CBSE Class 12 Business Studies Organising Notes

Concept Mapping:
1.Concept and important topics
2.Organizing Process. al and divisional
3.Structure of organization – function
4.Formal and informal organization.
5. Delegation: concept, elements and importance
6. Decentralization: concept and importance.

Meaning of Organising :- 

After laying down the plans and objectives the next function to be performed by the managers is organising. It determines what activities and resources are required and decides who will do a particular task, where it will be done and when it will be done. 

* Organising 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. 

Step Involved in the Process of Organising :- 

1. Indentification and Division of Work :- It involves identification and dividing the total work to be done into specific activities (called jobs) in accordance with previously determined plans. By dining the work the burden of work can be shared among the employees. 

2. Departmentalisation :- The second step in organising is to combine or grop similar or related jobs into larger units called departments, devisions or sections. They can be grouped on the basis of functions which on organisation undertakes to achieve its objective. For example departments may be created for manufacturing, marketing, financing etc. 

3. Assignment of duties :- Once departments have been formed each of them is placed under the charge of an individual called departmental head (e.g., production manager, finance manager etc.) Jobs are then allocated to the members of each department according to their skills and qualifications. 

4. Establishing Reporting Relationships :- Merely allocating work is not enough. Each individual should also know from whom he has to take orders and to whom he is accountable. It helps in coordination amongnst various departments. 

Importance of Organising :- 

1. Benefits of specialisation : - In organisions every individual is assigned a part of total work and not the whole task. Due to this division of work into smaller units and repetitive performance leads to specialisation. 

2. Optimum Utilisation of resources : - The proper assignment of jobs avoids overlapping / duplication of work, This helps in preventing confusion and minimising the wastage of resources and efforts. 

3. Clarity in working Relationship :- It helps in creating well defined jobs and also clarifying the limits of authority and responsibility of each job. 

4. Adaptation of change :- It allows a business enterprise to adapt itself according to changes in the business environment. Organisational structures can be suitably modified according to changes. 

5. 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 in effective administration. 

Meaning of Organisational Structure :- 

It seeks to establish relations among all the persons working in the organisation. Under the organisational 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 employees for performing their functions.
* The organisation structure can be defined as the frame work within which managerial and operating tasks are performed.
Relation between ‘Span of Management’ and ‘Organisation structure’
- ‘Span of mangement’ refers to the number of subordinates that can be effectively managed by a superior. The Span of management to a large extent gives shape to the organisation structure. This determines the levels of management in the structure.

Types of Organisation Structures :-
I. Functional Structure :- In functional structure activities are grouped and departments are created on the basis of specific functions to be performed.
For example all the jobs related to production are grouped under production Advantages :

1. Specialisation - Better division of labour takes place which results in specialisation of functions and its consequent benefits.
2. Coordination is established :- All the persons working within a department are specialist of their respective jobs. It makes the co-ordination easier at department level.
3. Helps in increasing managerial efficiency : Managers of one department are performing same type of function again and again which makes them specialised and improves their efficiency.
4. Minimises cost - It leads to minimum duplication of effort which results in economics of scale and thus lowers cost.

Disadvantages
1. Ignorance of organisational objectives - Each departmental head works according to his own wishes. They always give more weight to their departmental objectives. Hence overall organisation objectives suffer.
2. Difficulty in Inter-departmental Coordination - All departmental heads to work as per their own wishes which results coordination within the department but it makes inter-departmental coordination difficult.
3. Hurdle in complete development - because each employee specialises only in a small part of the whole job.

Suitability :-
1. Where the size of business unit is large.
2. Where specialisation is required.
3. Where there is mainly only one product in sold.

II. DIVISIONAL ORGANISATION STRUCTURE :

Dividing the whole enterprise according to the major products to be manufactured (like metal, plastic, cosmetics etc) in known as divisional organisation structure

Advantages :-

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

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

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

Disadvantages
1. Ignorance of organisational objectives - Each departmental head works according to his own wishes. They always give more weight to their departmental objectives. Hence overall organisation objectives suffer.
2. Difficulty in Inter-departmental Coordination - All departmental heads to work as per their own wishes which results coordination within the department but it makes inter-departmental coordination difficult.
3. Hurdle in complete development - because each employee specialises only in a small part of the whole job.

Suitability :-
1. Where the size of business unit is large.
2. Where specialisation is required.
3. Where there is mainly only one product in sold.

II. DIVISIONAL ORGANISATION STRUCTURE :
Dividing the whole enterprise according to the major products to be manufactured (like metal, plastic, cosmetics etc) in known as divisional organisation structure. 

Advantages :-
1. Quick decision making :- Divisional manager can take any decision regarding his division independently which makes decisons quick and effective.
2. Divisional results can be Assessed : - Divisional results (profit / loss) can be assessed easily. On this basis unprofitable division can be closed.
3. Growth and Expansion :- It facilities growth and expansion as new divisions can be added without disturbing existing departments.

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

Suitablity :-
1. Where the number of main products are more than one.
2. Where the size of the concern is large enough.
Formal Organisation - This structure is designed by the management to achieve organisational goals in which the responsibilities, authority and mutual relationships among all the employees working in an enterprise are clearly defined.

Features :-
1. It in deliberately created
2. It is based on rules and procedures.
3. It is impersonal - Does not take into consideration emotional aspect.
4. It is based on Division or work.
5. It is more stable.

Advantages :-
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 chian of commands.
4. Easy to achieve objectives - because of coordination and optimum use of human and material resources.
5. Stability in the organisation - because behaviour of employees can be fairly predicted since there are specific rules to guide them.

Disadvantages :
1. The work is based by rules which caues unnecessary delay.
2. Lack of initiatives - because 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 enterprice as it places more emphasis on structure and work.
Informal Organisation :
An informal organisation is that organisation which is not established delibeately but comes into existence because of common interests, tastes and religious and communal relations.

Features :
1. It orginates from within the formal organisation as a result of personal interction among employees.
2. It has no written rules and procedures.
3. It does not have fixed lins of communication.
4. It is not deliberately created by the management.
5. It is personal - means the feelings of individuals are kept in mind.

Advantage
1. Speed : Prescribed lines of communication are not followed which leads to faster spread of information.
2. Fulflment of social needs - enhances job satisfaction which gives them a sense of belongingness in the organisation.
3. Quick solution of the problems - because the subordinates can speak out their mind before the officers which helps the officers to understand the problems of their subordinates.
Disadvantages :-
1. It creates rumours :- All the persons in an informal organisation talk carelessly and sometimes a wrong thing in cenveyed to the other person.
2. It resists change and lays stress on adopting the old techniques.
3. Priority to group Interests - Pressurises members to confirm 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 the his subordinates perform all the work effecively and efficiently in expected manner the manager creates accountability.
Elements of Delegation :-
1. Authority - The power of taking decisions in order to guide the activities of others. Authority in that power which influences the conduct of others.
2. Responsibility : In 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 delegates 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.

Importance of Delegation of Authority
1. Reduction of Executive work load - It reduces the work load of officers.
They can thus utilise their time in more important and creative works instead of works of daily routine.
2. Employee development - Employees get more opportunities to utilise 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 power, duties and answerability related to various job positions which results in developing and maintaining effective co-ordination.

Difference - Authority, Resposibility and Accountability 

Decertralisation :-

Meaning - It means to delegate authority to all levels of management for taking decisions. Under decentealisation all the authority except the one which is absolutely necessary for the superiors to hold is given to the subordinates permanently. Under decentralisation the number of centres for taking decisions increases because the managers belonging to the middle and lower level have the authority to take important decisions.
Centralisation and Decentralisation - represents the pattern of authority among managers at different levels. Centralisation of authority means
concentrations of power of decision making in a few hands. In such an organisation very little authority is delegated to managers at middle and lower levels. No organisation can be completely centralised or decentralised. They exist together and there in a need for a balance between the two. As the organisation grows in size there is tendency to move towards
decentralisation. Thus every organisation characterised by both.

Importance of Decentralisation :-
1. Develops initiative amongst subordinates - It helps to promote confidence because the subordinates are given freedom to take their own decisions.
2. Quickes and better decisions - The burden of managerial decisions does not lie on a few individuals but get 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 all assigned to the subordinates which leaves enough time with the superiors which they can utilise in developing new strategies.
4. Managerial Development - It means giving authority to the subordinates upto the lower level to take decisions regarding their work. In this way the opportunity to take decisions helps in the development of the organisation.
5. Better Control - It makes it possible to evaluate performance at each level which results in complete control over all the activities.   

KEY CONCEPT IN NUTSHELL

Organizing is the process of defining and grouping, activities and establishing authority relationships among them.
Process: the process of organizingists consists of the following steps:
(a).Identification and division of work
(b).Departmentalization
(c).Assignment of Duties 
d).Establishing reporting relationships.

Importance: Organising is considered important because it leads to division of work, clarity in reporting relationships, optimum utilization of resources, growth, better administration and greater creativity.

Organisational structure is the framework within which managerial and operating tasks are performed. It can be functional or divisional.

Span of management is the number of subordinates under a superior. Functional structure groups activities on the basis of functions. The advantages of such a structure are specialization, better control, managerial efficiency and ease in training employees. The disadvantages are functional empires, conflict of interest, inflexibility and restriction in manageria
l development.

Divisional structure groups activities on the basis of Product. The advantages are integration, product specialization greater accountability, flexibility, better coordination and more initiative .The disadvantages are departmental conflicts, costly process, ignoring of organizational interests , and increase in requirements of general managers.

Formal organization is designed by the management to achieve organizational goals. Its advantages are fixation of responsibility, clarity of roles, unity of command and effective accomplishment of goals. Its disadvantages are procedural delays, inadequate recognition of creativity, limited in scope.

Informal organization arises out of interaction among people at work. Its advantages are speed, fulfillment of social needs, fills inadequacies of formal structure. Its disadvantages are disruptive fo
rce, resistance to change and priority to group interests.

Delegation is the transfer of authority from superior to subordinate. It has three elements: Authority, Responsibility and Accountability. Importance of delegation is that it helps in effective manageme
nt, employee development, motivation, growth and coordination.

Decentralization is delegation of authority throughout the organization. Importance of decentralization is that it helps in development of managerial talent, quick decision making burden on top management, development of initiative, growth and better control.

KEY CONCEPTS QUESTIONS WITH ANSWERS

Question. Name the organization which is deliberately created? 
Answer : Formal Organisation

Question. Enumerate the steps in the process of organizing?
Answer : 1) Identification and divrision of wok
2) Grouping Jobs and Departmentalisa tion
3) Assignment of duties 
4) Establishing authority relationship

Question. Organizing helps in optimum utilization of resources. Which type of resources does it refer?
Answer : All material, financial and human resources.

Question. Give any one importance organizing
Answer : Development of personnel.  

Question. What are the advantages and disadvantages of divisional structure? 5/6 M 
Answer : Advantages:

1).All activities associated with one product. It can be easily integrated.
2).Decision making is faster.
3).Performance can be easily assessed remedial action can be taken
4). It facilitates expansion and growth as new divisions can be added.

Disadvantages:
1).This gives rise to duplication of effort among its divisions.
2).Manages in each department focus on their own product without thinking the rest of the organization.
3).There may not be full utilization of different equipments
4).Conflict may arise among different division.

Question. Name the type of organization in which: 
a. Friendly relationship exists among the members.
b. Official relationship exists among the members.
Answer : a) Informal Organisation
b) Formal Organisation.

Question. Distinguish between formal and informal organizations on the basis of 5/6M

a) Formation       b. Purpose      c. structure      d. Behavior of members      e. stability and     f. adherence to rules.

Answer :

Question. Which term denotes “The number of subordinates that can be effectively managed by a superior? 
Answer :‐ Span of control.

Question. What are the elements of delegation of authority? 
Answer : Responsibility, Authority, Accountability.

Question. Distinguish between authority and responsibility on the basis of: 
Answer : Direction of flow     b. Delegation      c. Origin

Question. “A manager is of the view that he is not responsible for the quality of work that he has delegated to his subordinate”. Do you agree with his view points? Justify your answer by giving arguments. 

Answer : No I do not agree with managers view point.

The reasons are as follows:

i) Principle of delegation by results expected.

ii) Principle of parity of authority and responsibility

iii) Principle of absolute responsibility.

iv) Authority level principle

Question. Scope of decentralization of authority is wider than delegation. Why? 
Answer : Decentralization implies extension of delegation to the lowest level of management.

Question. Distinguish between ‘delegation’ and ‘decentralisation’ of authority on the basis of

QUESTIONS WITH DIFFERENT DIFFICULTY LEVELS

Question. Name of the function of management which co­ordinates the physical, financial and human resources and establishes productive relations among them for achievement of specific goals. 
Answer : Organising

Question. Name and explain the two steps in the process o organizing which come after ‘Identification and division of work’ and ‘Departmentalization’. 
Answer : Identification and division of work: Dividing the total work into jobs is necessary because the entire work cannot be done by individual (ii)Departmentalisation: In this step combine or group similar jobs into larger units called departments.

Question. Organising leads to a systematic allocation of jobs amongst the workf Which importance of organizing is stated here? 
Answer : Benefits of specialisation .

Question. Organising clarifies lines of communication and specifies who is to report to Mention the importance of organizing indicated here. 
Answer : Clarity in working relationships.

Question. Aman Lt Is manufacturing toys and has production, sales, Purchase and Finance Departments. Which type of organization structure would you suggest to them? State any three advantages of this organization structure. 

Answer : I would suggest functional structure for Aman Limited.
Advantages of this structure:

i. Supervision is facilitated

ii. Coordination with in the department is easier.

Question. Hindustan Ltd. , is manufacturing computers, soaps and textiles. Which type of organizational structure would suit the requirements of such organization? State any three advantages of this organization structure. 
Answer : Divisional structure would shoot the requirements of Hindustan limited.
Advantages: t can be easily integrated.
i. All activates associated with one produc
ii. Decision making is faster and effective.
iii. Performance of individual product can be easily assessed.

Question. It is a network of personal and social relations not established or required by the formal organization but arising spontaneously as people associate with one another. Name this organization and give its three advantages. 
Answer : Informal organization:
Advantages:
1. It brings feeling of belongingness. ural needs.
2. Informal organization satisfies social and cult
3. It provides useful channel of communication.

Question. It merely means the granting of authority to subordinates to operate within prescribe limits. Mention the concept referred here. 
Answer : Delegation of Authority

Question. Delegation provides a ready workforce to take up leading positions in new ventures. Which importance of delegation is stated here?
Answer : Facilitation of growth 1M

Question. “Authority can be delegated but accountability cannot.” Explain the statement
Answer : According to the principle of absolute responsibility, authority can be delegated but responsibility cannot be delegated by a manager. The manager remains responsible to his own superior for the task which he may assign to his subordinates. Every superior is responsible for the acts of this subordinates to whom he delegates authority for any work.

Question. The Marketing Manager of an organization has been asked to achieve a target sales of 100 generators per day. He delegates the task to 10 sales managers working under him. Two of them could not achieve their respective targets. Is the marking manager responsible? Briefly explain the relevant principle in support of your answer. 
Answer : Yes, Marketing manager is responsible for the non‐achievement of the target sales to his superior.
The principle related to this statement is absolute responsibility. It states that authority can be delegated but responsibility cannot be delegated by manager. The manager remains responsible are accountable to this own superior for the task which he may have assigned to his subordinate.

Question. It refers to the systematic delegation of authority from top management to the lower level managers. Mention it.
Answer : Decentralization of authority.

Question. If we delegate the authority we multiply it by two, If we decentralize it, we multiply it by money.
Answer : Scope of delegation of authority is limited. It is clear that if we delegate the authority we multiply it by 2 that is delegator and his subordinate to whom authority is delegated. Scope of decentralization of authority is wider than delegation. It involves many people from o level to bottom lower level of authority.

QUESTIONS :-
1 marks
1. How ‘effective administration in possible through organising?
2. Name the function of management which coordinates the physical, financial and human resources and establishes productive relations among them for achievement of specific goals.
3. Name the organisation which is directed by grop norms.
4. What is organisation chart?
5. What is meant by organisational structure?
6. “Difficulty in inter-departmental coordination” is one of the limitations of which organisation structure.
7. What is meant by Authority?
8. What is the basis of delegation of authority.
9. Why ‘effective management’ is possible through delegatin of authority.

3 marks
10. What is functional organisation structure? Write two advantages of this structure.
11. How accountability related to authority? Explain.
12. Why is it necessary to delegate authority? Give three reasons.
13. Write three characteristics of decentralisation.
14. State three steps in the process of organisaing.

4/5 marks
15. Explain briefly any four features of formal organisation.
16. The employees of Sachin Ltd. a software company, have formed a Dramatic group for their recreation, Name the type of organisation and state its three features.
17. Distingish between ‘Formal’ and ‘Informal’ organisation (any four points)
18. “A manager is of the view that he is not responsible for the quality of work that he has delegated to his subordinates”. Do you agree?
19. Delegation of authority provides the means where by a manager multiples himself “Commnet.

6 marks
20. Explain the importance of oranising as a function of management.
21. “Formal organisation is considered better than informal organisation”. Do you agree with this statement? Give reasons.
22. What is meant by “Divisional structure” of an organisation? Explan any two advantages and two limitations of it.
23. Decentralisation is an optional policy. Explain why an organisation would choose to be decentralised.
24. Explain the meaning and process of delegation of authority.