions of management. In the language of business and management, it is a relationship built between people, work and resources in an organisation that is hence used to achieve the common objectives or goals of the organisation as a whole. In this blog on Organising class 12 notes, we will be giving you important study notes on one of the chapters of Business Studies Organising Class 12. It is an important part of commerce subjects, so read this blog till the end if you want to know more about organising class 12 notes. 

Must Read: Business Studies Class 12 Project

This Blog Includes:

What is organising, organising process, importance of organising , organisational structure, types of organisation structure, formal vs informal organisation, delegation , elements of delegation , importance of delegation, centralisation, decentralisation .

Before taking this blog on organising class 12 notes any further, let us first understand what organising actually means. Organising is that function of business management that deals with identifying and grouping different activities in the organisation. Simultaneously, it also deals with bringing together the physical, financial, and human resources required and established to achieve organisational goals. As per Fayol, “To organise a business is to provide it with everything useful to its functioning; raw materials, machines and tools, capital and personnel.”

After understanding what organising actually is, it is now time to reveal the organising process in this blog on organising class 12 notes. According to NCERT, the organising process has 4 vital and important steps:

  • Identification and division of work 
  • Departmentalisation 
  • Assignment of duties
  • Establishing reporting relationships

Any theory topic and our organising class 12 notes in incomplete without mentioning the importance of the topic. Here is the importance of organising:

  • Benefits of specialization : Since a portion of the total work is allocated to each worker and not the entire job or assignment, the division of work into smaller units and repetitive output contributes to specialization , which therefore encourages specialization. In turn, specialization leads to productive & rapid task efficiency.
  • The clarity in working relationships : Organizing is essential because it helps to build well-defined roles and also to explain the boundaries of each job’s authority and obligation.
  • Optimum utilisation of resources : Proper job allocation prevents job overlap/duplication, which helps prevent confusion and minimise waste of resources and efforts.
  • Adaptation to change : Organising indeed enables a well-designed organizational structure that is flexible and facilitates adjustment to changes in workload caused by technology, products, resources and markets-related changes in the external environment.
  • Effective administration : Organizing provides a clear description of jobs and related tasks that helps to avoid confusion and duplication, and this clarity in working relationships allows work to be properly executed, resulting in effective management.
  • Development of personnel : On the part of the staff, the sound organization encourages initiative and relative thinking. It reduces their workload when managers delegate their authority to concentrate on more important growth & innovation issues. 
  • Expansion and growth: good organising also contributes to an enterprise’s growth & diversification by adding more jobs, departments, line managers, product lines, new geographical territories, etc.

Also Read: Top Business Studies Courses You Can’t Afford to Miss

Moving ahead with our blog on Organising class 12 notes, let us now look upon what is an organisational structure? In simple words, the organisational structure is a structure that clearly depicts and tells us the relationship among all the persons/departments working in the organisation. This structure hence provides a basis of the framework for the top management and line managers and also for the other employees to perform their required and needful functions. It can also be defined as the framework within which managerial and operating tasks are performed. While farming the organisational structure, the considerations to be kept in mind are as follows:

  • Span of management
  • Delegation of authority
  • Departmentation

According to the chapter of Organising class 12 notes, there are 2 types of organisational structure namely: 

  • Functional Structure: in this structure, the activities or jobs or tasks are grouped keeping in mind the functions of that particular task or job. 
  • Divisional structure: According to this structure of an organisation in our organising class 12 notes, when the organisation is a big or large organisation and is producing more than one product, then the activities related to product A are grouped together or clubbed under one department and a similar thing is done for the rest of the products. 

Do Read: Creative Courses After 12th Commerce

Let us take our blog on Organisation class 12 notes a step further by discussing formal and informal types of organisation.

  • A formal organisation is a type of organisation where an organisational structure is created while the managers are carrying the organising process to achieve systematic working condition and efficient utilisation of resources.
  • On the contrary, an informal organisation is a type of organisation where the organisational structure is basically a network of personal and social relations which is not established by the formal organisation. 

Must Read: Syllabus for Business Studies Class 12th

According to the chapter of Organising class 12, delegation or delegation of authority is a process through which the responsibilities and authority are entrusted to the subordinates and accountability is created on those employees who have entrusted the responsibility and authority. The importance of delegation is: 

  • Employee development
  • Improves the motivation of the employees
  • Facilitation of growth
  • Effective management
  • Basis of management hierarchy
  • Better coordination

There are 3 elements of the delegation which we will be discussing in a while in this blog on organising class 12 notes.

  • Employee development : It will provide opportunities for employees in order to help them develop their skills so as to handle complex tasks and hence, improve their career prospects.
  • Motivation of employees : It builds confidence and motivation when one receives responsibility and authority from superiors.
  • Better Coordination : Accountability and responsibility bring clarity and avoids duplication that leads to better coordination.
  • Basis of management hierarchy : The basis of management is provided by flow of authority, degree and responsibility.
  • Effective management : Sharing responsibilities with subordinates allows managers to concentrate on important matters.
  • Facilitation of growth : Subordinates get trained for new projects and ventures when they receiver responsibility from superior trains.
  • The top-level management retains all the power and authority of decision-making.
  • The higher management takes all the decisions in a centralised manner.
  • It may disrupt the production efficiency and discourage departments and employees hence, the organisation cannot be completely centralised. So, there is a balance between centralisation that is needed.

The blog on organising class 12 notes cannot be completed without mentioning decentralisation and its importance. In simple words, decentralisation is a process which refers to the manner in which the decision-making responsibilities of the organisation are being divided among the hierarchical levels of the organisation. The importance of decentralisation is:

  • It develops initiative among the subordinates
  • It helps in developing the managerial talent for the future. 
  • It helps in quick decision making in the organisation 
  • Relief to the top management is given 
  • It facilitates growth in the organisation 
  • It offers better control. 

Explore: Business Research: Definition, Methods & Types

Related Reads:-

Organising function comes after planning. The concept of organising involves allocating resources, departmentalise work, demarcate authority, and distribute responsibilities through the firm. The complicated process includes the collaboration of several factors.

The main steps under organising includes identification of work, grouping of work, establishment of hierarchy, delegation of authority, and coordination.

The 5 principles of organising includes the principles of specialisation, functional definition, span of control, scalar chain, and the principle of unity of command.

With this, we come to the end of this blog on organising class 12 notes. Hope these notes will help you to fetch some extra marks in your exam and will come in handy for that last moment revision before the exams. For more such awesome reads and revision/study notes on different subjects, stay tuned with the study abroad experts at Leverage Edu. If you wish to seek career advice or want to pursue business administration or any other related field, get in touch with our experts. Sign up for a free session today!

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Chapter 5: Organising

  • CBSE Class 12
  • Unit 1:Business studies I
  • Chapter 5: Organising Notes

Introduction and Organising Process.

  • BUSINESS STUDIES-XII
  • Publication
  • ABCD CLASSES
  • Business Studies

CONCEPT & MEANING:

Meaning: - Organizing is the process of defining and grouping the activities of the enterprise and establishing authority relationships among them.

Organizing is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of accomplishing objectives.

ORGANISING PROCESS:

Steps in the process of organizing:

  • Identifying and dividing the work into manageable activities so that duplication can be avoided.
  • Departmentalization/ departmentation is when activities of similar nature are grouped together.
  • Assignment of duties to job positions.
  • Establishing reporting relationships so that each individual knows who he has to take orders from and to whom he is accountable

Describe the steps involved in the process of Organizing.

  • One individual cannot do the entire work .
  • Therefore Work is divided into small tasks called job
  • So that  burden of work can be shared
  • The repetitiveness of work  brings speculation
  • Activities similar in nature are grouped together on the basis of their interdependence
  • Departments are formed
  • Example ( quality control, purchase, inventory management can be placed in the production department)
  • Defining the work of different job positions (defining responsibility and authority)
  • Jobs specification is prepared showing the  type of competence required. (Age, experience, Education, Skills)
  • Establishment Reporting Relationships means
  • Who will work under whom
  • Who will get the order from whom
  • Creation of superior-subordinate relationship

Feature & Importance of Organising

FEATURE & IMPORTANCE

Importance of Organizing

  • Due to the division of task, every person performs a particular task.
  • Repetitive performances give them experience and bring specialization.
  • Provides a clear picture of jobs and related duties. 
  • Reduces overlapping and confusion and brings effectiveness in administration.
  • Helps in the growth and diversification by adding new departments, employees, and products
  • Delegation reduces the workload of managers by assigning routine jobs to their subordinates.
  • Managers can concentrate on important tasks.
  • Optimum utilization of resources:
  • Well defined job helps each employee to know their role and duties
  • It reduces duplication of work  and  prevents confusion
  • When any employee retires or quit
  • It is easy for a new employee to adjust quickly because the job profile is clearly defined.

Organisation structure

ORGANISATIONAL STRUCTURE:

O rgani z ation Structure:- Defined as the relationships between people, work and resources and can be shown in the organizational chart.

Factors affecting organizational structure

  • Job design :- Total work is divided into various jobs like sales, finance, production, etc  and the results expected from it
  • Departmentation :-Jobs are grouped together to form departments on the basis of similar tasks like per unit  cost,   quality control under the purchase department
  • Narrow span:- when the size of the organization is large
  • Wide-span: - when the size of the organization is small
  • Delegation of authority :- Sharing of authority between the superior and subordinate and clearly specifying who is responsible for whom

Types of Organization Structure s

  • Functional structure and
  • Divisional structure

FUNCTIONAL STRUCTURE:

Functional structure

  • In a functional organization, all identical works are placed together under one functional head.
  • For example, production, marketing, finance, and marketing are considered essential functions of a manufacturing enterprise.

Suitability : It is most suitable when the size of the organization is large, has diversified activities and operations require a high degree of specialization.

  • Specialization (Occupational):- Employees perform similar tasks within a department and get knowledge in a specific field. Sales, production, etc.
  • Promotes control and coordination Within a department because of similarity in the tasks
  • Improves employee training: Training of employees is easier due to limited work
  • Cost-effective Leads to minimize duplication of effort which results in economies of scale
  • Equal importance to all departments Provides equal attention and importance to different functions (department).

Disadvantages

  • Functional Empires Functional head may give importance to their own departments and stop thinking about the interest of the organization.
  • Limited Growth Functional heads do not get training for top management positions because they work in a particular area (like production or sale).
  • Inter-departmental Conflicts Can arise when the interests of two or more departments are not the same or regarding sharing of resources
  • Problem of Responsibility. Functional head is responsible for a particulars function and if some things go wrong it becomes very difficult to fix responsibility.

DIVISIONAL STRUCTURE:

Divisional Structure: - Organization structure comprises separate business units or divisions. Each unit has a divisional manager responsible for the performance and who has authority over the unit.

Suitability:- Sui table for those business enterprises where a large variety of products are manufactured using different productive resources.

Advantages :

  • Responsibility fixing as divisional heads is accountable for profits. Revenues and costs related to different departments can be easily identified and assigned to them.
  • Initiative and flexibility because each division functions as an independent unit which leads to faster decision making.
  • Specialization (Product) helps in the development of different skills in a divisional head and this prepares him for higher positions.
  • Expansion and growth as new divisions can be added without interrupting the existing operations.

Disadvantages :

  • Conflict May arise among different divisions regarding the allocation of funds
  • Add-In Costs Since there may be a duplication of activities across products
  • Difficulty in Employee Training Due to various products training employees is quite difficult.

Distinguish between Functional and Divisional structure

importance of organising class 12 business studies

Formal & Informal organisation

FORMAL ORGANISATION

D eliberately Planned By the Top Management to Achieve the Specified Objectives Through the Network of Authority Responsibility Relationship

  • Created deliberately by management.
  • Results in the creation of a scalar chain.
  • Extra emphasis on work than on interpersonal relationships among employees.
  • Assigned a specific job to each individual and a fixed authority.
  • Motives to organizational goals.
  • Avoid duplication of effort as each member knows their duties.
  • Responsibility can be fixed due to well established authority responsibility relationship
  • Establish unity of command through a chain of command.
  • Accomplishment of goals by providing a structure where each employee knows their role
  • Stability to the organization by well-defined job and ensure growth and survival

Limitations :

  • Talent and creativity of worker is reduced  due to rigid policies
  • Rigid structures do not allow deviation due to fixed roles assigned to employees
  • Inter-personal relationship gaps between persons issuing orders and subordinates following orders
  • Procedural delays increase the time taken for urgent decision-making.

INFORMAL ORGANISATION

Informal Organization : - Complex network of social relationships which appear unexpectedly to fulfill social and human needs. Features

  • Created automatically without any purposeful efforts by the management.
  • Originates from within  the formal organization as a result of personal interactions among employees.
  • Does not follow any fixed path of authority.
  • Employee's behavior is based on convenience  with no definite structure.
  • Fast:- Information travels very fast as  there is no procedural and language barrier
  • Add flexibility : - Serves the purpose not fulfilled by the formal organization.
  • Social needs of the members are fulfilled and give them a sense of belongingness in the organization.
  • Timely feedback Prescribed lines of communication are not followed and quick feedback gets from informal channels.

Disadvantage s :

  • Opposition The management may not be successful in implementing changes if the informal organization opposes them.
  • Promotes groups : - Compels members to agree with the group expectations. This can be harmful  if the rule set by the group are against organizational interests.
  • Spread rumors: - Due to the fast flow of information it can spread rumors which may work against the goodwill of the formal organization

importance of organising class 12 business studies

DELEGATION OF AUTHORITY

Delegation:- Delegation is the process a manager shares some of his routine work with his subordinate s so that he can concentrate on an important issue which requires his active role.

  • Note: - The manager still is accountable for the performance of the assigned tasks.
  • The authority granted can be taken back and re-delegated to another person.

Elements of Delegation

Authority :

  • Right of an individual to command his subordinates and to take action within his powers
  • Flows from top to bottom, i.e., the superior has authority over the subordinate.
  • Maintain order in the organization by giving the managers the right to give directions.
  • Determines the superior-subordinate relationship wherein the superior communicates his decision to the subordinate, expecting fulfillment from him.

Responsibility :

  • The obligation of a subordinate to properly perform the assigned duty.
  • Arises from a superior-subordinate relationship because the subordinate is bound to perform the duty assigned to him by his superior.
  • Flows upwards i.e., a subordinate will always be responsible to his superior.
  • Delegation the authority must be equal to the assigned responsibility. If authority granted is more than responsibility, it may lead to misuse of authority, and if responsibility assigned is more than authority it may make a person ineffective.

Accountability (answerability):

  • Means being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot refuse accountability.
  • Cannot be delegated and flows upwards i.e., a subordinate will be accountable to a superior for satisfactory performance of work.
  • Generally forced through regular feedback on the amount of work done.

Differences in the elements of delegation

importance of organising class 12 business studies

“Authority can be delegated but responsibility cannot”. Explain the statement in brief–

According to the principle of absolute responsibility, authority can be delegated but responsibility and accountability cannot be delegated by a manager. The manager is responsible or accountable to his own superior for both, the tasks that he has assigned his subordinates and the acts of his subordinates. In other words, only authority can be delegated but responsibility and accountability are absolute.

For example: if a foreman fails to get 100 units produced by the workers on any day, he is responsible to his superior. He cannot escape by saying that the workers were at fault. Similarly, the factory manager remains responsible to his superior for the work he entrusted to this foreman. He cannot escape from the responsibility by passing on the blame to his foreman.

Importance of delegation

  • E stablishes superior-subordinate relationships, which are the basis of the hierarchy of management which in long run facilitates decentralization
  • By delegating routine tasks managers can concentrate on important tasks and concentrate in new areas.
  • Help to define the powers, duties and answerability related to the various positions in an organization
  • Which reduces duplication of effort
  • Subordinate gets to experience new areas for the work assigned to them
  • When new products and new departments are created they can be appointed.
  • Trust on the part of the superior and commitment on the part of the subordinate motivate the subordinate to perform better and improve his confidence
  • E mployees get opportunities to  gain experience and develop them for higher positions

Decentralisation

DECENTRALISATION:

Decentralization:- delegating authority at all management levels and all departments of the organization to take decisions and appropriate action on tasks assigned to them within their powers.

Centralization:- Decision-making authority is retained by higher management levels

importance of organising class 12 business studies

  Difference between delegation and decentralization

importance of organising class 12 business studies

Importance of decentralization

  • Decisions are taken to the nearest points of action and there is no requirement for approval from many levels
  • Information sent is cleared because it doesn’t have to go through long channels
  • Reduces direct supervision by a superior
  • Top management can concentrate on major policy decisions instead to day to day work
  • Promotes confidence among the subordinates due to freedom to make their own decisions
  • Brings more creativity and new ideas to the organization.
  • A wards greater independence to divisional or departmental heads.
  • This allows them to develop team spirit and a sense of competition amongst the departments.
  • Gives employees a chance to prove their abilities in their own working
  • Helps to develop multi-skills talents due to greater autonomy
  • Decentralization evaluates performance at each level and can be accountable for their results.
  • Organization goals can be effectively achieved

importance of organising class 12 business studies

Related Chapter Name

Chapter 1: nature and significance of management.

  • Introduction
  • Introduction and Concept of Management
  • Characteristics & Importance of Management
  • Objectives of Management
  • Importance of Management
  • Nature of Management
  • Objectives & Levels of Management
  • Functions of Management
  • Coordination-The essence of Management

Chapter 2: Principles of Management

  • Introduction and Concept of Principles of Management
  • Feature & Importance of Management Principle
  • Henri Fayol's POM
  • Taylor's POM
  • Fayol versus Taylor-A comparison

Chapter 3: Business Environment

  • Introduction and Feature & Importance of Business Environment
  • Importance of Business Environment
  • Dimensions of Business Environment
  • Macro Business Environment
  • Impact of Government changes on Business & Industry
  • Demonetisation

Chapter 4: Planning

  • Introduction and Feature & Importance of Planning
  • Features of Planning
  • Limitations of Planning
  • Planning process
  • Types of plans
  • Standing Plan and Single Use Plan

Chapter 6: Staffing

  • staffing as part of Human Resource Management
  • Introduction and Feature & Importance of Staffing
  • Staffing process
  • Elements of Staffing
  • Internal and External Recruitmnet
  • Training & Development
  • Methods of Training

Chapter 7: Directing

  • Introduction and Feature & Importance of Directing
  • Elements of Directing
  • Supervision and Motivation
  • Maslow's Need Hierarchy Theory
  • Financial Vs Non-Financial Incentives
  • communication
  • Formal and Informal Communication
  • Barriers to Communication

Chapter 8: Controlling

  • Planning & Controlling
  • Introduction and Importance of Controlling
  • Controlling Process
  • CPC & MBE

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  • NCERT Solutions
  • NCERT Class 12
  • NCERT Class 12 Business Studies
  • Chapter 5: Organising

NCERT Solution for Class 12 Business Studies Chapter 5 - Organising

NCERT Solutions are helpful books for students preparing for the CBSE Class 12 Business Studies examinations. These Solutions of NCERT are crafted by subject matter experts to make learning easy and help students grasp the concepts effortlessly.

Download the PDF of NCERT Solutions for Class 12 Business Studies Chapter 5 – Organising

ncert sol class 12 business studies chapter 5 organising 01

Access NCERT Solutions for Class 12 Business Studies Chapter 5

Very short answer questions ncert business studies solutions class 12 chapter 5.

1. Identify the network of social relationships which arises spontaneously due to interaction at work.

Informal organisation is referred to as the social relationship network that arises naturally as a result of interaction at work. The emergence of an informal organisation is a from social interaction and free flow of communication between the employees of the organisation.

2. What does the term ‘span of management’ refer to?

The term span of management refers to the number of subordinates a manager is able to handle efficiently. It determines the nature and structure of an organisation. There are two types of span of management: 1) Narrow 2) Wide

The span of management is dependent on various factors such as leadership, control, decentralisation extent in the organisation, nature of work and the working ability of the subordinates.

3. State any two circumstances under which the functional structure will prove to be an appropriate choice?

The functional structure requires grouping and organising activities that are of similar nature. Under a functional organisation, each group functions separately and specialises in its work. a financial structure is suitable for organisations that are large and which have various functions.

Here are two circumstances that under functional structure is appropriate.  They are

1. Large-sized organisations need to have a functional structure in order to operate smoothly. There will be many departments within the organisation, and making differentiation based on departments is very much helpful for an organisation. It helps in improving the efficiency of the managers so that the work progresses smoothly.

2. A high degree of coordination is required for managing various functions. It is done to improve efficiency. If an organisation has a clear division of work, a functional structure helps in promoting coordination between the various departments and thereby ensures all functions go on smoothly.

4. Draw a diagram depicting a functional structure.

NCERT Solution for Class 12 Business Studies Chapter 5 - Organising -1

5. A company has its registered office in Delhi, a manufacturing unit in Gurgaon and a marketing and sales department in Faridabad. The company manufactures consumer products. Which type of organisational structure should it adopt to achieve its target?

For this company, the type of organisation structure that needs to be followed is functional organisation. This can be justified using the following points:

1. Being a large organisation, it requires proper departmentalisation. It helps in increasing the efficiency of the managers and also provides a great degree of control over the activities of the organisation.

2. Organisation like this is managing multiple functions simultaneously where coordination of a high degree is required. It can be achieved in a smooth way by arranging a proper division of activities among various departments under a functional structure.

3. Specialisation will be promoted under functional structure, and it will help in performing all the diverse functions effortlessly.

Short Answer Questions NCERT Business Studies Solutions Class 12 Chapter 5

1. What are the steps in the process of organising?

The following steps are involved in the process of organising:

1. The first step that is involved in organising is identifying the number of activities and accordingly dividing them as per the plan. Actions are taken as per the defined objectives. Having a clear division of work keeps duplicity at bay.

2. Actions that were fixed earlier are now arranged in groups based on similarity. This ensures that the department specialising in the work has access to it.

3. The next step in organising is assigning the roles and responsibilities to the person best suited for the job. Work is allocated as per the skills of the members.

4. The next part of organising is the presence of a hierarchy in an organisation. It is very helpful when a person is aware of his immediate superior. A defined organisation structure helps in ensuring the successful functioning of the activities of the organisation.

2. Discuss the elements of delegation.

Delegation is the process of transferring authority and responsibility to subordinates in an organisation. The following are the elements of an organisation:

1. Delegation provides an individual with the power to direct or command a subordinate. This enables them to make decisions regarding what needs to be done and who will be doing that. The chain of command starts from the top level of management and ends at the lower level of management. As authority is delegated, it helps in maintaining discipline and obedience.

2. Responsibility is the part where the subordinate has to adhere to the given task. The duty provided should be performed by the subordinate properly. The responsibility of a subordinate is towards their superior.

3. The superior must be accountable for the outcome of the work that has been assigned by them to their subordinate. The superior should keep track of the work done by the subordinate and must see that it is done satisfactorily.

3. How does an informal organisation support the formal organisation?

The network of relations that is created from the social interactions taking place outside of the office is called an informal organisation. It traces its origin from formal organisations and is not created at will by management. These relationships are built on friendship that develops between co-workers. It supports formal organisations in the following ways:

1. A free flow of communication is established in an informal organisation which leads to communication channels outside the organisation. In this way, communication spreads easily and assists the formal organisation.

2. In informal organisations, people develop good bonding among themselves and thus towards the organisation. It helps in increasing coordination among the members and also promotes mutual trust and respect. The result of such bonding is it lowers the level of conflict.

3. Informal organisations help in fulfilling organisational objectives. Managers can get to know about the workers’ issues and ask for suggestions on improving the work conditions. Happy workers will be more contributing towards an organisation.

4. It helps in building a harmonious work environment by encouraging cooperation among workers and managers. A peaceful work environment is more productive.

5. An informal organisation helps in increasing efficiency among the workers. The workers understand their importance and actively contribute towards organisational growth.

4. Can a large-sized organisation be totally centralised or decentralised? Give your opinion.

Any organisation, regardless of its size, will find it difficult to function properly, either as centralised or decentralised, because there needs to be a balance between the two systems in order to make the best possible utilisation.

In centralisation, the decision-making capacity or authority is restricted to the people sitting at the top level of management. All the decisions regarding the organisation are taken by the top-level management. In stark contrast to this system, decentralisation works by delegating the decision-making capacity to the managers at a lower level. There is a distribution of decision-making capabilities which is spread evenly.

For an organisation to perform at its best, it has to follow a mix of centralisation and decentralisation. A growing organisation cannot rely on centralisation to manage all the functions. It would slow down the decision-making process for the organisation. Hence, a decentralised system helps ease the load on decision-making. Also, an organisation cannot let all the decisions be made by the lower level management, as it will be a risk to the integrity of the organisation.

Therefore, there should be a balance between centralisation and decentralisation in an organisation.

5. Decentralisation is extending delegation to the lowest level. Comment.

Decentralisation and delegation are similar in nature. Both are about transferring responsibility and authority. In the case of delegation, authority is shared among two individuals, i.e., superior delegating authority to subordinate, whereas in decentralisation, the authority is shared at multiple levels. Therefore, it can be said that the act of delegating authority at each level of management promotes decentralisation, while the act of decentralisation helps promote delegation at the lowest level.

6. Neha runs a factory wherein she manufactures shoes. The business has been doing well, and she intends to expand by diversifying into leather bags as well as western formal wear, thereby making her company a complete provider of corporate wear. This will enable her to market her business unit as the one-stop for working women. Which type of structure would you recommend for her expanded organisation and why?

The organisation structure that Neha can follow is the divisional organisation structure. Under this system, there will be separate departments which will take care of different products. There will be separate personnel for managing the departments.

The divisional structure is recommended for the following reasons:

1. Each department will have a head, who will be accountable for the overall performance of the department. The performance of individual departments can be determined easily; the best and worst performers can be identified, and necessary steps can be taken.

2. Decision-making will be quick as each department has a specialist to manage it.

3. Having a divisional structure allows for adding more divisions without impacting the functions of the organisation.

7. The production manager asked the foreman to achieve a target production of 200 units per day, but he didn’t give him the authority to requisition tools and materials from the store’s department. Can the production manager blame the foreman if he is not able to achieve the desired target? Give reasons.

No, in this case, the production manager cannot blame the foreman as he was provided with responsibility, but he was not given authority. With responsibility, there should be an authority also, which is essential for a task to complete.

Long Answer Questions NCERT Business Studies Solutions Class 12 Chapter 5

1. Why delegation is considered essential for effective organising?

Delegation is the transfer of authority from a superior to a subordinate. It helps in reducing the workload on the manager so that manager can give focus on areas that need more attention. It also provides subordinates to become more responsible and makes way for more growth opportunities.

The following points show the importance of delegation, which is effective in organising:

1. By delegating work to the subordinate, the managers can focus on other areas, which improves the efficiency of managers.

2. Employees also get the chance to perform well and improve their skills. It helps in developing the skillset of the employees.

3. The act of delegation gives employees responsibility, and it also provides motivation to the employees, as they feel that they belong to the organisation and their contributions are recognised.

4. Delegation helps in the career development of many managers as they take up more roles in the organisation. It also helps workers to gain more experience, which helps in career growth.

5. It helps in forming an organised structure in the organisation. The lines of the hierarchy are well-defined, which makes processes smooth.

6. It increases coordination among managers and workers. There is a well-defined working relationship, which makes things more organised in the company.

2. What is a divisional structure? Discuss its advantages and limitations.

Divisional structure is a system where work is divided into different departments. There is a separate head for each department, and there is no overlapping of responsibilities in such a structure. The field of work is clearly defined.

Here are some of the advantages of a divisional structure.

1. Managers and workers get ample opportunity to grow in their departments and become specialists in the product. It is helpful in increasing the efficiency of the workforce.

2. Each division or department can be tracked individually for their performance. It leads to the identification of the best and worst-performing divisions.

3. The divisions are independent to take their own decisions, which makes the decision-making process quick. Rapid decision-making enables faster implementation, which is beneficial for the organisation.

4. Having a divisional structure allows for adding more divisions without impacting the functions of the organisation.

The disadvantages can be highlighted as

1. There can be conflicts among departments with regard to the allocation of funds and resources.

2. There can be a rise in cost due to duplication of work among departments. There might be some activities that are common across all departments, and employing separate personnel for each department for these activities can drive the cost higher.

3. There can be a chance that due to more focus on improving the individual departments, the growth of the organisation as a whole can get hampered.

3. Decentralisation is an optional policy. Explain why an organisation would choose to be decentralised.

Decentralisation is the delegation of authority among various levels in an organisation ranging from the top level to the lower level. It is not mandatory for an organisation to follow decentralisation, but it is beneficial in the long run. Here are a few points that will support the statement of why an organisation wants to be decentralised.

1. Decentralisation allows lower-level managers to be independent in making their decisions. It gives more confidence and a feeling of responsibility to the managers.

2. Decentralisation provides the managers with an opportunity to grow and be a part of the growth of the organisation. It helps in skill development and the ability to tackle new challenges. It also provides a platform to showcase their talent and get noticed for more responsible positions.

3. Decentralisation helps analyse the performance of every department and also determine how each one of them is helping the organisation in fulfilling its objectives.

4. Decision-making is faster in a decentralised organisation. There is no need to take approval from the top-level to perform basic-level functions, it helps to avoid delays in decision-making.

5. The decentralisation system offers growth opportunities for managers at lower levels. There is a tendency to outperform each other, which results in more productivity and indirectly leads to the growth of the individuals.

6. Decentralisation makes work load of top-level management less. They can concentrate more on policy-making for organisation growth.

4. Distinguish between centralisation and decentralisation.

The points of difference between centralisation and decentralisation are as follows:

5. How is a functional structure different from a divisional structure?

The points of difference between functional structure and divisional structure are as follows:

6. A company, which manufactures a popular brand of toys, has been enjoying a good market reputation. It has a functional organisational structure with separate departments for Production, Marketing, Finance, Human Resources and Research and Development. Lately, to use its brand name and also to cash on new business opportunities, it is thinking of diversifying into the manufacture of a new range of electronic toys for which a new market is emerging. Which organisation structure should be adopted in this situation? Give concrete reasons with regard to benefits the company will derive from the steps it should take.

The company should adopt a divisional organisation structure, as it is the ideal structure for this organisation.

Following are the benefits that can be obtained by following this structure:

1. Each department will have a head who will be accountable for the overall performance of the department. The performance of individual departments can be determined easily; the best and worst performers can be identified, and necessary steps can be taken.

2. Decision-making will be quick, as each department has a specialist to manage it.

7. A company manufacturing sewing machines set up in 1945 by the British promoters follows formal organisation culture in totality. It is facing a lot of problems with delays in decision-making. As a result, it is not able to adapt to changing business environment. The workforce is also not motivated since they cannot vent their grievances except through formal channels, which involve red tape. Employee turnover is high. Its market share is also declining due to changed circumstances and the business environment. You are to advise the company with regard to change it should bring about in its organisation structure to overcome the problems faced by it. Give reasons in terms of benefits it will derive from the changes suggested by you.

The change that can be suggested in this situation is adopting some space for informal structure by making changes in its current formal organisation structure.

An informal structure would offer the following benefits:

1. Information will move faster, as there is no definite channel of communication that needs to be followed.

2. It will offer a sense of belongingness to the employees as the rules of communication are beyond official roles. Employees feel more secure in the organisation and work towards the betterment of the organisation.

3. It supports the working of a formal organisation, as it helps in fulfilling the organisational objectives in a manner beneficial for the organisation.

4. The company can also diversify their product range by venturing into sewing products, such as producing machinery with embroidery features.

8. Company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, a new liberalised environment has seen the entry of many MNCs in the sector. As A result, the market share of X limited has declined. The company had followed a very centralised business model with Directors and divisional heads making even minor decisions. Before 1991, this business model had served the company very well, as consumers had no choice. But now the company is under pressure to reform.

What organisation structure changes should the company bring about in order to retain its market share? How will the changes suggested by you help the firm? Keep in mind that the sector in which the company is FMCG.

The major change that needs to be adopted by the organisation is a move towards decentralisation. The organisation is growing and centralisation will not be sufficient for the organisation. The employees must be provided with more responsibility and authority, which ensures the proper functioning of the organisation.

Decentralisation also enables faster decision-making within the organisation.

The benefits of decentralisation will benefit the organisation in the following ways:

1. Lower-level managers will have the freedom to make their own decisions, which improves the efficiency of the work done.

2. It helps in developing the skills of the managers and also results in providing more growth opportunities for the managers.

3. Decisions taken by management are quick and timely. It helps in finding the solutions to problems easily.

NCERT Solution for Class 12 Business Studies Chapter 5 – Organising provides us with a brief introduction to the concepts. It provides a clear picture of the next step of planning, i.e., organising.

  • Meaning and process of organising
  • Importance of organising
  • Organisational structure
  • Types of organisational structure

NCERT Solutions for Class 12 Business Studies Chapter 5 provides a broad degree of illustrative examples, which helps the students to comprehend and learn quickly. The above-mentioned are the illustrations for the Class 12 CBSE syllabus. For more solutions and study materials of NCERT solutions for Class 12 Business Studies, visit BYJU’S or download the app for the best learning experience.

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CBSE Class 12 Case Studies In Business Studies – Organising

ORGANISING Organising: Definition Organising is the process of defining and grouping the activities of the enterprise and establishing authority relationships among them for the realisation of the desired goals.

Hierarchy: Definition Hierarchy is the ranking of job positions on the basis of relative roles and responsibilities.

Types of Organisation

  • Formal organisation refers to the organisation structure which is designed by the management to accomplish a particular task.
  • Informal organisation emerges from within the formal organisation when people interact beyond their officially defined roles.

Steps Involved in the Process of Organizing

  • Identification and division of work is done in accordance with predetermined plans to avoid duplication of activities and ensure that the burden of work is being shared among the employees.
  • Departmentalisation involves grouping of similar activities into departments, units, sections etc. using several criteria as a basis to facilitate specialization.
  • Assignment of duties is done to the members as per their job positions. Once departments have been created, each of them is placed under the charge of an individual.
  • Establishing reporting relationships While assigning jobs, each member is told that from whom he/she has to take orders and to whom he/she will be accountable. The establishment of such clear reporting relationships help to create a well defined hierarchial structure.

Importance of Organising

  • Organising offers benefits of specialisation as it leads to a systematic allocation of jobs amongst the workforce as the specific employees are assigned specific job on a regular basis.
  • It brings clarity in working relationships by establishing a hierarchical order thereby enabling the fixation of responsibility and specification of the extent of authority to be exercised by an individual.
  • It leads to optimum utilisation of resources through proper allocation of jobs, and minimising the wastage of resources and efforts.
  • It facilitates adaptation to change and helps to create a stable organisation by incorporating changes in the organisation structure as per the needs of the changing environment.
  • It leads to effective administration by providing a clear description of jobs and related duties which helps to avoid confusion and duplication.
  • It fosters development of personnel as delegation helps to build the ability of the subordinate to deal effectively with challenges and helps them to realise their full potential.
  • It leads to expansion and growth of an enterprise by enabling it to deviate from existing norms and taking up new challenges.

ORGANISATIONAL STRUCTURE Organisational Structure: Definition The organisational structure can be defined as the framework within which managerial and operating tasks are performed.

Types of Organisational Structures

  • Functional Structure
  • Divisional Structure

Features of Functional Structure

  • A functional structure is an organisational design that groups similar or related jobs together on the basis of functions like production, finance etc.
  • Each department hasa functional manager responsible for performance and who has authority over the department.
  • All departments are under the charge of a coordinating head.
  • These departments may be further divided into sections.

Features of Divisional Structure

  • A divisional structure is an organisational design that groups similar or related jobs together on the basis of functions. Different products manufactured in the organisation. Structure comprise of separate business units or divisions.
  • Each department hasa divisional manager responsible for the profit or loss of his division.
  • Each division is multi-functional because within each division functions like production, marketing, finance, purchase etc., are performed together to achieve a common goal.

Advantages of Functional Structure

  • A functional structure emphasises on specific functions and ensures that different functions get due attention.
  • Due to the similarity in the tasks being performed, it promotes control and coordination within a department.
  • It results in increased profit with the improvement in managerial and operational efficiency.
  • By focusing only on a limited range of skills, it facilitates the training of employees.
  • It leads to minimal duplication of effort and leads to economies of scale thereby reducing cost.

Advantages of Divisional Structure

  • Product specialisation helps a divisional manager to gain experience in all functions related to a particular product and this prepares him for higher positions.
  • It providesa proper basis for performance measurement and also helps in fixation of responsibility in cases of poor performance of the division as revenues and costs related to different departments can be easily identified.
  • It leads to faster decision making, promotes flexibility and initiative because each division functions as an autonomous unit.
  • It facilitates expansion and growth as new divisions can be added just by adding another divisional head and staff for the new product line without interrupting the existing operations

Disadvantages of Functional Structure

  • It gives less emphasis to overall enterprise objectives than the objectives pursued by a functional head.
  • It may lead to problems in coordination.
  • It may lead to conflict of interests if two or more departments are not compatible.
  • It may lead to inflexibility as the functional heads do not get training and experience in diverse areas.

Disadvantages of Divisional Structure

  • There may be conflicts among the different division heads, as in pursuit of higher profits, each of them may seek maximum allocation of resources at the cost of other divisions.
  • The cost is high as each division is provided with separate set of similar functions.
  • It provides the managers with the authority to supervise all activities related to a particular division. In course of time, such a manager may gain power and in a bid to assert his independence may ignore organisational interests.

FORMAL ORGANISATION Features of Formal Organisation

  • It specifies the reporting relationships among various job positions.
  • It is a means to achieve the organisational objectives.
  • It seeks to coordinate the efforts of various departments.
  • It is deliberately created by the top management to facilitate smooth functioning of the organisation.
  • It places more emphasis on work to be performed rather than interpersonal relationships among the employees.

Advantages of Formal Organisation

  • It is easier to fix responsibility since reporting relationships are clearly specified.
  • The role and duties of each employee are clearly defined.
  • Unity of command is maintained through an ^ established chain of command.
  • It leads to effective accomplishment of goals by providinga framework for the efficient operations.
  • It provides stability to the organisation as the behaviour of the employees is guided by rules and regulations of the organisation.

Limitations of Formal Organisation

  • It may lead to procedural delays as all communication has to take place through scalar chain only.
  • It restricts the creativity and ^ recognisation of employees as it does not allow any deviations from rigidly laid down polices.
  • It does not provide a complete picture of how an organisation works as it is difficult to understand all human relationships in a formal structure.

INFORMAL ORGANISATION Features of Informal Organisation

  • It originates from within the formal organisation as a result of personal interaction among employees.
  • Instead of the official rules and regulations, the standards of behaviour evolve from group norms.
  • The group members create independent channels of communication without specified direction of flow of information.
  • It emerges spontaneously and is not deliberately created by the management.
  • It isa complex network of social relationships among members and has no definite structure.

Advantages of Informal Organisation

  • It leads to faster spread of information as well as facilitates quick feedback.
  • It helps to fulfill the social needs of the members by giving them a sense of belongingness in the organisation and enhances their job satisfaction.
  • It contributes towards the fulfillment of organisational objectives by compensating for inadequacies in the formal organisation

Disadvantages of Informal Organisation

  • It may work against the interest of the formal organisations it leads to spreading of rumours.
  • Sometimes it may restrict growth of the organisation by strongly opposing to the proposed change.
  • As it create a peer pressure among the members to conform to group expectations, it can be harmful to the organisation.

DELEGATION OF AUTHORITY Delegation of Authority: Definition Delegation of authority merely means the granting of authority to subordinates to

Elements Of Delegation

  • Responsibility
  • Accountability.

Importance of Delegation

  • It leads to effective management as by relieving the employees from doing routine work, it provides them with time to excel in new areas.
  • It promotes employee development as they are entrusted with more opportunities to utilise their talent, perform complex tasks and assume those responsibilities which are likely to improve their career prospects.
  • It helps to motivate employees as when a subordinate is entrusted with a task, it is not merely the sharing of work but involves trust on the superior’s part and commitment on the part of the subordinate.
  • It facilitates the growth of an organisation as it seeks to enrich the quality of manpower and widens the scope of using internal recruitment by providing them with training and experience through exposure to varied jobs.
  • It provides the basis of management hierarchy as it establishes superior-subordinate relationships, which are the basis of hierarchy of management
  • It facilitates better coordination amongst the departments, levels and functions of management by providing clarity in reporting relationships.

DECENTRALISATON Decentralisation: Definition Decentralisation refers to systematic dispersal of authority to the lowest level, except that which can be exercised at central points.

Caution in Implementing a Decentralisation Policy

  • Decentralisation must always be balanced with centralisation in areas of major policy decisions.
  • Complete centralisation would imply concentration of all decision making functions at the apex of the management hierarchy find would eliminate the need fora management hierarchy.
  • Complete decentralisation can lead to organisational disintegration as the departments may start operating on their own guidelines which may be contrary to the interest of the organisation.

Need for Decentralisation As an organisation grows in size and complexity, the departmental or branch heads are directly and closely involved with certain operations and are likely to have more knowledge about them as compared to the top management which may be associated with individual operations only indirectly.

Importance of Decentralisation

  • It seeks to develop initiative in the subordinates by promoting self-reliance and confidence amongst them and also helps to identify those executives who have the necessary potential to become dynamic leaders.
  • It provides relief to top management as the subordinates are allowed to operate independently within their area of jurisdiction. Consequently, the need for direct supervision is reduced.
  • It facilitates quick decision making as the employees are allowed to act independently within their are a of jurisdiction without consulting others.
  • It develops managerial talent for the future by providing the employees with the necessary training and experience through exposure to varied challenging jobs and also facilitates identification of those employees who may and those who may not be successful in assuming greater responsibility.
  • It facilitates growth of the organisation by increasing its productivity and profitability through assigning greater autonomy to the lower levels of management as well as divisional or departmental heads.
  • It facilitates better control by ensuring continuous evaluation of performance at each level and the contribution of each department so that they can be individually held accountable for their results.

LATEST CBSE QUESTIONS

Question 1. Differentiate between ‘formal’ and ‘informal’ organisation on the basis of ‘origin’. (CBSE, Delhi 2017) Answer: Formal organisation arises as a result of companies rules and policies whereas informal organisation emerges spontaneously from within the formal organisation as a result of social interactions, amongst the employees.

Question 2. Aman Chadha started ‘Bulls Eye’ a company for providing cyber security solutions to businesses. Its objective is to prevent, detect and respond to cyber attacks and protect critical data. He was a hardworking software engineer and an expert in cyber security. His reputation grew by leaps and bounds as he was not only a person of integrity but also did his work with utmost honesty and sincerity. The business started growing day by day. He was delighted when he was offered a big project by the Ministry of Defence. While working on the project, he found that the volume of work made it impractical for him to handle all the work by himself. He decided to expand the team. The company maintained a close liaison with a local engineering college. During a campus placement, Ishan and Vrinda were appointed to work for the new project. He found the new employees capable, enthusiastic and trustworthy. Aman Chadha was thus, able to focus on objectives and with the help of Ishan and Vrinda, the project was completed on time. Not only this Aman Chadha was also able to extend his area of operations. On the other hand Ishan and Vrinda also got opportunities to develop and exercise initiative.

  • Identify and briefly explain the concept used by Aman Chadha in the above case which helped him in focusing on objectives.
  • Also, state any four points of importance of the concept identified in (i) above. (CBSE, Delhi 2017)
  • Delegation of authority is the concept used by Aman Chadha in the above case which helped him in focusing on objectives. Delegation of authority is the process of granting of authority to the subordinates to operate within prescribed limits.
  • Effective management: It helps the managers to function more efficiently as they get more time to concentrate on important matters. Freedom from doing routine work provides them with opportunities to excel in new areas.
  • Employee development: By empowering the employees, they are given more opportunities to utilise their talent and this may help them to become better leaders and decision makers in future.
  • Motivation of employees: Delegation also has psychological benefits as helps in building the self-esteem of an employee and improves his confidence and work performance. When a superior entrusts a subordinate with a task, it is not merely the sharing of work but involves trust on the superior’s part and commitment on the part of the subordinate. Thus, delegation may give rise to latent abilities in the subordinates.
  • Facilitation of growth: With the increase in the competence of the employees, an organisation tends to gain in many ways. The growth and expansion of the firm becomes easy as the capable workforce is ready to take greater responsibilities.

Question 3. Give the meaning of ‘supervision’ as an element of directing. (CBSE, OD 2017) Answer: Supervision is the process of overseeing the work of a subordinate by his superior.

Question 4. Differentiate between ‘formal’ and ‘informal’ organisation on the basis of ‘flow of communication’. (CBSE, OD 2017) Answer: In a formal organization the communication takes place through the scalar chain whereas in an informal organization communication can take place in any direction there is no planned route.

Question 6. Ramdas, aged 49 is working in an aviation company. He is the senior most employee in his division. He is even senior to the division manager, Kanaputti. Ramdas is considered one of the most committed, capable and hard-working employees. As a result of his abilities and seniority, he generally received the work assignments of his choice. Although there was no formal designation of various „special’ projects assigned to Ramdas, he handled them as a matter of routine. A problem developed when an able and intelligent person Nagarjuna, aged 33, was appointed by Kanaputti. Nagarjun’s previous three years’ experience in the closely related work, made it possible for him to catch on to the routine work of his new job more rapidly than was customary for a new employee. On several occasions, Kanaputti noticed the tension developing between the two employees. However, he didn’t want to get involved in their personal issues as long as the work was completed effectively and efficiently by them. One day, the tension between them reached the boiling point and Ramdas complained to Kanaputti stating that his duties were being largely taken over by Nagarjun. Kanaputti issued the order stating the clear allocation of the jobs and related duties between the two. He further clarified the working relationship between them by specifying who was to report to whom. This helped in reducing the workload, enhancing productivity and removing ambiguity. (CBSE, Sample Paper, 2017)

  • Identify and state the step of organizing process which has not been carried out properly and contributed to this problem.
  • State the two steps of the organizing process which have been taken by Kanaputti to respond to the complaint of Ramdas.
  • Also state two points of importance of organizing as reflected in the above case.
  • The step of organizing process which has not been carried out properly and contributed to this problem is Assignment of duties. Assignment of Duties: Once departments have been created each of them is placed under the charge of an individual and then jobs are allocated to the members as per their job positions.
  • Assigning the duties
  • Establishing reporting relationship.
  • Optimum utilization of resources: Organising ensures best possible use of all forms of resources i.e. physical, financial and human resource. It ensures systematic assignment of jobs thereby curbing overlapping of work and avoiding possibilities of duplication of work. This helps in preventing confusion and minimising the wastage of resources and efforts.
  • Adaptation to change: The process of organising provides stability to the enterprise as it can then continue to survive and grow inspite of changes in the business environment. It enables the organisation structure to be suitably modified and the revision of inter-relationships amongst managerial levels to pave the way for a smooth transition.

Question 7. “Shan Spices Ltd.” are the manufacturer of different food specific spices like Rajmaa Masala, Cholley Masala, Aaloo Parantha Masala etc. Mr. Raghav, the owner of the company has created different departments for purchase, production, marketing, finance and human resource. There are thirty employees working in the organisation. Planning is of paramount importance to the company as Mr. Raghav believes that effective planning leads to achievement of organisational objectives. So in order to make employees focus on objectives, he issued instructions that during working hours only official matters will be discussed. He made certain rules and code of conduct for the employees to follow, according to which employees are not allowed to visit and talk to the employees of other departments except for official work. He emphasised on work performance which resulted in smooth functioning of the organisation.

  • Identify and state the type of organisation mentioned in the above para.
  • State one feature of the concept identified in part (a) as mentioned in the above para.
  • What was the purpose behind the formulation of rules for the employees that restricted their personal communication with the employees of other departments?
  • State two values violated by Mr. Raghav. (CBSE, Sample Paper, 2017)
  • Formal organisation is the type of organisation mentioned in the above paragraph. Formal organisation refers to the organisation structure which is deliberately created by the management to accomplish a particular task. It clearly defines the boundaries of authority and responsibility and facilitates systematic coordination among the various activities to achieve organisational goals.
  • One feature of formal organisation is that it clarifies who has to report to whom by specifying the relationships among various job positions and the nature of their interrelationship.
  • The purpose behind the formulation of rules for the employees that restricted their personal communication with the employees of other departments is to ensure discipline at workplace and avoid wastage of time. This is help to curb the emergence of informal organisation to a certain extend and increase work efficiency.
  • Liberty to employees
  • Fulfilment of emotional needs

Question 8. Steelo Ltd. decided to set-up its steel manufacturing factory in the backward area of Orissa where very less job opportunities were available. People of that area welcomed this effort of Steelo Ltd. To attract people to work in its factory, it also decided to provide many other facilities like a school, hospital, market, etc. in the factory premises. Steelo Ltd. started earning huge profits. Another competing company asked its production manager Aslam to investigate the reasons of earning huge profits by Steelo Ltd. Aslam found that in both the companies, there was systematic coordination among the various activities to achieve the organisational goals. Every employee knew who was responsible and accountable to whom. The only difference was that in his organisation, communication took place only through the scalar chain whereas Steelo Ltd. was allowing the flow of communication in all the directions as per the requirement which led to faster spread of information as well as quick feedback.

  • Identify the type of organisation which permits Steelo Ltd. the flow of communication in all the directions.
  • State another advantage of the type of organisation identified in part (1) above.
  • State any two values which Steelo Ltd. wanted to communicate to society.

OR Mr Car Ltd. decided to set-up its new car manufacturing factory in the backward area of West Bengal where very less job opportunities were available. People of that area welcomed this effort of Mr Car Ltd. The company also decided to provide facilities like a school, hospital, market, etc. in the factory premises so that the people are attracted to join the factory as workers. Mr Car Ltd. started earning huge profits. Another competing company asked its production manager Arvind to investigate the reasons of earning huge profits by My Car Ltd. Arvind found that in both the companies, there was systematic coordination among the various activities to achieve the organisational goals. Every employee knew who was responsible and accountable to whom. The only difference was that in his organisation, communication took place only through the scalar chain whereas My Car Ltd. was allowing the flow of communication in all the directions as per the requirement which led to faster spread of information as well as quick feedback.

  • Identify the type of organisation which permits the flow of communication in all the directions in My Car Ltd.
  • Also state an advantage of the type of organisation identified in part (1) above.
  • State any two values which My Car Ltd. wants to communicate to the society. (CBSE, OD 2016)
  • An informal organisation permits the flow of communication in all the directions in My Car Ltd.
  • Another advantage of informal organisation is that it helps to fulfill the social needs of the members by giving them a sense of belongingness in the organisation and enhances their job satisfaction.
  • Social Responsibility

Question 9. Kiran Industries is a company dealing in office furniture. The company chose to diversify its operations to improve its growth potential and increase market share. As the project was important, many alternatives were generated for the purpose and were thoroughly discussed amongst the members of the organisation. After evaluating the various alternatives, Sukhvinder, the Managing Director of the company, decided that they should add ‘Home Interiors and Furnishings’ as a new line of business activity.

  • Name the framework, which the diversified organisation should adopt, to enable it to cope with the emerging complexity? Give one reason in support of your answer.
  • State any two limitations of this framework (CBSE, Sample Paper, 2015-16)
  • Divisional structure should be adopted by the diversified organisation to enable it to cope with the emerging complexity. Reason: It leads to faster decision making, promotes flexibility and initiative because each division functions as an autonomous unit.
  • There may be conflicts among the different divisions heads as in pursuit of higher profits, each of them may seek maximum allocation of resources at the cost of other divisions.

Question 10. Rajeev, the owner of Pathways Constructions, decided to start a campaign to create awareness among people for developing clean surroundings in their area. He formed a team of 10 members to list the different ways for cleaning the surroundings. One suggested to take the help of local residents, another suggested that they may involve school-going children in their venture. One more suggestion was to take the help of the unemployed youth. On evaluation of different ways, it was decided to take the help of local residents. To achieve the desired goal, various activities are identified like

  • Purchase of necessary items like dustbins, garbage bags, brooms, etc.;
  • Collection of garbage;
  • Disposal of garbage, etc.

After identification of different activities, the work was allocated to different members.

  • Identify the concepts of management involved in the above situation and quote the lines which help in their identification.
  • Also identify the values which the company wants to communicate to society. (CBSE, Sample Question Paper 2015
  • Planning: ” One suggested to take help of local residents, another suggested that they may involve school going children in their venture. One more suggestion was to take the help of the unemployed youth. On evaluation of different ways, it was decided to take help of the local residents.”
  • Purchase of necessary items like dustbins, garbage bags, brooms etc.
  • Collection of garbage
  • Disposal of garbage, etc. After identification of different activities, the work was allocated to different members.”
  • Cleanliness

Question 11. Samir Gupta started a telecommunications company, ‘Donira Ltd.’, to manufacture economical mobile phones for the Indian rural market with 15 employees. The company did very well in its initial years. As the product was good and marketed well, the demand of the products went up. To increase production, the company decided to recruit additional employees. Samir Gupta, who was earlier taking all the decisions for the company, had to selectively disperse the authority. He believed that subordinates are competent, capable and resourceful and can assume responsibility for the effective implementation of their decisions. This paid off and the company was not only able to increase its production but also expanded its product range.

  • Identify the concept used by Samir Gupta through which he was able to steer his company to greater heights.
  • Also explain any three points of importance of this concept. (CBSE, Delhi 2015)

OR Neeraj Gupta started a company ‘Yo Yo Ltd.’ with ten employees to assemble economical computers for the Indian rural market. The company did very well in its initial years. As the product was good and marketed well, the demand went up. To increase production, the company decided to recruit additional employees. Neeraj Gupta, who was earlier taking all the decisions for the company, had to selectively disperse the authority. He believed that people are competent, capable and resourceful and can assume responsibility for the effective implementation of their decisions. This paid off and the company was not only able to increase its production but also expanded its product range with different features.

  • Identify the concept used by Neeraj Gupta through which he was able to steer his company to greater heights.
  • Also explain any three points of importance of this concept.
  • The concept used by Sameer Gupta/ Neeraj Gupta through which he is able to steer his company to greater heights is Decentralisation.
  • Decentralisation helps to promote self-reliance and confidence amongst the subordinates: When the subordinates are given freedom to take their own decisions they learn to depend on their own judgment and develop solutions for the various problems they encounter. Moreover, a decentralisation policy helps to identify those executives who have the necessary potential to become dynamic leaders.
  • Relief to top management: Decentralisation reduces the need of direct supervision and helps to save the time of top management for persuing other important work.
  • Quick decision-making: In a decentralised organisation, managers at all levels are allowed to take such decisions independently which lie within their area of jurisdiction. This makes the process of decision making much faster.

Question 12. Alliance Ltd. is engaged in manufacturing plastic buckets. The objective of the company is to manufacture 100 buckets a day. To achieve this, the efforts of all departments are coordinated and interlinked and authority-responsibility relationship is established among various job positions. There is clarity on who is to report to whom. Name the function of management discussed above. (CBSE, 2015) Answer: Organising

Question 13. National Vritech Ltd. has grown in size. It was a market leader but with changes in business environment and with the entry of MNCs, its market share is declining. To cope up with the situation, the CEO starts delegating some of his authority to the General Manager, who also felt himself overburdened and with the approval of CEO disperses some of his authority to various levels throughout the organisation. Identify the concept of management discussed above. (CBSE, Sample Paper 2014-15) Answer: Decentralisation

Question 14. Sharda Ltd. is pursuing diversified activities which require a high degree of specialisation. Identify the type of structure that should be followed by Sharda Ltd. (CBSE, 2015) Answer: Functional structure

Question 15. A company is manufacturing washing machines. There is a well-defined system of jobs with a clear and definite authority, responsibility and accountability in the company. But people are not allowed to interact beyond their officially defined roles. As a result, the company is not able to adapt to the changing business environment. The workforce is also not motivated due to lack of social interaction. The company is facing problems of procedural delays and inadequate recognition of creative talents.

  • Suggest how the organisation can overcome the problems faced by it.
  • Give any two benefits it will derive from your suggestions. (CBSE, Sample Paper, 2014-15)
  • The organisation can overcome the problem faced by it by adopting informal organisation. Informal organisation emerges from within the formal organisation when people interact beyond their officially defined roles.
  • It helps to fulfill the social needs of the members by giving them a sense of belongingness in the organisation and enhances their job satisfaction .
  • It contributes towards the fulfillment of organisational objectives by compensating for inadequacies in the formal organisation.

ADDITIONAL QUESTIONS

Question 1. Ishita works as a corporate event coordinator in an event management company. She has been made an overall official incharge for organizing a painting exhibition for one of the clients of the company. For ensuring that the exhibition takes place successfully, she identifies the various activities involved and divides the whole work into various task groups like marketing committee, decoration committee and reception committee. In order to facilitate coordination within and among committees, she appoints a supervisor of each group. Each member in the group is asked to report to their respective supervisors and all the supervisors are expected to work as per Ishita’s orders. In context of the above case:

  • Identify the function of management being performed by Ishita.
  • Describe briefly the various steps involved in the performance of the function of management as identified in part (1) of the question.
  • The Organising function of management is being performed by Ishita.
  • Identification and Division of Work: The first step in the process of organising relates to identification and division of the work that has to be performed in accordance with predetermined plans. This helps to avoid duplication of activities and makes the work manageable. It also ensures that the burden of work is being shared among the employees.
  • Departmentalisation: The next step in the process involves grouping of similar activities into departments, units, sections etc. using several criteria as a basis. This facilitates specialization.
  • Assignment of Duties: Once departments have been created each of them is placed under the charge of an individual and then jobs are allocated to the members as per their job positions.
  • Establishing Reporting Relationship: While assigning jobs each member is told that from whom he /she has to take orders and to whom he/she will be accountable. The establishment of such clear reporting relationships help to create a well defined hierarchical structure. It also facilitates coordination amongst various departments.

Question 2. After completing a course in travel and tourism, Karan started his own travel agency. In order to ensure smooth functioning of his business, he decided to create fourteen job positions divided into four departments on the basis of functions namely, front office department including online queries, reservations department for airways, railways and roadways, accommodation booking department, and securing payments department. In order to avoid any interdepartmental conflicts he decides to specify clearly the lines of authority and areas of responsibility for each job position. In the context of the above case:

  • Which function of management is being described in the above lines?
  • Identify the framework created by Karan within which all managerial and operating tasks are to be performed in his organisation.
  • Name the type of the framework as identified in part (1) of the question. Also, give any two of its advantages.
  • The Organising function of management is being described in the above lines.
  • Organisational structure is the framework created by Karan within which all managerial and operating tasks are to be performed in his organisation.
  • A functional structure promotes work-related specialisation since it places emphasis on specific functions. This helps to increase efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve performance.
  • It facilitates control and coordination within a department because of similarity in the tasks being performed.

Question 3. As the head boy and head girl of Trakashay Public School’, Deepak Chugh and Deepika Chawla have been given the responsibility of hosting the Teacher’s Day programme in the school. In order to conduct the programme in a systematic way, Deepak and Deepika first called a meeting of the student council. In the meeting they decided about the content of the programme after taking into consideration the different available alternatives and choosing the best alternative among them. Then the various tasks required to be performed were identified and divided in accordance with predetermined schedule made by them. After that they grouped the similar activities into main groups as skit group, choir group, instrumental music group and contemporary dance group. Then each group was placed under the charge of a council member in accordance with his/her skills and competencies. These council members were in turn informed that they have to take orders and will be accountable only to Deepak and Deepika so as to facilitate coordination amongst various groups. In context of the above case:

  • Identify and explain the functions of management being discussed.
  • Describe briefly any two points highlighting the importance of each of the functions of management as identified in part (1) of the question.
  • State any two values that ‘Prakashay Public School’ wants to communicate to society.
  • The Planning and Organising functions of management are being discussed. Planning is deciding in advance what to do, how to do, when to do and who has to do it. It is one of the basic managerial functions. Thus, it involves setting objectives and developing an appropriate course of action to achieve these objectives. Organising is the process of defining and grouping the activities of the enterprise and establishing authority relationships among them.
  • Planning provides directions: The well defined plans act as a guide for deciding what course of action should be taken to attain the organisational goals.
  • Planning reduces the risk of uncertainty: Planning helps to reduce the risk of uncertainty arising due to the dynamic nature of business environment as it enables a manager to anticipate and meet changes effectively. The importance of the organizing function of management is described below:
  • Benefits of specialisation: Organising leads to a systematic allocation of jobs amongst the work force. This not only helps to reduce the workload of the employees but also leads to increased productivity. This is because of the fact that specific employees are assigned specific job on a regular basis which leads to specialisation.
  • Clarity in working relationships: The process of organising leads to establishment of clear cut reporting relationships. This helps in developing a hierarchical order thereby enabling the fixation of responsibility and specification of the extent of authority to be exercised by an individual.
  • Participation

Question 4. The activities and employees in ‘Elegance Pvt. Ltd.’, a footwear manufacturing company, can be broadly grouped into five departments namely; production, purchase, marketing, accounts and personnel. Over the years the company has grown and expanded its operations manifolds. The company now intends to diversify into leather bags segment. So its management has decided to restructure its operations. They plan to create separate product divisions for each product line wherein the functioning of each division will be further divided into five departments namely; production, purchase, marketing, accounts and personnel. In context of the above case: How is the company’s future organisational structures likely to be different from the existing one? State any three points of differences between the two types of organisational structures. Answer: At present, the company is following functional structure and it intends to adopt a divisional structure in future. The difference between Functional organisational structure and Divisional organisational structure is as follows:

Question 5. Rahunath works as a human resource manager in ‘Vanshika Housing Ltd.’ a company engaged in the real estate business. He suggests to the Managing Director of the company to start a sports club in the office where friendly indoor matches can be organised amongst the employees on every Saturday. In context of the above case:

  • Identify the type of organisation that Rahunath is desirous of promoting in the company.
  • State any three advantages of the type of organisation as identified in part (a) of the question.
  • Informal organisation is the type of organisation that Rahunath is desirous of promoting in the company.

Question 6. Smriti works as a marketing manager in a small company. The company has recently launched a new brand of room fresheners through aggressive promotion. However, the product is less in demand and its sales are low. Smriti decides to study the reasons for the poor likability of the product through a market research. Keeping in view the volume of work, she knows it will be impractical for her to handle it all by herself. In order to share her work, she deploys a team of executives. She gives them the necessary authority and assigns them the responsibility to conduct the research and report back to her so that she can make the decisions. In the context of the above case: Identify and explain the concept used by Smriti to share her work and authority with her subordinates. Answer: The concept used by Smriti to share her work and authority with her subordinates is Delegation of authority. Delegation of authority merely means the granting of authority to subordinates to operate within prescribed limits.

Question 7. Atul joins as a Regional Sales Head in the export division of a FMCG (fast moving consumer goods) company. In a departmental meeting, he asks one of this subordinates, Manik, to take charge of the company’s new office in Dubai. He allocates the work to him and grants the necessary authority. However, within a month by seeking regular feedback on the extent of work accomplished from Manik, Atul realises that Manik is not doing the work as per his expectations. So he takes away the authority delegated to him and re delegates the work to Prakrit. Due to the time wasted in this switch over, the work at the Dubai office suffers tremendously and the company is not able to meet its desired goals. In context of the above case:

  • Why is Manik supposed to give regular feedback about work to Atul?
  • Can the authority granted to a subordinate be taken back and re-delegated to another person?
  • Can Manik be held responsible for not meeting the work related expectations of Atul? Give a suitable reason in support of your answer.
  • Differentiate between authority, responsibility and accountability on the basis of origin and flow.
  • Manik is supposed to give regular feedback about work to Atul as he has been granted authority and entrusted responsibility, so he remains answerable for the outcome.
  • Yes, the authority granted to a subordinate can be taken back and re-delegated to another person.
  • Yes, Manik can be held responsible for not meeting the work related expectations of Atul as it is the obligation of a subordinate to perform the assigned duty to the best of his ability and skill.

Question 8. Srijan is working as a sales manager in a publishing house. In order the promote the new series of encyclopaedias, the company decides to undertake door to door selling in the city. As the sales manager, Srijan is given the target of selling 5000 units in one month. He appoints a team of five salesmen for the purpose. Each salesman is given the target of selling 1000 units. At the end of the month only 4800 units are sold as one of the salesman, Bobby, falls ill during the last week and is able to sell only 800 units. In the context of the above case: Will Srijan be still accountable for the performance of the assigned tasks to Bobby? Why or why not? Give a suitable reason to support your answer. Answer: Yes, Srijan will still be accountable for the performance of the assigned tasks to Bobby because only the responsibility for the work assigned can be delegated. The ultimate responsibility of a superior is absolute and cannot be delegated. Thus, irrespective of the extent of delegated authority, the manager shall still be accountable to the same extent as before delegation.

Question 9. Sudhir is working as a purchase manager in a power sector compahy. All his subordinates hold him in high regard for his exceptional managerial skills. On one hand, as a manager, he is a tough task master and expects strict compliance to the organisational rules and procedures from his subordinates. On the other hand, he makes conscious efforts to develop rapport with his subordinates by interacting freely with them during the lunch breaks in the cafeteria. Many a times these chit chats helps him to get an insight into the views and opinions of his team members about the policies of the organisation. In the context of the case:

  • Identify and explain the two types of organisations have been discussed.
  • State any three differences between the types of organisations as identified in part (a) of the question.
  • Formal organisation and Informal organisation are the two types of organisations which have been discussed. Formal organisation is the structure of authority relationships created deliberately by the management to achieve its objectives. Informal organisation is a network of social relationships arising out of the interaction among employees within an organisation.
  • The difference between Formal organisation and Informal organisation is as follows:

Question 10. Rakesh joins as a Head Librarian of a newly constructed medical college in Pune. A team of four librarians is placed under him for the smooth functioning of the library. Besides, he has been assigned eight people as support service staff. On the second day of his joining, he is told get a shipment of new books unloaded, stock the bookshelves, and then get all waste (packaging, paper etc.) disposed off within a weeks time. In order to ensure orderliness and speed in the process of setting up of the library, he makes each of the four librarians in charge of five different subjects. Keeping in mind their competence and experience he decides to give them more authority so that they can make autonomous plans and assume the responsibility for the effective implementation of their decisions. In context of the above case:

  • Identify and explain the concept used by Rakesh keeping in mind the competence and experience of the other librarians.
  • Describe briefly any three advantages of using the concept as identified in part (a) of the question.
  • Rakesh has used the concept of decentralisation keeping in mind the competence and experience of the other librarians.
  • Decentralisation helps to promote self-reliance and confidence amongst the subordinates: When the subordinates are given freedom to take their own decisions, they learn to depend on their own judgment and develop solutions for the various problems they encounter. Moreover, a decentralisation policy helps to identify those executives who have the necessary potential to become dynamic leaders.
  • Quick decision making: In a decentralised organisation managers at all levels are allowed to take such decisions independently which lie within their area of jurisdiction. This makes the process of decision making much faster.

Question 11. ‘Home Creations Ltd.’ is a well known chain of large department store offering various types of products under one roof. The company owns fifty stores in various parts of the country. Each store is placed under the charge of a manager who is allowed to run their stores autonomously by deciding about the products which may be promoted, appointment of staff, ways to handle customer complaints etc. As these managers have a deeper knowledge of the local situations, it enables them to take these decisions effectively keeping in view the local circumstances and consumers’ needs. This approach helps to improve customer service and at the same time serves to boost morale and increase the job satisfaction of the store managers as it empowers them to innovate and use their initiatives. In the context of above case:

  • Identify and explain the policy followed by ‘Home Creations Ltd.’ to run their stores successfully.
  • Also, give any three points highlighting the importance of the approach followed as identified in part (1) of the question.
  • List any two values that ‘Home Creations Ltd.’ wants to communicate to its employees.
  • The approach followed by ‘Home Creations Ltd.’ to run their stores successfully is Decentralisation. Decentralisation refers to systematic effort to delegate to the lowest level all authority except that which can be exercised at central points.
  • Develops initiative among subordinates: Decentralisation helps to promote self reliance and confidence amongst the subordinates. The lower managerial levels are empowered to take their own decisions and they learn to depend on their own judgment. This helps to identify those executives who have the necessary potential to become dynamic leaders.
  • Develops managerial talent for the future: Decentralisation is an effective means for training employees to use their talent in real life situations as it provides them many opportunities to prove their abilities. Thus, it helps to create a pool of qualified employees who may be considered to fill up challenging job positions internally through promotions. At the same alsoit so helps to identify those employees who may not be successful in assuming greater responsibility.
  • Quick decision making: Decentralisation facilitates quick decision making as the employees are allowed to act independently within their area of jurisdiction.

Question 12. Kabir opens a retail mart in a local market. As he knows it will be impossible for him to handle all work alone, he appoints Jasraj to perform tasks on his behalf thereby reducing his workload. This decision provided Kabir with more time to concentrate on important matters. Besides, he recruits eight other persons as support staff. Over the years his business earns a good name for itself. So he opens another outlet in the city. Considering Jasraj’s competence, he gives the independent charge of running the new outlet to him, thereby empowering him by giving him autonomy in functioning of the outlet. In the context of the above case:

  • Identify the two concepts which reflect the transition in the role of Jasraj in the above paragraph.
  • What are the factors that Karan must keep while giving the independent charge of the new outlet to Jasraj?
  • Delegation of authority: In the initial years of business, Jasraj’s role is restricted. He is granted limited authority to perform tasks on behalf of Kabir to reduce his workload and provide him with more time to concentrate on important matters. Decentralisation of authority: When Jasraj is given an independent charge of the new outlet, he is empowered to take decisions autonomously to ensure successful running of the outlet.
  • Karan needs to be careful while selecting those decisions related to the outlet which will be taken by Jasraj independently and those that will be retained with him. It is important to define the decision making powers as complete decentralisation would imply the delegation of all decision making functions to Jasraj and this would obviate Karan’s role as the owner of the business.

Question 13. Karan and Arjun are first cousins. After completing a course in journalism, both of them join a leading newspaper company as sub-editors. Over the years, due to their consistent hardwork, they are promoted to the post of chief editors in different divisions. However, the way of their functioning is totally different. Karan believes in the capabilities of his subordinates and therefore follows the philosophy of selective dispersal of authority throughout all the levels in his division. On the other hand, Arjun prefers to function through strict controls and retains all the decision-making authority with himself. In the context of the above case: How do Karan and Arjun differ in their policies related to the extent of delegation of authority? Explain. Answer: Karan has adopted a decentralisation policy as he believes in the capabilities of his subordinates. He follows the philosophy of selective dispersal of authority throughout all the levels in his division. Whereas Arjun follows a policy of centralisation as he prefers to function through strict controls and retains all the decision-making authority with himself.

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