Organising - Class 12 Commerce Business Studies - Extra Questions

Distinguish between formal and informal organisations on the basis of purpose.

The purpose of formal organisation is to achieve organisational goal whereas purpose of informal organisation is psychological satisfaction of employees


How informal organisation is created?

An organization formed within the formal organization as a network of interpersonal relationship, when people interact with each other, is known as informal communication.
It is created, spontaneously by members, to satisfy their social and psychological needs.


Out of formal and informal organisation which is dependent upon which?

 Generally, Informal is dependent upon formal,  that is why first informal is set up, then formal. 


Vimal Clothing Ltd. was manufacturing only fabrics. After having great success in fabric business the directors of Visual cloth Ltd. acquired three new manufacturing units and started selling multi-products in market. (Electronics, Mobile phone, Cements) They decided that an individual who has capability and competence to handle responsibility would head each unit. The vacant position will be filled by women candidate only.
(a) State the type of organisation structure Vimal doth Ltd. have followed as a producer of single product.
(b) Suggest which type of organisational structure Director must adopt now and explain its advantages.
(c) Identify the value which have been communicated in this paragraph.

a) Functional organization 
Functional organization is a system in which functional department is created to deal with the problems of business at various levels. Functional authority remains confined to functional guidance to different departments. This helps in maintaining quality and uniformity of performance of different functions throughout the enterprise.
The concept of the Functional organization was suggested by F.W. Taylor who recommended the appointment of specialists at important positions. For example, the functional head and Marketing Director directs the subordinates throughout the organization in his particular area. This means that subordinates receive orders from several specialists, managers working above them.

b) Divisional organization
The divisional organizational structure organizes the activities of a business around geographical, market, or product and service groups. Thus, a company organized on divisional lines could have operating groups for the United States or Europe, or for commercial customers, or for the green widget product line. Each such division contains a complete set of functions. Thus, the green widget division would handle its own accounting activities, sales and marketing, engineering, production, and so forth.
This approach is useful when decision-making should be clustered at the division level to react more quickly to local conditions. The divisional structure is especially useful when a company has many regions, markets, and/or products. However, it can cause higher total costs and can result in a number of small, quarreling fiefdoms within a company that do not necessarily work together for the good of the entire entity.
The key points in favor of the divisional structure involve placing decision making as close to the customer as possible. The advantages are:
() Accountability. This approach makes it much easier to assign responsibility for actions and results. In particular, a division is run by its own management group, which looks out for the best interests of the division.
() Competition. The divisional structure works well in markets where there is a great deal of competition, where local managers can quickly shift the direction of their businesses to respond to changes in local conditions.
() Culture. You can use this structure to create a culture at the divisional level that most closely meets the needs of the local market. For example, a retail division could have a culture specifically designed to increase the level of service to customers.
() Local decisions. The divisional structure allows decision-making to be shifted downward in the organization, which may improve the company's ability to respond to local market conditions.
() Multiple offerings. When a company has a large number of product offerings, or different markets that it services, and they are not similar, it makes more sense to adopt the divisional structure.
() Speed. This approach tends to yield faster responses to local market conditions.

(c) Value which have been communicated in this paragraph is women empowerment




At Alpha Ltd. all expense bills of employees are processed by general manager himself. He feels quite overburdened. He decided to delegate this work to deputy general manager. But after sometime the deputy general manager, disperses this authority to various levels throughout the organisation. Now all bills for travelling are processed through respective department supervisor.
Name the concept of management highlighted in above case before and after delegating the authority

Before delegation of authority- centralization-
The concentration of control of an activity or organization under a single authority. 
After delegating the authority- decentralization-
the movement of departments of a large organization away from a single administrative center to other locations.




Short answer type of question:
Define 'organising'.

Organizing is a “process of defining the essential relationships among people, tasks and activities in such a way that all the organisation’s resources are integrated and coordinated to accomplish its objectives efficiently and effectively”. — Pearce and Robinson


Kiran Industries is a company manufacturing 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.
(a) Name the framework, which the diversified organisation should adopt, to enable it to cope up with the emerging complexity? Give one reason in support of your answer.
(b) State any two limitations of this framework. 

(a) Divisional structure:
Reason in support of the answer (any two)
(A) Product Specialisation helps in the development of varied skills in a divisional head and this prepares him for higher position.
(B) Divisional heads are accountable foe profits, as revnues and costs related to different
(b) Limitations of the Divisional Structure: (Any two) 

(A) It may lead to increase in costs since there may be a duplication of activities across products. 
(B) Divisional interests may supersede organisational interests.


Short answer type of question:
Under what circumstances would functional structure prove to be an appropriate choice?

Functional structure would prove to be most suitable when the size of the organisation is large, has diversified activities and operations require high degree of specialisation. It promotes control and Co-ordination within a department, increased managerial and operational efficiency, results in increased profits


"Delegation of authority is based on elementary principle of division of work." Explain.

In division of work the work is divided into different units. Same way in delegation the manager divides some of his work and authority with his subordinates. No manager can perform all the functions himself. To get the work done efficiently and in specialized manner, the manager divides the work among his subordinates according to their qualification and capability. Thus, it can be said that delegation is based on elementary principle of division of work. In division of work the work is divided into different units and in delegation work is divided between superior and subordinate.


Anoop Gaut started 'Cat's Eye', a company for providing cyber security solutions to businesses. Its objective is to prevent, detect, 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 Science and Technology. While working on the project he found that the volume of work made it impractical for him to handle all the work by himself. Therefore, he decided to expand the team. The company maintained a close liaison with an engineering college in the State. During a campus placement, Aarav and Pranshi were appointed to work for the new project 
He found the new employees capable, enthusiastic and trustworthy. Anoop Gaur was thus, able to focus on the objectives and with the help of Aarav and Pranshi, the project was completed on time. Not only this, Anoop Gaur was also able to extend his area of operations. On the other hand, Aarav and Pranshi also got opportunities to develop and exercise initiative.
(a) Identify and explain briefly the concept used by Anoop Gaur in the above case which helped him in focussing on the objectives.
(b) Also, explain any four points of importance of the concept identified in part (a) 

Delegation. 
Delegation is the transfer of authority from superior to subordinate, entrustment of responsibility and creation of accountability for performance which helps a manager to extend his area of operations. (or any other relevant explanation) Importance of delegation: 
(A) Growth facilitation. 
(B) Better co-ordination. 
(C) Creation of management hierarchy.
(D) Effective management


Short answer type of question:
What does the term 'span of management' refer to? 

The Span of Management refers to the number of subordinates who can be managed efficiently by a superior. Simply, the manager having the group of subordinates who report him directly is called as the span of management.


"The responsibility of a firm should be divided among various levels such as top level, middle level, and lower level". Identify the concept of management function and state its importance.

Decentralization is a systematic delegation of authority at all levels of management and in all of the organization. In a decentralization concern, authority in retained by the top management for taking major decisions and framing policies concerning the whole concern. Rest of the authority may be delegated to the middle level and lower level of management.
Importance of decentralization:
  • There is less burden on the Chief Executive as in the case of centralization.
  • In decentralization, the subordinates get a chance to decide and act independently which develops skills and capabilities. This way the organization is able to process reserve of talents in it.
  • In decentralization, diversification and horizontal can be easily implanted.
  • In decentralization, concern diversification of activities can place effectively since there is more scope for creating new departments. Therefore, diversification growth is of a degree.


'Shan Spices Ltd.' is the manufacturer of different food specific spices like Rajmaa Masala, Cholley Masala, AalooParantha 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 emphasized on work performance which resulted in smooth functioning of the organisation.
(1) Identify and state the type of organisation mentioned in the above para.
(2) State one feature of the concept identified in part (1) as mentioned in the above para.
(3) What was the purpose behind the formulation of rules for the employees that restricted their personal communication with the employees of other departments?
(4) State two values violated by Mr. Raghav. 

(1) Formal organization. 
(2) Focus on objective and work performance. 
(3) Avoidance of the emergence of an informal organization which may obstruct the fulfillment of organizational goals. 
(4) Values 
     (i) Freedom to employees 
     (ii) Fulfillment of psychological social needs of employees.


Short answer type of question:
Decentralisation is extending delegation to the lowest level. Comment. 

Decentralization is extending delegation to the lowest level. Decentralization refers to delegation of authority throughout all the levels of the organisation. Decision making authority is shared with lower levels and is consequently placed nearest to the points of action.


Long Answer Type Question: 
Why is delegation considered essential for effective organisation?

To delegate is to assign responsibility and authority to someone else in order to complete the task at hand but you retain the overall responsibility for its success. Delegation of authority is very important to any organization as it empowers employees or team members. It is essential in sharing authority and duty among individuals within an organization. Without it, it will be difficult to establishing a formal organization.

The Importance of Delegation is because it leads to:
Efficiency: Efficiency arises when duty is transferred to people with skills that match the role. Let the team members carry out routine activities for themselves while you plan and strategy is for the next step. This will ensure you have adequate time for planning, less stress and improved efficiency
Development: Team leaders have skills and abilities that can be passed down to other team members. The best way to do this is to teach them the new skills and then delegate duties to them for them to utilize the already learnt skills. The importance of delegation is in team development as well; as you can outsource team development to experienced members of your team thereby increasing their mentoring skills as well as decision making.
Empowerment: To empower is to allow others become experts at what they do even if they surpass your ability. This encourages personal development of team members leading to the overall team success.
Leadership: A good leader does not do, he plans and coaches. After coaching, team members will take roles assigned to them and accomplish with or without supervision. When tasks are completed, new tasks can be taken with maximum confidence.
Delegation is not only directed downwards but upwards as well. Whichever the direction tasks are assigned, it is important to follow up on progress and propel the team for success.


Short answer type of question:
Can a large sized organisation be totally centralised of decentralised? Give your opinion.

Ideally, a large firm must have combination of centralization as well as decentralization. Some important aspects such as finance, setting up of overall objectives, Policies, etc. can be centralized but routine decisions like buying raw materials, inputs, etc. can be decentralized.


Very Short Answer Question: 
Distinguish between authority and responsibility between: (a) Direction of flow, (b) Delegation, (c) Origin

 On the basis of Authority Responsibility
 Direction of flow Downward Upward
 Delegation It can be delegated to others It cannot be delegated
 Origin It is power. Orders and commands play a vital role.It is a duty. Duties and obedience play a vital role.


Very Short Answer Question: 
How is delegation of authority source of development of managers? 

A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the manager should delegate authority. Delegation of Authority means division of authority and powers downwards to the subordinate. Delegation is about entrusting someone else to do parts of your job. Delegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.


Very Short Answer Question: 
Give the meaning of informal organisation with the help of suitable example.

The informal organisation may be defined as “a network of personal and social relationships that arise spontaneously as people associate with one another in a work environment. It is composed of all the informal groupings of people within a formal organisation.” Over time there are changes of memberships in most informal organisations.
For example, one may consider the case of only two workers whose habit it is to gossip and have their perceptions of company affairs and personnel. They can do this on the job, at work, or after work.


Very Short Answer Question: 
How does informal organisation emerge in the formal set up? 

For a concerns working both formal and informal organization are important. Formal organization originates from the set organizational structure and informal organization originates from formal organization. For an efficient organization, both formal and informal organizations are required. They are the two phase of a same concern.
Formal organization can work independently. But informal organization depends totally upon the formal organization. Formal and informal organization helps in bringing efficient working organization and smoothness in a concern.
Within the formal organization, the members undertake the assigned duties in co- operation with each other. They interact and communicate amongst themselves. Therefore, both formal and informal organizations are important.
When several people work together for achievement of organizational goals, social tie ups tends to built and therefore informal organization helps to secure co-operation by which goals can be achieved smooth. Therefore, we can say that informal organization emerges from formal organization.


Long Answer Type Question:
What is divisional structure? Discuss its advantages and limitations. 

A divisional organizational structure gives a larger business enterprise the ability to segregate large sections of the company's business into semi-autonomous groups. While generally better suited to larger organizations, in some circumstances a divisional organizational structure may also benefit a smaller business. In all cases, groups are mostly self-managed and focused upon a narrow aspect of the company's products or services. As with any organization structure, divisional structures have both strengths and weaknesses.

Advantages of Divisional Organizational Structure
Divisions work well because they allow a team to focus upon a single product or service, with a leadership structure that supports its major strategic objectives. Having its own president or vice president makes it more likely the division will receive the resources it needs from the company. Also, a division's focus allows it to build a common culture and esprit de corps that contributes both to higher morale and a better knowledge of the division's portfolio. This is far preferable to having its product or service dispersed among multiple departments through the organization.

Disadvantages of Divisional Organizational Structure
A divisional structure also has weaknesses. A company comprised of competing divisions may allow office politics instead of sound strategic thinking to affect its view on such matters as allocation of company resources. Thus, one division will sometimes act to undermine another. Also, divisions can bring compartmentalization that can lead to incompatibilities. For example, Microsoft's business-software division developed the Social Connector in Microsoft Office Outlook 2010. They were unable to integrate Microsoft SharePoint and Windows Live until months after Social Connector could interface with MySpace and LinkedIn. Some experts suggested that Microsoft's divisional structure contributed to a situation where its own products were incompatible across internal business units.


Long Answer Type Question:
How does informal organisation support the formal organisation? 

The informal organization supports formal organization in many ways, some of them are as follows:
(i) Quick feedback Prescribed lines of communication are not followed. Thus, the informal organization leads to a faster spread of information as well as quick feedback.
(ii) Social needs It helps to fulfill the social needs of the members. This enhances their job satisfaction since it gives them a sense of belonging in the organization.
(iii) Flexibility Informal organization, rules, and policies are fixed, thus it is rigid in nature. On the other hand, in an informal organization, no such rules are there, thus leads to flexibility.
The existence of informal depends upon the formal structure because people working at different job positions interact with each other to form informal structure and the job positions are created in the formal structure. So, if there is no formal structure there will be no job position and no interaction so no informal structures.


Very Short Answer Question: 
'Decentralisation is the extension of delegation'. Explain. 

Decentralization is not the same as delegation. In fact, decentralization is all extension of delegation. Decentralization pattern is wider is scope and the authorities are diffused to the lowest most level of management. Delegation of authority is a complete process and takes place from one person to another. While decentralization is complete only when fullest possible delegation has taken place.


Short Answer Question: 
'If we delegate the authority we multiply with two, if we decentralize it we multiply with many'. Explain. 

A delegation of authority refers to granting authority by one individual (superior) to another (subordinate). Therefore, its scope is confined to a manager and his immediate subordinate. When we delegate authority, we multiply it by two i.e. the delegator and his subordinate, to whom authority is delegated. Delegation is a process of sharing of task and authority between a manager and his subordinate.
Decentralization of authority is not restricted to two individuals. It involves the systematic delegation of authority at all levels and in all functions of the organization. In case of decentralization, managers at middle and lower levels are granted the authority for taking decisions on tasks assigned to them. Therefore, the scope of decentralization is wider than that of delegation. When we decentralize authority, we multiply it by many.


Very Short Answer Question: 
Distinguish between delegation and decentralization on the basis of
(a) Responsibility, (b) Scope, (c) Grant of authority.

On the basis of Delegation Decentralization
Responsibility In delegation, superior delegates or transfers some rights and duties to a subordinate but his responsibility in respect of that work does not end. On the other hand, decentralization relieves him from responsibility and the subordinate becomes liable for that work.
Scope
 Delegation hardly poses any problem of coordination to the delegator of authority.  While decentralization poses a great problem in this regard since extreme freedom of action is given to the people by creating self-sufficient or autonomous units.
Grant of authority The delegation represents selecting dispersal of authority decentralization signifies the creation of autonomous and self-sufficient units or divisions.


Long Answer Questions: 
Can an overburdened manager take help from his subordinates? How? Explain the three important things he should keep in mind while taking such help.

Yes, an overburdened manager can take help from his subordinates. As he is overburdened, he can reduce his work by opting the concept of delegation of authority and responsibility.

Elements of delegation.
Authority
The term authority implies the right of an individual to take decisions and to command his subordinates.
The concept of authority arises from the position in the scalar chain, which is highest at the top and declines as we move down the hierarchy.Thus, it flows from top to bottom. It helps to maintain order in the organisation and determining superior subordinate relationship.
Responsibility
It is the obligation of a subordinate to properly perform the assigned duty. It arises from a superior subordinate relationships because the subordinate is bound to perform the duty assigned to him. Thus, it flows upward i.e. a subordinate is always responsible to his superior. Granting authority is necessary to create, responsibility and facilitates its fulfillment.
Accountability
It implies being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot deny accountability. "
It is the obligation to carry out responsibility and exercise authority. It flows upwards as subordinate will be accountable to his superior, generally enforced through regular feedback.

To sum up, we can say that the process of delegation starts with assignment of duties (responsibility), followed by giving necessary authority and once the authority is given, the superior creates accountability for the subordinates. However for effective delegation, authority granted must commensurate with the responsibility i.e. equal and not more or less authority must be given. As more authority will lead to misuse, whereas lower grant of- authority will make the person ineffective to perform the assigned job.


Long Answer Questions: 
A company has its registered office in Delhi, manufacturing unit in Gurgaon and marketing and sales department in Faridabad. The company manufactures consumer products. Which type of policy should it adopt to achieve the target?

As a company is performing separate functions in separate areas, then it should adopt functional structure.

A functional structure is one of the most common organizational structures. Under this structure, the organization groups employees according to a specialized or similar set of roles or tasks. While functional structures operate well in stable environments where business strategies are less inclined to changes or dynamism, the level of bureaucracy makes it difficult for organizations to respond to changes in the market quickly.

Strength: Specialization.
When companies use a functional organizational structure, people with similar knowledge and skills are grouped together. This makes it possible for employees to become specialists in their field. It requires a performance management system that allows for the promotion, development and visibility of individual skills within their functional area. The specialization that functional structures hone helps to bring about in-depth knowledge and skill development among the employees, and this can help you achieve your company's functional goals.

Strength: Productivity
Specialization leads to operational efficiencies and enhances productivity levels. Because of their expertise, workers with specialized skills can perform tasks quickly, efficiently and with more confidence, thus reducing the occurrence of work-related mistakes. In addition, the clear nature of the career path within the functional unit makes it possible for employees to be highly motivated to advance their careers as they move up within the hierarchy. The main goal of functional structures in organizations is to bring the entire human and informational resources together to meet the organization’s goals. This can be an ideal structure for small businesses that focus on one product or service because you can maximize performance by encouraging peer cooperation among different units at various levels of management through supervision and coordination.

Weakness: Management Issues
Communication in organizations with functional organizational structures can be rigid because of the standardized ways of operation and the high degree of formalization. This can further make the decision-making process slow and inflexible. Since it is more bureaucratic, functional units are often not accountable to each other, and poor horizontal coordination within the departments can occur. Lack of innovation and restricted views of organizational goals, along with too much focus, can affect employees' motivation. As your company grow and you create more functional units, the level of autonomy within units might increase, making it difficult for you to coordinate all the units efficiently.

Weakness: Unit Coordination
Even though functional units often perform with a high level of efficiency, their level of cooperation with each other is sometimes compromised. Such groups may have difficulty working well with each other as they may be territorial and unwilling to cooperate. The occurrence of infighting among units may cause delays, reduced commitment due to competing interests, and wasted time, making projects fall behind schedule. This ultimately can bring down production levels overall, and the company-wide employee commitment toward meeting organizational goals


Short Answer Question: 
In large organisations why is decentralisation considered essential? 

Decentralisation can be defined as even and systematic distribution of authority at every level of management. Under decentralisation every employee working at different levels gets some share in the authority. Decentralization is a policy matter and managers plan in advance whether to go for centralised or decentralized policy. Sometimes company follows a mixed policy of centralisation and decentralisation. They keep the important matters such as financial decisions, structural decisions with the top level management only and share the common decisions with the people working at different levels as generally an organisation can never be completely centralised or decentralised.


One Mark Question:
Identify the type of suitable organisation structure for a large scale organisation having diversified activities requiring high degree of specialisation in operations.

Functional structure



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

Organizing or Organizing in management refers to the relationship between people, work and resources used to achieve the common objectives (goals).


Short Answer Question: 
Explain through a suitable example, how a delegated authority can be extended to decentralization of authority. 

Decentralization is extending delegation to the lowest level. Decentralization explains the manner, in which decision-making responsibilities are divided among hierarchical levels. Decentralization refers to delegation of authority throughout all the levels of the organisation.
Decision-making authority is shared with lower levels and is consequently placed nearest to the point of action. In other words, decision-making authority is pushed down the chain of command. Delegation is the process and decentralization is the end result, e.g. if the director gives the responsibility to production head to complete the target of 20000 units and authorizes him to hire the workers, production head further shares his responsibility with manager to select the workers.
Manager shares his responsibility with supervisors, who are dealing with workers, authorizes them to select workers. Here, the responsibility is distributed at every level. That’s why, we say systematic delegation leads to decentralization.


Long Answer Questions: 
Arran Ltd. is manufacturing toys and has production, sales, purchase and finance department. Which types of organisational structure would you suggest them? State any three advantages of this types of organisational structure.

Functional Organisation.
Merits of Functional Organization
  1. Specialization- Better division of labour takes place which results in specialization of function and it’s consequent benefit.
  2. Effective Control- Management control is simplified as the mental functions are separated from manual functions. Checks and balances keep the authority within certain limits. Specialists may be asked to judge the performance of various sections.
  3. Efficiency- Greater efficiency is achieved because of every function performing a limited number of functions.


Short Answer Question:
'The directors of Bhuwan Ltd., an organisation manufacturing computers, want to double the sales and have given this responsibility to their sales manager. The sales manager further divides this responsibility to the 5 salesmen. These salesmen could not achieve the target. Who is accountable for non-completion of target and why? 


The sales manager is not responsible because he has no authority either to increase the sales expenses or appoint new salesmen. In this case, the principle of Parity of Authority and Responsibility is violated.

Authority means the right to orders & obtain obedience. There are two types of authority

(a) Official authority i.e. authority to command and

(b) Personal authority which is the authority of the individual manager. 

‘Responsibility’ means an obligation to perform the job assigned on time. Fayol suggested that there must be a balance between authority and responsibility. Giving authority without responsibility may lead to the irresponsible use of authority. So an organization should build safeguards against abuse of managerial power. Hence directors of Bhuwan ltd will be held responsible.



Four Mark Question:
Aman, Avneesh and Amrish have decided to start a business of manufacturing toys. They identified the following main activities which they have to perform: (i) Purchase of raw materials, (ii) Purchase of machinery, (iii) Production of toys, (iv) Arrangement of finance, (v) Sale of toys, (vi) Identifying the areas where they can sell their toys, (vii) Selection of employees.
In order to facilitate the work they thought, that four managers should be appointed to look after (a) Production, (b) Finance, (c) Marketing, (d) Personnel.
A. Identify the function of management involved in the above-mentioned para.
B. Quote the lines from the above pars which help you in identifying this function.
C. State the steps followed in the process of this function of management. 

A. Divisional structure
B.  facilitate the work they thought, that four managers should be appointed to look after (a) Production, (b) Finance, (c) Marketing, (d) Personnel
C. (i) Purchase of raw materials,
 (ii) Purchase of machinery,
 (iii) Production of toys,
 (iv) The arrangement of finance,
 (v) Sale of toys,
 (vi) Identifying the areas where they can sell their toys,
 (vii) Selection of employees.


Six Mark Question:
What is meant by 'Divisional Structure' of an organisation? For which type of business enterprises is this structure most suitable? State any four advantages of this form of organisational structure. 

Divisional structure Under the divisional structure an organization is divided into different divisions or units on the basis of products or geographical area.

Advantages of a divisional structure are:
Decisions are taken much faster in divisional structure.
It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.
It leads to specialization of physical facilities and human talent.

Disadvantages of a divisional structure are:
There is a duplication of physical facilities and functions.
It suffers from the under-utilization of plant capacity.
Conflict may arise between different divisions on an allocation of funds and other resources.


Four Marks Question:
Define 'delegation' and differentiate it with 'decentralisation'. Give any three points.


On the basis ofDelegationDecentralization
PurposeTo lessen the burden of manager.To increase the role of subordinates in the organization.
StatusIt is a process followed to share the task.It is the result of the policy decision of top management.
 
Delegation is the practice of turning over work-related tasks and/or authority to employees or subordinates. Small business owners often have difficulty with delegation for a variety of reasons, from concerns about the abilities of subordinates to long-standing "hands-on" management habits.




Six Mark Question:
 A truck manufacturing company has its registered office in Delhi and manufacturing unit in Chennai. The company manufactures different types of trucks. Its marketing division is located at Noida.
Suggest a suitable organisational structure for this company giving reason in support of your answer. Also explain any five advantages of this structure of organising. 

A functional organization structure is a hierarchical organization structure wherein people are grouped as per their area of specialization. These people are supervised by a functional manager with expertise in the same field. This expertise helps him effectively utilize the skills of employees, which ultimately helps organizations in achieving its business objectives.
In this kind of organization structure, people are classified according to the function they perform within the organization. The organizational chart for a functional organization structure shows the president, vice president, finance department, sales department, customer service, administration, etc.
Each department will have a department head who will be responsible for the performance of his section. This helps the organization control the quality and uniformity of performance.
These different departments are sometimes referred to as “silos”. This means the system is vertical and disconnected. The communication flows through the department heads to the top management.
Here, all authority (i.e. budget allocation, resource allocation, decision making, etc.) stays with the functional manager. Usually, the position of the project manager does not exist in this type of organization structure. Even if this position exists, the role of the project manager will be very limited and he will need permission from the functional manager to fulfil his requirements. The project manager may have the title of a coordinator or an expediter.
The functional organization structure is suitable for an organization which has ongoing operations and produces standard products or goods, such as manufacturing industries.
Advantages of the Functional Organization Structure
The following are a few benefits of the functional organization structure:
1 Employees are grouped by their knowledge and skills, which helps achieve the highest degree of performance.
2 Employees are very skilled. Efficiency is gained because they are experienced in the same work and they perform very well.
3 Their roles and responsibilities are fixed, which facilitates easy accountability for the work.
4 The hierarchy is very clear and employees don’t have to report to multiple supervisors. Each employee reports to his or her functional manager, which reduces the number of communication channels.
5 There is no duplication of work because each department and each employee has a fixed job responsibility.
6 Employees feel secure, and therefore, they perform well without fear.
Since there is a sense of job security, employees tend to be loyal to the organization.
7 Employees have a clear career growth path.
8 Cooperation and communication are excellent within the department.


Four Mark Question:
Distinction between 'Delegation' and 'Decentralization' on the basis of the following:
(a) Purpose (b) Scope (c) Status and (d) Nature.

On the basis of Delegation Decentralization
PurposeTo lessen the burden of managerTo increase the role of subordinates in an organization. 
ScopeIt has a narrow scope as it is limited to superior and his immediate subordinate It has a wide scope as it implies the extension of delegation to the lowest level of management.
StatusThe process followed to share a taskThe result of policy decision of top management
NatureCompulsory actOptional policy decision


One Mark Question:
What is the direction of flow of 'Responsibility' and 'Accountability'?

According, to McFarland, "accountability is the obligation of an individual to report formally to his superior about the work he has done to discharge the responsibility." When authority is delegated to a subordinate, the person is accountable to the superior for performance in relation to assigned duties


One Mark Question:
State any one advantage of 'Formal Organisation'. 

Creation of Chain of Command:
Formal organisational structure clearly defines superior subordinate relationship, i.e. who reports to whom.


Three Marks Question:
Explain how (i) Adaptation to change and (ii) Effective administration makes organising important. 

(i) Adaptation to change Organising facilitates modification in organisation structure and revision of inter-relationships among people in order to adapt to environmental changes.
(ii) Effective administration gives a clear description of duties and responsibilities of each individual. This helps to avoid confusion regarding work and avoids duplication of activities. This helps in bringing efficiency in administration


Three Marks Question:
What is meant by 'informal organisation'? List any two limitations of informal organisation.

The informal organisation may be defined as “a network of personal and social relationships that arise spontaneously as people associate with one another in a work environment. It is composed of all the informal groupings of people within a formal organisation.”

Limitations of Informal Organisation:
  • Attitude of leaders:
If leaders have negative attitude, that is, want their personal interests to be satisfied at the cost of group interests, informal organisation will work against the formal organisational goals. This is harmful for the organisation.

  • Role conflict:
As members of formal and informal organisation, people face role conflict. If group goals are different from formal goals, members conform to group goals. If the organisation allows lunch break of 30 minutes but group extends it to 45 minutes to socialize, members face conflict in their formal and informal roles.


Six Mark Question:
Shreyskar runs a locks manufacturing factory. He wants to expand his business. For this, he wants to enter into the manufacturing of locks for cars as an ancillary company. By doing this his company will be able to provide many products to car manufacturers.
Which type of organisational structure will he choose for his factory and why? State any five advantages of this organisational structure.

He will choose a 'Divisional Structure' for his factory as the factory is producing more than one product.
Advantages of divisional structure:
(i) Product specialization helps in the development of varied skills.
(ii) It helps in the fixation of responsibility as divisional heads who are accountable for profits, revenues and costs related to their departments.
(iii) It promotes flexibility, initiative and faster decision making as each division is an autonomous unit.
(iv) It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.
(v) It reduces the problem of co-ordination between departments as all activities concerning a particular product line are integrated together.


Six Mark Question:
With the help of any four points, explain the crucial role that organising plays in an enterprise.

Organizing is the process of defining and grouping activities and establishing authority relationships among them.
The organizing function helps in the growth and survival of an enterprise in a dynamic environment by providing the following benefits:
Benefits of Specialization
1-It facilitates the systematic allocation of work. This reduces the workload as well as enhances productivity, as each task is repetitively performed by a worker which helps him to gain experience and attain specialization.
Clarity in Working Relationships
2-The establishment of working relationships clarifies the lines of communication and specifies who is accountable to whom.
Thus, there is no confusion regarding the performance of work, fixation of responsibility and communication.
3-Optimum Utilization of Resources
It leads to proper usage of all materials, financial and human resources by proper assignment of jobs. Assignment of jobs to workers reduces duplication of work, prevents confusion, minimizes wastages and allows the best possible use of resources.
4-Adaptation to Change
It facilitates modification in organizational structure and revision of inter-relationships among people in order to adapt to environmental changes.
It also helps to provide stability and growth, despite external changes occurring in the business environment.
5-Effective Administration
It gives a clear description of the duties and responsibilities of each individual. This helps to avoid confusion regarding work and avoids duplication of activities. Thus, it helps in bringing efficiency in administration.
6-Development of Personnel
It stimulates creativity amongst the managers. Effective delegation allows the managers to reduce their workload by assigning routine jobs to their subordinates.
This helps subordinates to develop newer skills and - ability to deal effectively with emerging challenges. Thus, it helps in the development of personnel.
7-Expansion and Growth
It helps in the growth and diversification of an enterprise by adding more, job positions, departments and new lines of product.
This helps in increasing sales volume and profits of the enterprise.


Six Mark Question:
Give the meaning of 'Informal Organisation' and state any five features of it.

The informal organisation may be defined as “a network of personal and social relationships that arise spontaneously as people associate with one another in a work environment. It is composed of all the informal groupings of people within a formal organisation.”
Features of Informal Organisation:
1. Social needs: The basic purpose of informal organisation is fulfillment of social and personal needs of people. People share common thoughts, feelings and interests different from formal organisational goals. Their social needs of friendship, love and support are strengthened by informal organisations.
2.Informal leaders: Leaders are informally elected by group members. They strongly influence group activities and contribute to formal goals positively or negatively.
3.Informal communication system: The system of communication is informal. It does not follow the chain of command. It operates along with formal channel of communication and works faster than the formal channel.
4.No rules and regulations: It has no fixed rules and regulations that govern functions of the organisation. Rules are framed and changed by people according to their convenience.
5.No fixed tenure: It is formed at the will of people and dissolves at their will. It does not operate for a fixed time period. Dissolution of informal organisation also does not follow any legal procedure.


ABC Ltd. decided to develop the plan for upcoming year in such a manner that weaker section of society can be given job opportunities and make use of eco friendly method of production. For this it hired leading consultancy firm and paid high fees. ABC Ltd. invited suggestions from lowest level also and involve employees working at different level to develop this plan. Company spent lot of money on fees and research work to collect various facts.
(a) State the limitation of planning referred in above para.
(b) Identify the concept of organising being discussed above.
(C) Identify the values ABC Ltd. desire to achieve. 

(a)- limitation of planning referred in above para-
planning involve huge cost.
(b)- Decentralization- the movement of departments of a large organization away from a single administrative center to other locations.
(c)- (i) Providing employment opportunity to weaker section. 
      (ii) Pollution free environment.



An employee is asked to produce $$100$$ units in one week's time out is not allowed to take out raw materials from store. At the end of the week, the employee could not complete his target because of insufficient supply pf raw material. Can we blame the employee? Which principle is associated with this condition? Explain it.

No, employee can't be blamed for not achieving the targets because of insufficient supply of raw materials.
Authority and Responsibility- These are the two key things in management. They work hand in hand. While authority enables the management to delegate work, responsibility makes them accountable for any work done under their leadership.
Henri Fayol said that the power of authority accompanying responsibility gives the management the right to order subordinates along with a duty to be liable for acts of their subordinates.



Mr. Ram director of ABC Ltd., does the entire planning for the organisation. He instructed lower and middle level managers to strictly follow his plan and does not allow them to deviate from the set plan. He does not involve subordinates in decision making. The lower managers only follow the instructions of their superiors.
(a) Name the limitation of planning referred above.
(b) State any other two limitations.
(c) Name the concept of management followed by Mn Ram. 

(a) Planning reduces creativity 
(b) (i) Planning leads to rigidity. 
     (ii) Planning involve huge cost 
(c) Centralization.


Mn Jitender Kumar Aggarwal is an eminent Social worker and he is running a school for mentally retarded children named toshish'. The school has two parts - one part is `Functional centre", where children learn to earn by small activities, e.g., candle making, clay pots, etc. The second part of school's tany learning' where Children learn their daily routine activities, e.g., eating, brushing, reading, writing etc. School has separate heads for each part & there is friendly relation between teachers, heads & students. School is working on the basis of mutual cooperation. Now Mr. Jitender Kumar wants to make some changes in new session, e.g., uniform for all teachers, timing of school will be 7.00 am to 2.30 p.m. MI the changes were successfully implemented.
(a) Name the type of Plan highlighted in the paragraph by quoting the lines from paragraph.
(b) Which type of organisation structure is referred in about paragraph.
(c) Explain any two features of this structure.
(d) Identify the value highlighted in above paragraph.

(a)- policy-  he is running a school for mentally retarded children
(b)-.A divisional organizational structure consists of parallel divisions. This division might be responsible for a product or service, a geographical location, or a customer group. Each unit is equipped with its own resources to function independently
(c) two features of divisional organizational-
(1) unit of purpose
(2) future executive
(3) responsiveness
(d)- skill development of mentally retarded children


Mr. Chirag is promoted to the post of General Manager of Krishna Garments. The company Krishna Garments is facing the problem of decline in market share due to severe competition in the market. To overcome this problem Mr. Chirag decided to explore foreign market where he can get big order but at low price. In order to enter in foreign market and to face competition the company decided to reduce its price. From the foreign market he gets a big order of 10000 units to be manufactured within one week. He accepts that order and delegates the work to production manager without discussing it with him. He firmly tells him that if the task is not completed within given time period a strict action will be taken against him.
At the end of the given time period, Mr. Chirag discovers that production target of 10000 units is not achieved by production manager.
(a) Identify and explain the type of plan followed by company.
(b) Who is responsible in above situation for not achieving the targets? Give arguments in support of your answer.

(a)-  Strategic plans are designed with the entire organization in mind and begin with an organization's mission. Top-level managers, such as CEOs or presidents, will design and execute strategic plans to paint a picture of the desired future and long-term goals of the organization. Essentially, strategic plans look ahead to where the organization wants to be in three, five, even ten years. Strategic plans, provided by top-level managers, serve as the framework for lower-level planning.
(b)- Mr. Chirag as in this company power is not transferred, hence Mr chirag is responsible..


Six Mark Question:
A company is manufacturing Televisions, Refrigerators, Air-conditioners, Washing' machines and Gas stoves using different productive resources and is at the threshold of growth, requiring more employees.
Suggest a suitable organisational structure for this company giving reason in support of your answer. Also explain any three advantages and two limitations of this structure of organising.

Divisional structure Under the divisional structure an organisation is divided into different divisions or units on the basis of products or geographical area.

Advantages of divisional structure are:
Decisions are taken much faster in divisional structure.
It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.
It leads to specialisation of physical facilities and human talent.

Disadvantages of divisional structure are:
There is a duplication of physical facilities and functions.
It suffers from the under utillisation of plan capacity.
Conflict may arise between different divisions on allocation of funds and other resources.


Differentiate between 'functional' and 'divisional' structure of organization on any six basis. 

 On the basis Functional structure Divisional structure
 Meaning Functional Structure is one in which the reporting relationships of the organization are bifurcated according to their functional area. An organizational structure wherein the organizational functions are classified into divisions as per product or service lines, a market is called Divisional Structure.
 Basis Functional areas Specialized divisions
 
Responsibility

 Difficult to fix responsibility on a particular department. Easy to fix responsibility for performance.
 Cost Economical, as the functions are not repeated. Expensive as it involves repetition of resources.
 Appropriate for Small and simple organizations. Large and dynamic organizations.
 Autonomy of decisions Managers do not have autonomy of decisions. Managers have autonomy of decisions.


Six Mark Question:
Explain 'Authority', 'Responsibility' and 'Accountability' as elements of Delegation.

The Delegation of Authority is a process through which manager assigns responsibility to the subordinate with a certain level of authority, i.e. power to take decisions, in order to accomplish certain assignments on the manager’s behalf.
Elements of Delegation of Authority
There are three major elements of delegation of authority:
Responsibility: The responsibility means, assigning the work to an individual. The managers assign certain responsibility to the subordinates for the completion of certain tasks on his behalf. An individual has to apply all his physical and mental ability to get the task completed efficiently.Here it is to be noted, that manager can only assign the responsibility, and in the case of the subordinate fouls, the manager will be answerable to his seniors. Thus, the responsibility flows upwards.
Authority: To fulfill the responsibility, certain authority is delegated to the subordinate. Authority means the power to take decisions. Hence, the manager along with the responsibility also delegates authority to enable the subordinate to take decisions independently and accomplish the task efficiently.
The authority must be equal to the responsibility, this means, a certain level of authority is delegated which is sufficient to complete the responsibility. The authority also flows upward, as we go up in the scalar chain, the authority increases.
Accountability: Accountability means, to check whether the subordinates are performing their responsibilities in an expected manner or not. The Accountability cannot be delegated which means, in the case of non-completion of the task, the manager will only be held responsible for it, not the subordinates. The accountability also flows upward, i.e. subordinates will be accountable to the manager and the manager to his superior.


What is pre-requisite of organising? 

An efficient organization is essential for the success of a business enterprise. The defining of duties and fixing responsibilities of all employees in the organization is essential. An effective organizational system ensures proper suspension and control. It facilitates expansion and diversification.
Pre-Requisites:
An effective organization has the following pre-requisites:

1. Able Organisers:
Success of an organisation depends upon the competence and calibre of those who are at the helm of affairs. The entrepreneur should understand all aspects of the business so that he may properly organise various aspects of the concern. A well-defined organisational set-up will be helpful in smooth running of the business. The persons at the top should be well versed with everything. He should be dynamic and should be able to cope with the changing business environment.
2. Sound Business Policies:
The management should be clear about the objective to be achieved. Various policies should be aimed to achieve the business goals. There should be no conflict and confusion regarding different policies. The policies should be clearly defined and different levels of management should be clear about the policies.

3. Proper Supervision and Control:
The success of an organisation will depend upon the effective supervision and control. If the activities of different individuals are not properly controlled, then business goals will not be achieved. The targets of work should be fixed and the performance should be recorded. A corrective action is necessary if the performance is less than the goals. The number of persons to be supenised (span of control) by the supervisors should also be realistic. The supervisors should be able to devote enough lime in checking the work of every employee under his control.

4. Co-operation and Co-ordination:
It is necessary to get the co-operation of everybody in the organisation lo make it a success. The goals of the business are common and everybody should try to achieve them in their respective fields. There should be some agency to co-ordinate the activities of various departments. Sales department must know the plans of purchase and finance department should also work in co­ordination with each other. The employees should develop an attitude of co-operation. A central agency should act as a co­ordinating body.

5. Efficient Personnel Organisation:
Management of personnel is an important aspect of organisation. Proper personnel organisation is necessary for enabling all persons to optimise their contribution towards realising the corporate objective. Personnel organisation includes recruitment, training, job evaluation, merit rating and fixing of remuneration. Working conditions should be improved so that workers are encouraged to work more efficiently and have job satisfaction.

6. Capacity for Business Expansion:
The organisation should be elastic to enable expansion and diversification of the business. The production may be raised in the same line or more products may be added. The organisational structure should be such that it allows increase or decrease of production, as the case may be without disturbing the whole organisation. If some change in production and sales require a change in organisational set up, it will discourage the growth of the enterprise.


Out of Delegation and decentralisation which is a policy matter?

When an authority or responsibility is entrusted to the subordinate by a superior is known as Delegation. Decentralization refers to the final result which is attained when the authority is delegated to the lowest level, in an organised and consistent manner. Delegation is the technique of management Hence, out of delegation and decentralisation, decentralization is a policy matter.


Give the meaning of 'authority' an an element of delegation.

Authority refers to the power given to an individual to command and direct the subordinates and take various decisions.


Name the type of 'organisational structure' which promotes efficiency in utilisation of manpower.

Functional structure is a type of organisation structure which promotes efficiency in utilisation of manpower.


Give the meaning of 'Responsibility' as an element of delegation.

Responsibility refers to the adherence of the subordinates to complete the task assigned to him/her and considering it as his/her answerability.


Four Marks Question: 
D & D Ltd. is a large manufacturing unit. Recently, the company had conducted the 'time' and 'motion' studies and concluded that on an average a worker could produce 120 units per day. However, it has been noticed that average daily production of a worker is in the range of 80-90 units.
What steps will you suggest to ensure that the actual performance is in accordance with the performance as per 'time' and 'motion studies?

Following steps should be taken to ensure that the actual performance is in accordance with the performance as per time and motion studies:
(i) Deciding how much time is normally required to perform a certain job.
(ii) Determining a fair day’s work.
(iii) Determining the number of workers to be employed according to the amount of work.
(iv) Study the movements of an operator of a machine involved in a task with a view to eliminate useless/superfluous movements.
(v) Apply differential piece wage system to reward efficient workers.


How are employees motivated to improve their performance when the organisation uses internal sources of recruitment?State.

When the recruitment takes place through internal sources, the employees know that the promotions in the organisations will take place from within the organisation. This motivations them to perform to the best of their capabilities so as to get entitled for the promotions.


Define 'organizing ' as a function of management.

Organising refers to the procedures off aligning the  activities in a certain order. This function of management contains designing the roles and directing the people towards the accomplishment of goals with the focus on enabling people to work together and implementing the plans for successful attainment of objectives.


Four Marks Question: 
K & K Co. Ltd. is engaged in manufacturing machine components. The target of production is 200 units daily. The company had been successfully attaining this target until two months ago, Over the last few months it has been observed that daily production varies between 150-170 units.
Identify the possible causes for the decline in production and the steps to be taken to achieve the desired targets.

The possible causes of the decline in production are-
1) There may be some defect in machinery.
2) Employees are not performing efficiently.
3) Sometimes employees may become lethargic.

The company can take the following steps to overcome these problems-
1) A company can replace the defective machine with a new one or get it repaired.
2) If employees are not performing efficiently, the company should give adequate training to their employees.
3) A company should keep close supervision of employees so that they don't act in a lethargic way.


Name and explain the type of plan which decides whether an organisation should adapt functional or divisional structure? 

Policies are generic statements, which are basically a guide to channelize energies towards a particular strategy. It is an organization’s general way of understanding, interpreting and implementing strategies. Like for example, most companies have a return policy or recruitment policy or pricing policy etc. Policies are made across all levels of management, from major policies at the top-most level to minor policies. The managers need to form policies to help the employees navigate a situation with predetermined decisions. They also help employees to make decisions in unexpected situations.



Explain any three functions performed by a supervisor that are vital to any organisation.

A supervisor refers to a person who directly oversees the activities of the workers. In the organisational hierarchy he lies immediately above the worker. A supervisor performs the following functions.
(i)He is in direct contact with the workers and thereby, guides and supports the workers.He also helps in maintaining harmony and unity among the workers.
(ii)He acts as a link between the manager and the workers.Through the supervisor,the management communicates the idea and policies to the  workers. On the other hand,the workers are also able to communicate their problems and grievances to the management through the supervisor. 
(iii)Supervisor ensures that the workers work efficiently and as per the targets to achieve the overall goals of the organisation.


Two years ago Madhu completed her degree in food technology. She worked for sometime in a company manufacturing chutneys, pickles and murabbas. She was not happy in the company and decided to have her own organic food processing unit for the same. She set the objectives and the targets and formulated action plan to achieve the same. One of her objective was to earn $$10 \%$$ profit on the amount invested in the first year. $$11$$ was decided that raw materials like fruits, vegetables, spices etc. will be purchased on three months credit from farmers cultivating organic crops only. She also decided to follow the steps required for marketing of the products through her own outlets. She appointed Mohan as a Production Manager who decides the exact manner in which the production activities are to be carried out. Mohan also prepared a statement showing the number of workers that will be required in the factory throughout the year. Madhu informed Mohan about her sales target for different products, area wise for the forthcoming quarter. While working on the production table a penalty of Rs $$100$$ per day for not wearing the caps, gloves and apron was announced. Quoting lines from the above pare identify and explain the different types of plans discussed. 

The different types of plans discussed in the paragraph are listed below. 
1. Objective 'One of her objective was to earn $$10 \%$$ profit on the amount invested in the first year"
An objective is the goal that a management desires to achieve. By stating the objective, the management broadly defines what is to be done. 
2. Poky-"Raw materials like fruits, vegetables, spices etc. will be purchased on three months credit from farmers cultivating organic crops only."
A policy is a general statement that aims at channelling the efforts of the organisation in a particular direction. It forms the general response or a course of action to be followed in a particular situation. 
3. Procedure "Decided. follow the steps required for marketing of the products through her own outlets" A procedure is a set of routine steps defined in a chronological order that are to be followed for the enforcement of a policy. 
4. Method: The exact manner in which the production activities are to be carried out A method defines the way or manner in which a particular task can be performed. It considers one step of an entire procedure and defines the step to be taken for the completion of the given task. 
5. Rule "Penalty of $$Rs \,100$$ per day for not wearing the caps, gloves and aprons was announced" A rule refers to a standard or specific statement that gives information about what is to be done and what is not to be done. Rules are the simplest type of plans. 
6. Budget- "Mohan also prepared a statement showing the number of workers that will be required in the factory throughout the year" Budget refers to a numerically expressed financial statement that defines the targets to be achieved & policies to be followed in a specific period. 


Radhika and Vani who are young fashion designers left their jobs with a famous fashion designer chain to set-up a company 'Fashionate Pvt. Ltd.' They decided to run a boutique during the day and coaching classes for entrance examination of National Institute of Fashion Designing in the evening. For the coaching centre they hired the first floor of a nearby building. Their major expense was money spent on photocopying of notes for their students. They thought of buying a photocopier knowing fully that their scale of operations was not sufficient to make full use of the photocopier.
In the basement of the building of 'Fashionate Pvt. Ltd.' Praveen and Ramesh were carrying on a printing and stationery business in the name on 'Neo Prints Pvt. Ltd.' Radhika and Praveen with the proposal to buy a photocopier jointly which could be used by both of them withous making separate investment, Praveen agreed to this.
Identify the factor affecting capital requirements of 'Fashionate Pvt. Ltd.'

The factor affecting the fixed capital requirements of 'Fashionate Pvt. Ltd.' is level of collaboration. At times, business organisations undergo collaboration with each other and jointly establish certain facilities. In such case, an individual organisations requirement for fixed capital reduces.


Mega Ltd. was manufacturing water-heaters. In the first year of its operations, the revenue earned by the  company was just sufficient to meet its costs. To increase the revenue, the company analysed the reasons of less revenue. After analysis, the company decided
(i)To reduce the labour cost by shifting the manufacturing unit to a backward area where labour was available at a very low rate.
(ii)To start manufacturing solar water-heaters and reduce the  production of electric water-heaters slowly.
This will not only help in converting the  risk, but also help in meeting other objectives too.

(a)The objective of the management that is being discussed here is 'organisational objective'.The total revenue earned by an organisation should be such that it is bale to sufficiently cover the various costs and expenses. That is, the revenue earned should be such that the organisation is able to continue operations in the long run. In addition, it should be focus on growth in terms of sales,production, etc.
(b) Following are the two values involved in the situation:
(i)Promotion of employment in backward areas.
(ii)Adoption of environment friendly methods of production


Differentiate between formal and informal organisation on the basis of the following:
(i)Meaning
(ii)Origin
(iii)Authority
(iv)Flow of communication
(v)Nature

 Basis of difference Formal organisationInformal organisation 
 Meaning 'Formal organisation' refers to the relationship between authorities as defined by the management. Refers to the  relationship based on personal and informal relationship among the employees.
 Origin The structure originates from the rules and policies of the management.  The structure originates from the social interactions among the employees.
 Authority Authority is defined by the profile and managerial positions.  Authority is defined by the personal qualities of the employees.
 Flow of communication Communication flows through the scalar chain. No planned route of communication is followed.
 Nature Formal organisations are rigid Informal organisations are flexible


With the help of any four points,explain the importance of 'Decentralization' in an organization.

Decentralisation refers to the dispersal of the decision making power among the middle and lower level managers. The following points highlight the importance of decentralisation.
(i) Initiative: Decentralisation allows a sense of freedom to the lower managerial levels as it lets them take their own decisions. It gives them a higher degree of autonomy to take initiative. Moreover, it promotes a feeling of self-confidence and self-reliance among them.When the power is delegated to the lower level managers , they learn to face new challenges and find solution for the problems themselves. This helps in spotting those potential managers who can take the needed initiative.
(ii)Managerial competence: Once the authority is delegated to the managers at lower levels, it provides them the needed opportunity to develop themselves. It provides them with the opportunity to gain experience and thereby, develop the skills and knowledge to face new challenges. Decentralisation gives them a chance to prove their talent and get ready for higher positions. It also helps in pre-identification of the future managers who are well-equipped with the necessary talent required to deal with managerial problems.
(iii)Control: Decentralisation helps in evaluating the performance of the organisation in a better manner. Decentralistaion helps in analysing and evaluating the performance of each department separately. Thus, the extent of achievement of each department and their contribution to the overall objectives of the organisations can be easily evaluated.
(iv)Active decision making: Since through decentralisation, the authority of making decision is passed on to lower levels of management, decision are taken quickly and timely. This is because the decision can be taken at the nearest points of action which thereby, helps in easy adjudication of the problems.


State any four advantage of external sources of recruitment.

External sources refer to the sources that are exogenous to the organisation,i.e.they are available outside the organisation. The following are the benefits of external sources of recruitment.
(i)Infusion of new talent:When vacancies are filled through external sources of recruitment, there is infusion of new blood in the organisation. This improves the scope for increasing the organisational efficiency.
(ii)Wide range of choice: External sources have a benefit over internal sources as they provide a wide range of choices for selection.In internal sources, this choice gets restricted to a very few people. When external sources, such as advertising or placement agencies, are used for recruiting,a wide variety of applicants apply for the job vacancies and hence the organisation gets various option to select from.
(iii)New enterprise: In case a firm is newly established, it cannot use internal sources for recruitment.Hence,it has to opt for external sources such as employment exchanges or advertising for attracting new applicants.
(iv)Specialised personnel: If external sources are used, then an organisation has the advantages of hiring specialised and trained candidates for particular jobs. As technology keeps changing, the existing employees may not be able to handle new technologies and hiring new talent becomes a necessity.


Give any two characteristics of 'Organization Climate' that influence the behaviour of individuals and act as a non-financial incentive.

The following characteristics of 'Organizational Climate' that influence the behaviour of individuals and act as a non-financial incentive:
a. Autonomy of individuals
b.Appropriate reward orientation


What are the disadvantages of divisional structure?

Following are the disadvantages of divisional structure -
(a) Conflict may arise among different divisions with reference to allocation of funds and further a particular division may seek to maximize its profits at the cost of other divisions.
(b) It may lead to an increase in costs since there may be a duplication of activities across products. Providing each division with a separate set of similar functions increases expenditure.
(c) It provides 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 organizational interests.


What is the aim of production? What are its factors?
Or
'Every production is organised by combining land, labour, physical capital and human capital'. Explain

The aim of production is to produce the goods and services that we want. There are four factors of production:
(i) Land. The first requirement of production is land, and other natural resources such as water, forests, minerals.
(ii) Labour. Labour is the next necessary factor for production. Some production activities require highly educated workers to perform the necessary tasks. Other activities require workers who can do manual work. Each worker provides the labour necessary for production.
(iii) Physical Capital. Physical capital means the variety of inputs required at every stage during production. The following items come under it.
$$\bullet$$ Tools, machines, buildings. Tools and machines range from very simple tools such as a farmer's plough to sophisticated machines such as generators, turbines, computers, etc. Tools, machines, buildings can be used in production over many years, and are called fixed capital.
$$\bullet$$ Raw material and money in hand. Production required a variety of raw materials such as yarn, clay. Also, some money is always required during production to make payments and buy other necessary items. Raw materials and money in hand are known as working capital because they are used up in production.
(iv) Human Capital. The last but not the least is human capital without which we cannot produce best results. In other words, we need knowledge and enterprise to be able to put together the above three requirements of production i.e. land, labour and physical capital and produce an output either to use ourselves or to sell in the market.


What do you mean by fixed capital?

Fixed capital is the portion of the total capital outlay of a business invested in physical assets such as factories, vehicles, and machinery that stay in the business. Those materials which can be used in production over many years are called fixed capital. Fixed capital is capital or money that we invest in fixed assets. In other words, money that we invest in assets of a durable nature. These are assets that we repeatedly use over a long period. We do not resell fixed assets as part of our everyday business operations. We use fixed assets in the production of our company’s income or for administrative purposes.


Differentiate between 'formal' and 'informal' organisation on the basis of 'flow of communication'.

The difference between formal organisation on the basis of 'flow of communication' is below

In formal organisation communication takes place through a properly defined scalar chain.In informal organisation communication can take place in any direction as there is no planned communication.


Define 'Decentralisation'.

Decentralization refers to a situation which exists as a result of systematic delegation of authority throughout the organization. Decentralization is a situation where  all the authoritative power is distributed among the hierarchical structuring of the organization and not solely to the managers.


Aradhana and Gandharv are heads of two different departments in 'Yumco Ltd' They are efficient managers and are able to motivate the employee of their respective departments to improve performance. However, their drive to excel in their own sphere of activity instead of giving emphasis on objectives of the enterprise has hindered the interaction between the departments that Aradhana and Gandharv are beading. Often there are inter-departmental conflicts and they have become incompatible. This has proved to be harmful in the fulfilment of the organisational objectives. The situation has deteriorated to such an extent that the CEO of 'Yumco Ltd'. has hired a consultant, Rashmi, to resolve the problem. After studying the situation closely, Rashmi found that the problem has arisen due to inflexibility and a narrow perspective on the part of both Aradhana and Gandharv. She is of the view that this situation is a result of the type of organisation structure 'Yumco Ltd.' has adopted.
From the information, identify the organisational structure adopted by 'Yumco Ltd.' and state any three advantages of the structure so identified.

The organizational structure adopted by 'Yumco Ltd' is Funtional structure as per which the organization is divided into various departments of work fuctions to operate. Aradhana and Gandharv are the managers of two different departments that operate to function the organization. The advantage of such type of organization structure are specialization in a specific department of work and easy co-odrination and co-operation between the employees.


Answer the following question:
Give three points in support of the statement, "Organising is an important function of management".

Three points in support of the statement:
1. Organizing brings specialization in the organization by dividing the whole task into small units called jobs. 
2. It results in optimum utilization of resources. 
3. It brings clarity in working relationship and sets authority and responsibility of each level of Management.


Answer the question briefly.
Explain any two sources of external recruitment used in today's world.

Any two sources of external recruitment are:
1. Campus recruitment- Where company approach universities for hiring educational professionals for the company. 
2. Media Advertising- Company advertise the vacant job position of their company in the selected media to invite applications from the interested people.


Explain the various steps involved in the process of organising.

Main steps involved in the process of organizing an Organisation are: 1. Identification and Division of Work 2. Departmentalisation 3. Assignment of Duties 4. Establishing Reporting Relationships!

1. Identification and Division of Work:

The process of organising starts with the identification and division of work. The whole work is to be divided into manageable activities so that duplication is avoided and work can be completed as per predetermined goals.

2. Departmentalisation:

Departmentalisation refers to the process of grouping the activities of similar nature under same departments. This facilitates specialisation and coordination in the organisation.

Following are the various ways of departmentalisation:

(i) On the basis of functions:

Numerous activities are grouped into different departments on the basis of various functions. For example, Purchase Department for purchase functions, Finance Department for financing activities etc.

(ii) On the basis of type of products manufactured:

In this case, activities are grouped into different departments on the basis of products manufactured or produced by organisation. For example, textile division, food division etc.

(iii) On the basis of territory:

Here, activities are grouped into offices/branches on the basis of four directions (or locations) North, East, West, South (NEWS) e.g., Southern Zone, Eastern Branch etc.

3. Assignment of Duties:

Once the departments have been formed; the next step is to assign the work to the employees according to their skills and competencies. In order to ensure effective performance in an organization, it is essential that a balance is created between the nature of a job and ability of the employee responsible for that job.

4. Establishing Reporting Relationships:

Establishing responsibility relationships in an organisation structure implies the allocation of authority and responsibility among employees of the enterprise in such a way that each person should know who is responsible to whom and for what.



Answer the following question:
Explain the first five steps involved in selecting suitable work force in an organisation.

The first five steps involved in selecting suitable work force are:
1. Preliminary screening 
2. selection test which includes Intelligence test, aptitude test etc. 
3. Employment interview.
4. Checking background and references.
5. Selection decision. 


Discuss the need for the principles of management.

The need for the principles of management are:

1. The principles are directed towards organisational objectives. 

2. The principles are not rigid rules but general guidelines for the manager. 

3. The principles are based on cause and effect relationship.

4. The principles are very flexible in nature. 

5. The principles results in optimum utilization of the resources allocated in the business.



Business organisation is a part of _________.

A business organization is an entity aimed at carrying on the commercial enterprise by providing goods or services, to meet the needs of the customers.
The different forms of business organizations are Sole Proprietorship, General Partnership, Limited Partnership, Corporation, "S" Corporation, and Limited Liability Company.
So customers are more important than any stockholders, the workers, or the management. Without customers, there is no business. So the main purpose of the business organization is to serve and satisfy its customers. The organization's vision statement provides the future state of the organization to strive to reach.


State any three points which highlight the importance of delegation for an organisation.

  • Through delegation, a manager is able to divide the work and allocate it to the subordinates. This helps in reducing his work load so that he can work on important areas such as - planning, business analysis etc.
  • With the reduction of load on superior, he can concentrate his energy on important and critical issues of concern. This way he is able to bring effectiveness in his work as well in the work unit. This efficiency helps a manager to prove his ability and skills in the best manner.
  • Delegation of authority is the ground on which the superior-subordinate relationship stands. An organization functions as the authority flows from top level to bottom. This in fact shows that through delegation, the superior-subordinate relationship become meaningful. The flow of authority is from top to bottom which is a way of achieving results.


Why is it that organizations are not always able to accomplish all their objectives?

Planning does not guarantee success:
Sometimes managers have false sense of security that plans have worked successfully in past so these will be working in future also. There is a tendency in managers to rely on pretested plans.
It is not true that if a plan has worked successfully in past, it will bring success in future also as there are so many unknown factors which may lead to failure of plan in future. Planning only provides a base for analysing future. It is not a solution for future course of action.


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 unemployed youth. On the evaluation of different ways, it was decided to take the help of local residents. To achieve the desired goal various activities were identified like:
(a) Purchase of necessary items like dustbins, garbage bags, brooms etc.
(b) Collection of garbage
(c) Disposal of garbage etc..
After the identification of different activities the work was allocated to different members.
(i) Identify the concepts of management involved in the above situation and quote the lines which help in their identification.
(ii) Also identify the values which the company wants to communicate to the society

Planning and organizing are the two concepts involved in the above situation.
Lines for planning:
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 unemployed youth.
a campaign to create awareness among people for developing clean surroundings in their area.
A line for organizing:
To achieve the desired goal various activities were identified like:
(a) Purchase of necessary items like dustbins, garbage bags, brooms etc.
(b) Collection of garbage
(c) Disposal of garbage etc.
Following are the values stated in the above paragraph-
Respect for environment
Teamwork
Fulfilling social responsibility



Name the organisation in which employees are allowed to communicate freely and there are no rules and regulations. 

A formal organisation has a definite structure. It is depicted by lines and boxes on the organisation chart (organisation chart is a visual representation of organisation structure). Informal organisation does not have any formal structure. It cannot be precisely shown on the organisation chart. Relationships amongst people change according to changes in their interests and liking for each other.

Workers of production department may consult sales managers to solve their personal problems rather than production manager and vice versa. There are no superiors and subordinates in informal organisation. People communicate with each other in all forms; vertical, horizontal and diagonal.


Name the concept which reduces the workload of a manager. 

Delegation of authority reduces the workload of a manager. Managers who practice delegation of authority are definitely better decision makers than those managers who do not delegate authority. The former ones get the benefit of the skills of their subordinates.


Which organisational structure is suitable for a multi-product manufacturing company? 

A type of organizational configuration that groups together those employees who are responsible for a particular product type or market service according to workflow. The divisional structure of a business tends to increase flexibility, and it can also be broken down further into product, market and geographic structures.
A divisional organizational structure gives a larger business enterprise the ability to segregate large sections of the company's business into semi-autonomous groups. While generally better suited to larger organizations, in some circumstances a divisional organizational structure may also benefit a smaller business. In all cases, groups are mostly self-managed and focused upon a narrow aspect of the company's products or services. As with any organization structure, divisional structures have both strengths and weaknesses.


Which organisational structure is suitable for a uni-product manufacturing company?

Functional structure
A functional organization structure is a hierarchical organization structure wherein people are grouped as per their area of specialization. These people are supervised by a functional manager with expertise in the same field. This expertise helps him effectively utilize the skills of employees, which ultimately helps organizations in achieving its business objectives.
In this kind of organization structure, people are classified according to the function they perform within the organization. The organizational chart for a functional organization structure shows the president, vice president, finance department, sales department, customer service, administration, etc.



State any three advantages that a functional structure offers to an organisation.

Advantages of functional structure:
(i) It leads to minimal duplication of effort.
(ii) It makes training of employees easier. 
(iii) It ensures that different functions get due attention.


 In an organisation, sales department could not meet its target due to delay in supply by production department. The production department is blaming the purchase department for delay in supply of raw material, even the employees working in these department are not focussing on their department's objective. The employees seem to be very confused and do not know where to focus.
(a) Name the concept of management missing in this organisation.
(b) State the principle of management violated above. 

(a) Coordination, 
(b) Unity of Direction


"An organisation is manufacturing medicines, cosmetics, and soaps." What kind of organisational structure is suitable for this organisation and why?

The divisional organizational structure organizes the activities of a business around geographical, market, or product and service groups. Thus, a company organized on divisional lines could have operating groups for the United States or Europe, or for commercial customers, or for the green widget product line. Each such division contains a complete set of functions. Thus, the green widget division would handle its own accounting activities, sales and marketing, engineering, production


What is the objective of decentralisation?

The following are the main objectives which a decentralized system of organization seeks to achieve:
  • To relieve the burden of work on the chief executive.
  • To develop the managerial faculties.
  • To motivate the lower level of workers.
  • To take quick and appropriate decision at the level which it is really required with a view of exploiting the opportunity available and
  • To reduce the communication work and fill the gap in communication, if any.



Which of the following is the ideal situation?
(i) Authority > Responsibility
(ii) Authority = Responsibility
(iii) Authority < Responsibility

Authority = Responsibility.


What type of structures can a formal organisation have?

The formal organizational structure includes:
Functional Organizational Structure
Linear Organizational Structure
Matrix Organizational Structure
Staff & Line Organizational Structure
Functional structure 
Divisional structure


In ABC Ltd. all the decisions are taken by top level management only. Which policy is followed by organisation? Explain the drawback of this organisation. 

Centralization-
A concentration of control of an activity or organization under a single authority or top level management.
The following are the main drawbacks or disadvantages of centralization:
1.  Centralization Is Unsuitable For Large Organization
2.  Manager Is Overburdened
3.  Possibility Of Power Misuse
4.  Low Morale Motivation
5.  Lack Of Environmental Adaptation


Authority can be delegated but accountability can not be." Explain.

As per this principle, authority can be delegated but accountability is absolute and cannot be delegated. The person who delegates authority remains accountable to his own boss for the work performance of his subordinates.
For example, the directors of a computer manufacturing company have asked their production manager to achieve a target production of 150 computers per day. The production manager has asked his five foremen to achieve this target. Two of them could not achieve the target. 
In this case production manager is responsible and accountable for non-completion of target because by passing authority and work to foremen, manager cannot get rid of his responsibilities and accountability. 


Define job description.

A broad, general, and written statement of a specific job, based on the findings of a job analysis. It generally includes duties, purpose, responsibilities, scope, and working conditions of a job along with the job's title, and the name or designation of the person to whom the employee reports. Job description usually forms the basis of job specification.


Does decentralization increases the importance of subordinates or reduces it?

Decentralization increases the importance of subordinates by giving them authority or decision making power. 


Name the type of organisation in which
(a) Friendly relationship exists among members
(b) Official relationship exists among the members

In informal organisation friendly relationship exists among members.
In formal organization official relationship exists among the members.


If responsibility is more than the authority. What would be its impact on working of an organisations? 

If responsibility is more than the authority, performance of responsibility will become a difficult task


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 to creative talents.
(i) Suggest how the organisation can overcome the problems faced by it.
(ii) Give any two benefits it will derive from your suggestion.

(i)- An informal organization should be taken into practice.
(ii)- Two benefits the firm will derive, are: 
     (a) The faster spread of communication and quick feedback. 
     (b) It helps to fulfill the social needs of the members and enhances their job satisfaction. 
     (c) Fulfillment of organizational objectives.


What would be the effect of No delegation of work? 

There will be delay in work and manager will become overburdened, apart from the following effects.

() Lack of skills development
() Lack of career enhancement
() Reduced opportunity to build personal strengths and learn from experience
() Lack of confidence for taking on new goals and actions in the future


"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 this viewpoint? Justify your answer by giving proper arguments. 

Authority can be delegated but responsibility can never be delegated.


What should a growing company adapt; centralised or decentralised policy? 

Decentralized policy:
To distribute the administrative powers or functions of (a central authority) over a less concentrated area.


State whether the principle of Scalar Chain is followed in informal organisation or not? 

Informal organization does not follow scalar chain.


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 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.  

Decentralization is a systematic delegation of authority at all levels of management and in all of the organization. In a decentralization concern, authority in retained by the top management for taking major decisions and framing policies concerning the whole concern. Rest of the authority may be delegated to the middle level and lower level of management.


State the relationship between authority, responsibility and accountability.

Responsibility.
Responsibility indicates the duty assigned to a position. The person holding the position has to perform the duty assigned. It is his responsibility. The term responsibility is often referred to as an obligation to perform a particular task assigned to a subordinate. In an organisation, responsibility is the duty as per the guidelines issued.
Authority.
Authority is the right or power assigned to an executive or a manager in order to achieve certain organizational objectives.
Accountability.
Every employee/manager is accountable for the job assigned to him. He is supposed to complete the job as per the expectations and inform his superior accordingly. Accountability is the liability created for the use of authority. It is the answerability for performance of the assigned duties


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.
(i) Identify and briefly explain the concept used by Aman Chadha in the above case which helped him in focusing on objectives.
(ii) Also, state any four points of importance of the concept identified in (i) above.

Delegation is the assignment of any responsibility or authority to another person (normally from a manager to a subordinate) to carry out specific activities. It is one of the core concepts of management leadership. However, the person who delegated the work remains accountable for the outcome of the delegated work. Delegation empowers a subordinate to make decisions
(ii) Importance of delegation of authority:
(a) Effective management: It helps in effective management as the managers get more time to concentrate on important matters. 
(b) Employee development: It helps in the development of employees as the employees get more opportunities to utilize their talent. 
(c) The motivation of employees: It helps to motivate employees as the employees feel encouraged arid try to improve their performance further.
(d) Better coordination: It helps in better co-ordination by avoiding overlapping of duties.


Name the process of entrusting responsibility, authority and creating accountability of the person whom work has been handed over. Explain the importance of this process. 

Importance of delegation process-
() Efficiency: Efficiency arises when duty is transferred to people with skills that match the role.
() Development: Team leaders have skills and abilities that can be passed down to other team members. The best way to do this is to teach them the new skills and then delegate duties to them for them to utilize the already learnt skills. 
() Empowerment: To empower is to allow others become experts at what they do even if they surpass your ability. This encourages personal development of team members leading to the overall team success.
() Leadership: A good leader does not do, he plans and coaches. After coaching, team members will take roles assigned to them and accomplish with or without supervision.
() Improved decision making: Another importance of delegation is that it always leads to better decisions. This is because supervisors are closer to the scene and are part of everything that happens and they only need to be empowered to make justified judgments..
() Managers are relieved from heavy workload: Everyday, responsibilities accumulate. When a lot of duties are handled by one person, inefficiency creeps in resulting to wrong decisions that negatively influence the company operations.
() Enhances faster decisions: Quick decision making is made possible as unnecessary bureaucratic channels initially followed to arrive to simple decisions are broken.On-the-spot-decisions save the organization a lot of time initially wasted.
() Builds morale and trains subordinates: When subordinates are allowed to make decisions on their own, they accept responsibility. This in turn improves their self-confidence and overall performance.



"The existence of informal organisation depends on the formal organisation." Comment. 

Informal organisation refers to network of social and friendly relations established between the employees working at different job positions. The network of these job positions is known as formal organisation. So the framework within which the informal organisation establishes gets created by formal organisation only.


Grouping of jobs of similar nature and organising these jobs as separate departments creates a particular type of organisational structure. Name that type of structure and explain any two advantage and disadvantages of that structure. 

Functional structure. 
Aadvantages:
1. Specialisation : When the activities are grouped according to the type of function then all the activities are related to one type only. So, the specialised and professional experts can be hired to supervise those activities. This leads to efficiency and specialisation. 
2. Easy supervision : The supervisor becomes familiar with the type of task to be performed because all tasks are related to one function only. As a result he can supervise and guide the employees who are performing those activities. 
Disadvantages
1. Difficulty in achieving organisation's goal : The departments become specialised in their own way only. They fail to see the prospects of whole organisation. As a result the organisational goal cannot be achieved. 
2. Departmental head's attitude : The departmental heads start thinking their departments as their functional empire and this leads to conflicts among various departments. 


The number of subordinates that can be effectively managed by a superior refers to which aspect of management?

The Span of Management refers to the number of subordinates who can be managed efficiently by a superior. Simply, the manager having the group of subordinates who report him directly is called as the span of management.


A Manager increased the production target from 500 units to 700 units per month but the authority to draw raw material was not given by him. The employees were not able to meet the new target. Who should be held responsible for this and which principle has been violated here? Explain. 

Authority is the legal right of person or superior to command his subordinates while accountability is the obligation of individual to carry out his duties as per standards of performance.
Authority flows from the superiors to subordinates, in which orders and instructions are given to subordinates to complete the task. It is only through authority, a manager exercises control. In a way through exercising the control the superior is demanding accountability from subordinates. If the marketing manager directs the sales supervisor for 50 units of sale to be undertaken in a month. If the above standards are not accomplished, it is the marketing manager who will be accountable. Therefore, we can say that authority flows from top to bottom and responsibility flows from bottom to top. Accountability is a result of responsibility and responsibility is result of authority. Therefore, for every authority an equal accountability is attached.


A company is manufacturing washing machines. There is a well-defined system of jobs which is clear and defines authority, responsibility and accountability in the company. But people are not allowed interact beyond their officially defined roles. As a result, the company is not able to adopt the changing business environment. The work force is also not motivated due to lack of social interaction. The company is facing problems of procedural delays and inadequate recognition to creative talents.
(a) Suggest how the organisation can overcome the problems faced by it.
(b) Give any two benefits it will derive from your suggestion.

(a). An informal organization is the social structure of the organization, as opposed to the formal structure of an organization. It establishes how an organization functions from a practical standpoint. The informal organization can work in concurrence with the formal organizational structure, parallel with it, or against it.
(b). Informal organization has the following benefits:
1.  Promotes social and cultural values:
Members of informal organization share common thoughts, social and cultural beliefs. Their interests are promoted which adds to the strength of the organization and a commitment to accomplish its formal goals.
2. Relief to top managers:
Social interactions lead to cooperation and coordination amongst people of different groups. It helps top managers achieve their formal goals efficiently. They are relied o the botheration of inspiring workers to work.
3. Supplement to managers’ capacities:
Sometimes managers are unable to awake official decisions without the support of theist. People of informal organization help managers by providing them the help and support that cuts across official chain of command.
4. Social satisfaction and security:
Members satisfy their social needs of interaction, recognition and acceptance by others in informal organist ions. Their needs of friendship, love and support are satisfied in these organs tons.
5. Communication:
Communication travels much faster in informal transitions than formal organization. People discuss their work and non-work reacted problems with each other and find solutions without the support of superiors.
6. Better relationships:
If managers of formal organization develop and maintain cordial teat ions with managers of the informal organization, it promotes an environment of understanding. This helps to achieve formal goals of the organization efficiently.
7. Solve work-related problems:
People of different department’s discs their work-related problems and solve them on their own without waiting for instruction of superiors of their departments. A worker of the sales department, for example, can known details about production from his friend in the production department rather than his seniors in the sales department.
8. Promotes creativity:
People get a chance to exploit their creativity and work according to their judgment and skills without waiting for superiors’ instruction. They think of new ideas and apply them in practice without the fear of rejection by their superiors.
9. Self-control:
Employees frame their own targets and self control their activates. Control need to be exercised from the top.
10. Restraint on manager’s discretion:
Informal origination checks wrong acts of managers. Managers cannot frame goals, policies and plans not acceptable to members of informal organizations provide them relief against official boredom and tiredness. The provide them an outlet for satisfying their needs of interaction, love and friendship.
12. Quick feedback to managers:
Managers can get quick feedback on their official decisions from member through informal channels of communication. This helps in knowing how well their policies are bating accepted and implemented by organist members.


Rohan, a sole proprietor, was running food catering business in North Delhi. He got great success and profit margin in this business. Due to excess demand in the market he expanded his business with separate departments as purchase, production, finance and marketing.
Which type of organisational structure would you suggest him? Enumerate its two benefits.

Functional Organisation.
Functional organization has been divided to put the specialists in the top position throughout the enterprise. This is an organization in which we can define as a system in which functional department are created to deal with the problems of business at various levels. Functional authority remains confined to functional guidance to different departments. This helps in maintaining quality and uniformity of performance of different functions throughout the enterprise.
Benefits of functional organisation:
  • Specialization- Better division of labor takes place which results in specialization of function and it’s consequent benefit.
  • Effective Control- Management control is simplified as the mental functions are separated from manual functions. Checks and balances keep the authority within certain limits. Specialists may be asked to judge the performance of various sections.


State any one objective of organizing. 

Unity of action:
Objectives provide unity of action. All organisational activities related to all departments (production, marketing etc.) are targeted towards organisational objectives.


The Principal of ABC Public School ordered the staff that they will be allowed to sit in the staffroom situated in their block. No teacher will be allowed to sit in another staffroom. During school's hours, teachers can meet teachers of their department only for work related matters. He wants each teacher to strictly work as per rules and directions given by him.
(a) Identify the type of organisation in this and state disadvantage of such organisation.
(b) State the value violated in the above case. 

(a) Formal organization.
Formal organisation is a well-defined structure of authority and responsibility that defines delegation of authority and relationships amongst the organisational members. It works along pre-defined set of policies, plans, procedures, schedules and programmes. Most of the decisions in formal organisation are based on pre-determined policies.It is a deliberately designed structure with formal authority, responsibility, rules, regulations and channels of communication. Some degree of formalization is necessary for organisations to function effectively; to avoid taking time-consuming decisions, to handle conflicting situations and exercise control over the activities of subordinates.
Though formal structure of relationships helps to achieve organisational goals, it suffers from the following limitations:

1. Loss of initiative:
As too much emphasis is placed upon formal rules and regulations, workers do not use their creative and innovative skills to perform organisational tasks. There is loss of initiative and innovative abilities due to strict adherence to rules.

2. Unsatisfied social needs:
Man is a social being. He needs to interact with people and share his feelings at-work and off-work with others. In a formally designed organisation structure, social needs remain unsatisfied as people are related to each other through a formal chain of command to discuss only official matters with each other. Social interactions are altogether ignored.

(b) Social need. Social values are missing:
Man is a social being. He needs to interact with people and share his feelings at-work and off-work with others. In a formally designed organisation structure, social needs remain unsatisfied as people are related to each other through a formal chain of command to discuss only official matters with each other. Social interactions are altogether ignored.


Manager of XYZ Ltd, is over burdened with routine work and is unable to concentrate on its objectives and other important issues of the firm. To solve this, problem which management concept should be followed by manager? Also explain the related function. 

Delegation
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the manager should delegate authority. Delegation of Authority means division of authority and powers downwards to the subordinate. Delegation is about entrusting someone else to do parts of your job. Delegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.


Is organisational structure essential to provide relationship between various positions in the organisation? 

Yes, organisational structure is essential to provide relationship between various positions in the organisation.


Vishal is production manager in an auto company. He held a meeting with production unit including supervisor, foreman and employees. He sets the target to produce 1000 units in one month and assures them to give full co-operation. He delegates powers to operational level to achieve the targets in the time.
(a) Identify organisational activity which Vishal communicated to his subordinates and explain its benefits.
(b) Identify the value involved in above case. 

(a) A delegation of authority is a process in which the authority and powers are divided and shared amongst the subordinates. When the work of a manager gets beyond his capacity, there should be some system of sharing the work. This is how the delegation of authority becomes an important tool in organization function.
The importance of delegation can be justified by -
() The delegation, a manager is able to divide the work and allocate it to the subordinates. This helps in reducing his workload so that he can work on important areas such as - planning, business analysis etc.
With the reduction of load on superior, he can concentrate his energy on important and critical issues of concern. This way he is able to bring effectiveness in his work as well in the work unit. This efficiency helps a manager to prove his ability and skills in the best manner.
() Delegation of authority is the ground on which the superior-subordinate relationship stands. An organization functions as the authority flows from top level to bottom. This in fact shows that through delegation, the superior-subordinate relationship become meaningful. The flow of authority is from top to bottom which is a way of achieving results.
() Delegation of authority in a way gives enough room and space to the subordinates to flourish their abilities and skill. Through delegating powers, the subordinates get a feeling of importance. They get motivated to work and this motivation provides appropriate results to a concern. Job satisfaction is an important criterion to bring stability and soundness in the relationship between superior and subordinates. Delegation also helps in breaking the monotony of the subordinates so that they can be more creative and efficient.
() Delegation of authority  help to both superior and subordinates. This, in a way, gives stability to a concern’s working. With effective results, a concern can think of creating more departments and divisions flow working. This will require creation of more managers which can be fulfilled by shifting the experienced, skilled managers to these positions. This helps in both virtual as well as horizontal growth which is very important for a concern’s stability.

(b) cooperation- the action or process of working together to the same end.



Short answer type of question:
What are the steps in the process of organising? 

While organizing, the top managers carry out following important tasks:-

  • In this general eight-stepped process, the top management first fixes the common objectives of the organisation.
  • In the second step, they (top management) identify all the activities (i.e. works or jobs) which are required to achieve these predefined objectives.
  • In the third step, they group similar (related) activities and make their individual departments.
  • In the fourth step, they define the responsibilities (duties) of all the staff members (employees and managers).
  • In the fifth step, they delegate authority to staff members.
  • In the sixth step, the authority relationships between superiors and subordinates are established.
  • In the seventh step, they provide the staff members with all the essential requirements like money, machines, materials, etc., which are used for achieving the objectives.
  • In the eighth final step, they co-ordinate the efforts of all staff members and direct it towards achieving the common objectives of the organisation.


Samir Gupta started a telecommunication 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 its products went up. To increase production the company decided to recruit additional employees. Samir Gupta, who was earlier taking all decisions for the company had to selectively disperse the authority. He believed that subordinates are competent, capable and resourceful and can assume responsibility for 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.
(a) Identify the concept used by Samir Gupta through which he was able to steer his company to greater heights. 
(b) Also explain any three points of importance of this concept.

Delegation.
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the manager should delegate authority. Delegation of Authority means division of authority and powers downwards to the subordinate. Delegation is about entrusting someone else to do parts of your job. Delegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.
The Importance of Delegation is because it leads to:
  • Efficiency: Efficiency arises when duty is transferred to people with skills that match the role. Let the team members carry out routine activities for themselves while you plan and strategize for the next step. This will ensure you have adequate time for planning, less stress and improved efficiency.
  • Development: Team leaders have skills and abilities that can be passed down to other team members. The best way to do this is to teach them the new skills and then delegate duties to them for them to utilize the already learnt skills. The importance of delegation is in team development as well; as you can outsource team development to experienced members of your team thereby increasing their mentoring skills as well as decision making.
  • Empowerment: To empower is to allow others become experts at what they do even if they surpass your ability. This encourages personal development of team members leading to the overall team success.
  • Leadership: A good leader does not do, he plans and coaches. After coaching, team members will take roles assigned to them and accomplish with or without supervision. When tasks are completed, new tasks can be taken with maximum confidence.


Discuss the elements of delegation. 

Elements of Delegation
  • Authority - in context of a business organization, authority can be defined as the power and right of a person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve the organizational objectives. Authority must be well- defined. All people who have the authority should know what is the scope of their authority is and they shouldn’t misuse it. Authority is the right to give commands, orders and get the things done. The top level management has greatest authority.
  • Responsibility - is the duty of the person to complete the task assigned to him. A person who is given the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was held responsible are not completed, then he should not give explanations or excuses. Responsibility without adequate authority leads to discontent and dissatisfaction among the person. Responsibility flows from bottom to top. The middle level and lower level management holds more responsibility. The person held responsible for a job is answerable for it. If he performs the tasks assigned as expected, he is bound for praises. While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that.
  • Accountability - means giving explanations for any variance in the actual performance from the expectations set. Accountability can not be delegated. For example, if ’A’ is given a task with sufficient authority, and ’A’ delegates this task to B and asks him to ensure that task is done well, responsibility rests with ’B’, but accountability still rests with ’A’. The top level management is most accountable. Being accountable means being innovative as the person will think beyond his scope of job. Accountability, in short, means being answerable for the end result. Accountability can’t be escaped. It arises from responsibility.


Draw a diagram depicting a divisional structure.


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Bhuvan & Co. are running a shoe manufacturing company successfully. So they planned to expand their business activities by adding more line of products, i.e., leather bags, belts and garments. Which type of structure would you recommend after expansion and why?  

Bhuvan & Co. are manufacturing only one product so the most suitable organisation structure is functional but on expansion if they are adding more line of products then the suitable organisation structure will be divisional structure as it is a perfect structure for multi-product manufacturing company due to following reasons: (Give advantages of divisional structure). 
1. Product specialization : All the activities related to one type of product are grouped under one department only which bring integration and co-ordination in the activities.
2. Fast decision making : The decision are taken much faster in divisional structure because there is no dependence on other departments for taking decision. 


A company manufacturing sewing machines set up in 1946 follows formal organisation structure. It is facing lot of problems such as delays in decision-making. As a result it is not able to adapt to the changing business environment. The work force is also not motivated. There is a problem of red-tapism and employees' turnover is very high. 
You 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. In which sector can the company diversify keeping in mind the declining market for the product the company is manufacturing.

The advice to the company is - to give due importance to informal organisational structure along with formal. They should allow informal structure also to develop. This will help company to overcome the problems of delay in decisions, lack of motivation, etc. As information travel very fast in informal organisational structure. The company may get following benefits with informal organisational structure. Explain the advantages of informal structure 
1. Fast communication : Informal structure does not follow scalar chain so there can be faster spread of communication.
2. Fulfills social needs : Informal communication gives due importance to psychological and social need of employees which motivate the employees.
Company can diversify its activities by introducing embroidery machines, it can also design special machines keeping in mind the requirement of ready-made garment manufacturers, etc. By diversifying in the same field it can get maximum utilization of existing resources only.


Long Answer Type Question:
Decentralisation is an optional policy. Explain why an organisation would choose to be decentralised. 

Decentralization refers to the dispersal of the decision making power among the middle and lower level managers. It is an optional policy as it depends on the organisation how much power the top level management wants to delegate to the lower levels.
An organisation would choose to be decentralized because of the following importance of decentralization:
1. Develops Initiative among Subordinates: Decentralization helps the managers at the lower levels to take all those decisions, which are for the betterment of organisation, on their own and to develop solutions for solving the various problems they face. This helps in enhancing confidence and self-reliance among the employees.
2. Quick Decision Making: Decentralization promotes independent and quick decision making by subordinates as they are close to the operations and are in constant touch with all activities of their departments. Approval from various levels being not required, decisions can be taken much faster on their own.
3. Relief for Top Management: It relieves the top executives of excessive workload as the common and day to day routines are assigned to the subordinates. The saved time can be utilized by them in making strategic plans and providing direction to the organisation for further growth.


Royal Ltd. decided that whenever an employee reaches a particular age the employee will be promoted. Influenced by this plan of the company several employees from other companies also joined the firm. But within few days they realized that the firm has pre-determined relation structure without free communication.
On the basis of this, answer the following questions.
(a) Identify the type of organization described here.
(b) Point out any two limitations of this type of organisation.  

  • Formal Organisation.
Formal organisation is “a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability, the whole consciously designed to enable the people of the enterprise to work most effectively together in accomplishing their objectives.”
  • Limitations of Formal organisation:
1. Loss of initiative: As too much emphasis is placed upon formal rules and regulations, workers do not use their creative and innovative skills to perform organisational tasks. There is loss of initiative and innovative abilities due to strict adherence to rules.
2. Unsatisfied social needs: Man is a social being. He needs to interact with people and share his feelings at-work and off-work with others. In a formally designed organisation structure, social needs remain unsatisfied as people are related to each other through a formal chain of command to discuss only official matters with each other. Social interactions are altogether ignored.


Distinguish between centralization and decentralization. 

Delegation vs Decentralization

Points

Delegation

Decentralization

Nature

It usually involves two people – a manager and his subordinate.

It involves the entire organization – from the top management to individual departments.

Control

The manager or the delegator controls it.

The control lies with the concerned departments or sections.

Need

All organizations need delegation to get things done. Delegating authority is essential to assign responsibility.

This is an optional mode of working. Organizations can also work in a centralized manner.

Responsibility

The delegator can delegate authority but the responsibility remains with him. The delegator is accountable for the task.

The head of the department is responsible for the activities performed under him. Therefore, responsibility is fixed at the department-level.


Very Short Answer Question: 
Explain briefly the meaning of organising.

Organizing is that managerial process which seeks to define the role of each individual (manager and operator) towards the attainment of enterprise objectives; with due regard to establishing authority-responsibility relationships among all; and providing for co-ordination in the enterprise-as an in-built device for obtaining harmonious groups action.


Very Short Answer Question: 
'Authority can be delegated but not the accountability'. Explain.

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 is absolute.


Very Short Answer Question: 
Give any two objectives of organising.

1. Basis for managerial functions:
Objectives provide basis for all managerial functions. Planning, organizing, staffing, directing and controlling are directed towards organisational objectives. Unless organisational objectives are clearly identified, managerial functions will not be effectively carried out.

2. Basis for organisational existence:
Objectives provide foundation or legitimacy to business organisation. An organisation will not come into existence if it has no objective to achieve. Objectives enable the organisation to make its profile (identify its strengths and weaknesses) and relate it with environmental profile (opportunities and threats). Organisation can, thus, relate itself with the environment.


Very Short Answer Question: 
Distinguish between formal and informal organisation.

There are two types of organization structure, that can be formal organization and informal organization. An organisation is said to be formal organisation when the two or more than two persons come together to accomplish a common objective, and they follow a formal relationship, rules, and policies are established for compliance, and there exists a system of authority.
On the other end, there is an informal organisation which is formed under the formal organisation as a system of social relationship, which comes into existence when people in an organisation, meet, interact and associate with each other. In this article excerpt, we are going to discuss the major differences between formal and informal organisation.


Very Short Answer Question: 
In what kind of organisation is functional structure more suitable and why?

Functional organisation would prove to be more effective when size of organisation is large, has diverted activities and operations require high amount of specializations. It promotes control and coordination within a department, increased managerial and increased efficiency, results in higher profits.


Long Answer Type Question:
How is a functional structure different from a divisional structure?

Functional Structure is one in which the reporting relationships of the organization are bifurcated according to their functional area.
Whereas, an organizational structure wherein the organizational functions are classified into divisions as per product or service lines, market, is called Divisional Structure.


Very Short Answer Question: 
In what kind of organisation is divisional structure more suitable and why?

Divisional structure is suitable to organizations having several products with each product having distinct features, or for organizations having coverage of wide geographical area, or having distinct segments. Dividing the organization into several autonomous divisions allows it may advantages of functional structure.


Very Short Answer Question: 
Briefly explain the elements of delegation. 

Elements of Delegation
  • Authority - in context of a business organization, authority can be defined as the power and right of a person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve the organizational objectives. Authority must be well- defined. All people who have the authority should know what is the scope of their authority is and they shouldn’t misuse it. Authority is the right to give commands, orders and get the things done. The top level management has greatest authority.
  • Responsibility - is the duty of the person to complete the task assigned to him. A person who is given the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was held responsible are not completed, then he should not give explanations or excuses. Responsibility without adequate authority leads to discontent and dissatisfaction among the person. Responsibility flows from bottom to top. The middle level and lower level management holds more responsibility. The person held responsible for a job is answerable for it. If he performs the tasks assigned as expected, he is bound for praises. While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that.
  • Accountability - means giving explanations for any variance in the actual performance from the expectations set. Accountability can not be delegated. For example, if ’A’ is given a task with sufficient authority, and ’A’ delegates this task to B and asks him to ensure that task is done well, responsibility rest with ’B’, but accountability still rest with ’A’. The top level management is most accountable. Being accountable means being innovative as the person will think beyond his scope of job. Accountability, in short, means being answerable for the end result. Accountability can’t be escaped. It arises from responsibility.


Very Short Answer Question: 
Define 'organising' as a structure.

Organizing is that managerial process which seeks to define the role of each individual (manager and operator) towards the attainment of enterprise objectives; with due regard to establishing authority-responsibility relationships among all; and providing for co-ordination in the enterprise-as an in-built device for obtaining harmonious groups action.


Very Short Answer Question: 
How does organising function of management help in bringing administrative efficiency? 

Effective administration - The organization structure is helpful in defining the jobs positions. The roles to be performed by different managers are clarified. Specialization is achieved through division of work. This all leads to efficient and effective administration.


Long Answer Questions: 
Explain the meaning and process of organizing. 

Organizing is a “process of defining the essential relationships among people, tasks and activities in such a way that all the organisation’s resources are integrated and coordinated to accomplish its objectives efficiently and effectively”. — Pearce and Robinson
Organizing is a step-by-step process. At each step, an important task is performed by the administrators working at the top-level of management.
While organizing, the top managers carry out following important tasks:-
  1. In this general eight-stepped process, the top management first fixes the common objectives of the organisation.
  2. In the second step, they (top management) identify all the activities (i.e. works or jobs) which are required to achieve these predefined objectives.
  3. In the third step, they group similar (related) activities and make their individual departments.
  4. In the fourth step, they define the responsibilities (duties) of all the staff members (employees and managers).
  5. In the fifth step, they delegate authority to staff members.
  6. In the sixth step, the authority relationships between superiors and subordinates are established.
  7. In the seventh step, they provide the staff members with all the essential requirements like money, machines, materials, etc., which are used for achieving the objectives.
  8. In the eighth final step, they co-ordinate the efforts of all staff members and direct it towards achieving the common objectives of the organisation.


Long Answer Questions: 
What is meant by Divisional structure of an organisation? Explain any two of its advantages and limitations.

Dividing the whole organisation according to the major products to be manufactured by them is known as Divisional Organizational Structure. For example Samsung, Reliance etc. This type of structure is devised by the business firms when they are dealing in different categories of products. It helps in coping with the emerging complexities due to diversification of products.
Following are the important advantages of divisional structure:
1. Development of Skills: Handling all aspects relating to a product line enhances various skills in a divisional head and thus makes him worthy of promotion to next higher level.
2. Accountability: Performance measurement of each division is easily possible since the divisional heads are accountable for profits. This further helps in fixing responsibilities and taking appropriate remedial action in case of poor performance.
Disadvantages of divisional structure are as under:
1. Duplication of Activities: Similar types of activities performed in all divisions leads to duplication of work and increased expenditure.
2. Conflict: There may be conflicts among different divisions over allocation of funds. Further, the divisions may also try to maximize their profits at the cost of other divisions.


Short Answer Question: 
Explain the meaning and relation between authority and responsibility

Authority is the legal right of person or superior to command his subordinates while accountability is the obligation of individual to carry out his duties as per standards of performance Authority flows from the superiors to subordinates, in which orders and instructions are given to subordinates to complete the task. It is only through authority, a manager exercises control. In a way through exercising the control the superior is demanding accountability from subordinates. 


Long Answer Questions: 
What is meant by functional structure of an organisation? Explain any two of its advantages and limitations.

Functional Structure:
This is the simplest & the most prevalent form of organizational structure. Functional organisational structure refers to the structure in which different departments are created on the basis of major functions performed in the organisation.

Advantages of functional structure are as follows:
1. Specialization: Under functional organisation, an employee is required to perform the same job within a department regularly. Thus, this improves the performance of the employees and leads to specialization in the organisation.
2.Coordination: Since the workers perform similar jobs, it becomes very easy to control and coordinates their activities.

Disadvantages of functional structure are as under:
1. Hindrance in Organisational Objectives: Under functional structure, more emphasis is given on achieving of departmental objectives rather than the overall organisational objectives. Such a practice leads to functional empires and places hindrance in the interaction between two or more departments. Hence, organisational objectives may not get achieved.
2. Ineffective Coordination: Establishing coordination in functionally differentiated departments becomes very difficult.


Long Answer Questions
What is meant by decentralization of authority? How is it different from delegation of authority? 

Decentralization can be defined as even and systematic distribution of authority at every level of management. Under decentralization every employee working at different levels gets some share in the authority. Decentralization is a policy matter and managers plan in advance whether to go for centralized or decentralized policy.
Decentralization is extension of delegation. In delegation we multiply the authority with two whereas in decentralization the authority is multiplied by many because systematic delegation taking place at every level will result in evenly distribution of authority and responsibility at every level and result in decentralization. If delegation is restricted to certain levels only then there will be no complete decentralization also.


Long Answer Questions: 
Define delegation and differentiate it with decentralization. Explain any three points.

Delegation is the assignment of any responsibility or authority to another person (normally from a manager to a subordinate) to carry out specific activities. It is one of the core concepts of management leadership. However, the person who delegated the work remains accountable for the outcome of the delegated work. Delegation empowers a subordinate to make decisions.

Major Differences Between Delegation and Decentralization.
1. Responsibility:
In delegation, a superior delegates or transfers some rights and duties to a subordinate but his responsibility in respect of that work does not end.
On the other hand, decentralization relieves him from responsibility and the subordinate becomes liable for that work.
2. Process:
Delegation is process while decentralization is the end result of a deliberate policy of making delegation of authority to the lowest levels in managerial hierarchy.
3. Need.
Delegation is almost essential for the management to get things done in the organisation i.e., delegating requisite authority for performance of work assigned. Decentralization may or may not be practiced as a systematic policy in the organisation.
4. Control:
In delegation the final control over the activities of organisation lies with the top executive while in decentralization the power of control is exercised by the unit head to which the authority has been delegated.
5. Authority:
Delegation represents selecting dispersal of authority whereas decentralization signifies the creation of autonomous and self-sufficient units or divisions.
6. Scope:
Delegation hardly poses any problem of co- ordination to the delegator of authority. While decentralization poses a great problem in this regard since extreme freedom of action is given to the people by creating self-sufficient or autonomous units.
7. Good Results:
Decentralization is effective only in big organisations whereas delegation is required and gives good results in all types of organisations irrespective of their size.
8. Nature:
Delegation is the result of human limitation to the span of management. Decentralization is the other hand, is the result of the big size and multifarious functions of the enterprise.


Very Short Answer Question: 
Explain in brief the process of delegation.

Delegation of authority is the base of superior-subordinate relationship, it involves following steps:-

  1. Assignment of Duties - The delegator first tries to define the task and duties to the subordinate. He also has to define the result expected from the subordinates. Clarity of duty as well as result expected has to be the first step in delegation.
  2. Granting of authority - Subdivision of authority takes place when a superior divides and shares his authority with the subordinate. It is for this reason, every subordinate should be given enough independence to carry the task given to him by his superiors. The managers at all levels delegate authority and power which is attached to their job positions. The subdivision of powers is very important to get effective results.
  3. Creating Responsibility and Accountability - The delegation process does not end once powers are granted to the subordinates. They at the same time have to be obligatory towards the duties assigned to them. Responsibility is said to be the factor or obligation of an individual to carry out his duties in best of his ability as per the directions of superior. Responsibility is very important. Therefore, it is that which gives effectiveness to authority. At the same time, responsibility is absolute and cannot be shifted. Accountability, on the others hand, is the obligation of the individual to carry out his duties as per the standards of performance.


Short Answer Question: 
Why is informal organisation considered better than formal organisation?

Informal organisation is considered better than formal organisation because:
(i) Communication and feedback is quick, as scalar chain is not followed.
(ii) It provides a sense of belonging and fulfills social needs of employees.
(iii) It enhances creativity and innovation.
(iv) It helps in fulfillment of goals through cooperation among employees.


Why is delegation of authority essential and not the decentralisation? 

Delegation is an essential part of every organisation. No organisations can work without using the concept of delegation as there is no individual who can do all the work himself only.
Delegation is a tool to get the work done effectively and efficiently through others whereas decentralization is required when an organisation grows and expands and only top level cannot manage it.
Especially in the present era due to liberalization and globalization fast decision is needed and quick decisions can be taken through decentralization only as it provides greater flexibility and freedom of action but still many organisations are working with little or no decentralization. It is a matter of choice and preference of top level management and not compulsory.


Long Answer Questions: 
Explain different types of organisational structures.

The organizational structure can be classified under following two types:
1. Functional Structure: This is the simplest & the most prevalent form of organizational structure. Functional organisational structure refers to the structure in which different departments are created on the basis of major functions performed in the organisation.
2.Divisional Structure: Dividing the whole organisation according to the major products to be manufactured by them is known as Divisional Organizational Structure. For example Samsung, Reliance etc. This type of structure is devised by the business firms when they are dealing in different categories of products. It helps in coping with the emerging complexities due to diversification of products.


Three Marks Question:
What is meant by 'formal organisation'? List any two limitations of 'formal organisation'. 

Formal organisation is a well-defined structure of authority and responsibility that defines delegation of authority and relationships amongst the organisational members. It works along pre-defined set of policies, plans, procedures, schedules and programmes. Most of the decisions in formal organisation are based on pre-determined policies.

LIMITATIONS:
1. Loss of initiative:
As too much emphasis is placed upon formal rules and regulations, workers do not use their creative and innovative skills to perform organisational tasks. There is loss of initiative and innovative abilities due to strict adherence to rules.
2. Unsatisfied social needs:
Man is a social being. He needs to interact with people and share his feelings at-work and off-work with others. In a formally designed organisation structure, social needs remain unsatisfied as people are related to each other through a formal chain of command to discuss only official matters with each other. Social interactions are altogether ignored.


One Mark Question:
Why is it easy to fix responsibility in formal organisation?

The formal organisation is officially set up.It clearly spells out the responsibilities and role of each individual in the organisation. The main feature of this structure is accountability and responsibility. Therefore, it is easier to fix responsibility in formal organisation.


One Mark Question:
Define 'organising' as a function of management. 

Organising is a “process of defining the essential relationships among people, tasks and activities in such a way that all the organisation’s resources are integrated and coordinated to accomplish its objectives efficiently and effectively”. — Pearce and Robinson


Three Marks Question:
What is meant by 'formal organisation'? List any two advantages of formal organisation. 

Formal organisation is “a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability, the whole consciously designed to enable the people of the enterprise to work most effectively together in accomplishing their objectives.”
Formal organisation has the following merits:
1. It clearly defines objectives of the organisation and authority- responsibility relationships amongst people to attain those objectives.
2. It results in optimum utilisation of scarce organisational resources.


One Mark Question:
Differentiate between 'formal' and 'informal' organisation on the basis of 'origin.'

Origin
Formal                                                         Informal
Deliberately by top management.             Spontaneously by members.


Long Answer Questions:
What is meant by Informal organisation? State features of Informal Organisation.

The informal organisation may be defined as “a network of personal and social relationships that arise spontaneously as people associate with one another in a work environment. It is composed of all the informal groupings of people within a formal organisation.” 
Features of Informal Organisation:
  • Social needs: The basic purpose of informal organisation is fulfillment of social and personal needs of people. People share common thoughts, feelings and interests different from formal organisational goals. Their social needs of friendship, love and support are strengthened by informal organisations.
  • Informal leaders: Leaders are informally elected by group members. They strongly influence group activities and contribute to formal goals positively or negatively.
  • No rules and regulations: It has no fixed rules and regulations that govern functions of the organisation. Rules are framed and changed by people according to their convenience.
  •  No fixed tenure: It is formed at the will of people and dissolves at their will. It does not operate for a fixed time period. Dissolution of informal organisation also does not follow any legal procedure.


One Mark Question:
Give the meaning of 'Authority' as an element of delegation: 

Authority: To fulfill the responsibility, certain authority is delegated to the subordinate. Authority means the power to take decisions. Hence, the manager along with the responsibility also delegates authority to enable the subordinate to take decisions independently and accomplish the task efficiently.
The authority must be equal to the responsibility, this means, a certain level of authority is delegated which is sufficient to complete the responsibility. The authority also flows upward, as we go up in the scalar chain, the authority increases.


One Mark Question:
Differentiate between 'formal' and 'informal' organisation on the 'flow of communication'. 

There is Official communication in Formal organisation; whereas there is grapevine in Informal organisation.


Long Answer Questions:
What is meant by Decentralization? State any four points of importance of Decentralization. 

Decentralization is a systematic delegation of authority at all levels of management and in all of the organization. In a decentralization concern, authority in retained by the top management for taking major decisions and framing policies concerning the whole concern. Rest of the authority may be delegated to the middle level and lower level of management.
The Importance of Delegation is because it leads to;
  1. Efficiency: Efficiency arises when duty is transferred to people with skills that match the role. Let the team members carry out routine activities for themselves while you plan and strategize for the next step. This will ensure you have adequate time for planning, less stress and improved efficiency
  2. Development: Team leaders have skills and abilities that can be passed down to other team members. The best way to do this is to teach them the new skills and then delegate duties to them for them to utilize the already learnt skills. The importance of delegation is in team development as well; as you can outsource team development to experienced members of your team thereby increasing their mentoring skills as well as decision making.
  3. Empowerment: To empower is to allow others become experts at what they do even if they surpass your ability. This encourages personal development of team members leading to the overall team success.
  4. Leadership: A good leader does not do, he plans and coaches. After coaching, team members will take roles assigned to them and accomplish with or without supervision. When tasks are completed, new tasks can be taken with maximum confidence.


One Mark Question:
Grouping similar nature jobs into larger units called department is the second step in the process of one of the functions of management. Identify the function.

Organizing is the function of management in which similar nature of jobs are grouped together into larger units called department.


Four Mark Question:
What is meant by delegation? Explain the concept of Authority' and 'Responsibility'.

Delegation of authority is a process in which the authority and powers are divided and shared amongst the subordinates. When the work of a manager gets beyond his capacity, there should be some system of sharing the work. This is how delegation of authority becomes an important tool in organization function. Through delegation, a manager, in fact, is multiplying himself by dividing/multiplying his work with the subordinates.
Authority - in context of a business organization, authority can be defined as the power and right of a person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve the organizational objectives. Authority must be well- defined. All people who have the authority should know what is the scope of their authority is and they shouldn’t misuse it. Authority is the right to give commands, orders and get the things done. The top level management has greatest authority.
Responsibility - is the duty of the person to complete the task assigned to him. A person who is given the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was held responsible are not completed, then he should not give explanations or excuses. Responsibility without adequate authority leads to discontent and dissatisfaction among the person. Responsibility flows from bottom to top. The middle level and lower level management holds more responsibility. The person held responsible for a job is answerable for it. If he performs the tasks assigned as expected, he is bound for praises. While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that.


Four Mark Question:
"Organising involves a series of steps that need to be taken in order to achieve the desired goals." Explain these steps.

Organizing is a process of establishing work relation, flow of work and information and grouping of activities, identification of authority and responsibility of employees in the organisation. Various steps of organizing process are as follows.
  1. Identification of tasks: All the relevant activities and tasks are identified. Number of activities depends upon the objectives of the organization. It should be done effectively such that no important activity is omitted or repeated.  
  2. Grouping jobs: Once all the activities are identified the next step is grouping of the related jobs. This leads to set up of the departments and divisions in the organization like production department, finance department, marketing department, and personnel department.
  3. Assigning work: When activities are divided among departments the next step would be to appoint suitable persons for the various tasks. Experts in their fields are appointed as appointed as heads of their departments and for lower positions peoples are appointed.
  4. Delegation of authority: When some work is assigned to someone then he must be given some authority to do that work effectively. Assigning work and delegation goes parallel to each other. Assigning work without proper authority is meaningless.
  5. Coordination: As all activities in organization are distinct but they are interdependent so their must be coordination among the departments. In absence of coordination ultimate goal of the organization will not be achieved. Success of the organization is fully dependent on better coordination between the different divisions and managers.


Four Mark Question:
"Organising is the process of defining and grouping the activities of the enterprise and establishing the authority relationship among them." In the light of this statement, explain the steps in the process of organising. 

Organizing is a process of establishing work relation, flow of work and information and grouping of activities, identification of authority and responsibility of employees in the organisation. Various steps of organizing process are as follows.
  1. Identification of tasks: All the relevant activities and tasks are identified. Number of activities depends upon the objectives of the organization. It should be done effectively such that no important activity is omitted or repeated.
  2. Grouping jobs: Once all the activities are identified the next step is grouping of the related jobs. This leads to set up of the departments and divisions in the organization like production department, finance department, marketing department, and personnel department.
  3. Assigning work: When activities are divided among departments the next step would be to appoint suitable persons for the various tasks. Experts in their fields are appointed as appointed as heads of their departments and for lower positions peoples are appointed.
  4. Delegation of authority: When some work is assigned to someone then he must be given some authority to do that work effectively. Assigning work and delegation goes parallel to each other. Assigning work without proper authority is meaningless.
  5. Coordination: As all activities in organization are distinct but they are interdependent so their must be coordination among the departments. In absence of coordination ultimate goal of the organization will not be achieved. Success of the organization is fully dependent on better coordination between the different divisions and managers.


Four Mark Question:
State any two advantages and two limitations of informal organisation.

Informal organisation has the following merits:
1. Promotes social and cultural values: Members of informal organisation share common thoughts, social and cultural beliefs. Their interests are promoted which strengthens the organisation and promotes commitment to accomplish its formal goals.
2. Relief to top managers: Social interactions lead to cooperation and coordination amongst people of different groups. It helps top managers achieve the formal goals efficiently. They do not have to officially inspire the workers to work.

Informal Organisation has the following disadvantages:
1.Role conflict: As members of formal and informal organisation, people face role conflict. If group goals are different from formal goals, members conform to group goals. If the organisation allows lunch break of 30 minutes but group extends it to 45 minutes to socialize, members face conflict in their formal and informal roles.
2. Rumour: “Rumour is grapevine information that is communicated without secure standards of evidence being present.” It means spreading false information. Information flows virtually in all directions, to every individual at every level of the organisation. False information (rumor) spreads in informal organisation at a very fast speed.


Four Mark Question:
Nemaj Gupta stoned a company 'YoYo 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 decisions for the company, had to selectively disperse the authority. He believed that people are competent, capable and resourceful and can assume responsibility for 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:
(a) Identify the concept used by Neeraj Gupta through which he was able to steer his company to greater heights.
(b) Also explain any three points of importance of this concept.

(a)- The concept used by Nemaj Gupta through which he was able to steer his company to greater heights is decentralization.
(b)- An organization would choose to be decentralized because of the following importance of decentralization:

1. Develops Initiative among Subordinates:
Decentralization helps the managers at the lower levels to take all those decisions, which are for the betterment of the organization, on their own and to develop solutions for solving the various problems they face. This helps in enhancing confidence and self-reliance among the employees.

2. Develops Managerial Talent for the Future: Decentralisation provides a chance to the employees to prove their abilities by handling various assignments independently. Such opportunities to take decisions to increase their knowledge & experience at all levels. It also provides qualified manpower for fulfilling the top positions through promotions.

3. Quick Decision Making:
Decentralization promotes independent and quick decision making by subordinates as they are close to the operations and are in constant touch with all activities of their departments. Approval from various levels being not required, decisions can be taken much faster on their own.

4. Relief for Top Management:
It relieves the top executives of excessive workload as the common and day to day routines are assigned to the subordinates. The saved time can be utilized by them in making strategic plans and providing direction to the organization for further growth


Four Mark Question:
Define organising 'as a process' and 'as a structure'.

Organizing is a process of maintaining the flow of work and information and grouping of activities, identification of authority and responsibility of employees in the organization.
Organizational structure is the network of authority and responsibility to the member. It is the mechanism that highlights position, department, and level of management. The structure is selected according to its requirement. 


Four Mark Question:
Distinguish between 'Formal' and 'Informal' organisation on the basis of (a) Meaning, (b) Origin, (c) Authority, (d) Flow of communication. 

On the basis ofFormal organizationInformal organization 
MeaningAn organization type in which the job of each member is clearly defined, whose authority, responsibility and accountability are fixed is a formal organization.An organization formed within the formal organization as a network of interpersonal relationship, when people interact with each other, is known as informal communication.
OriginDeliberately by top managementSpontaneously by members
AuthorityMembers are bound by a hierarchical structureAll members are equal
Flow of communicationOfficial communication Grapevine communication


Four Mark Question:
'Authority' and 'Responsibility' are two important elements of delegation of authority. Explain.

  • Authority - in context of a business organization, authority can be defined as the power and right of a person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve the organizational objectives. Authority must be well- defined. All people who have the authority should know what is the scope of their authority is and they shouldn’t misutilize it. Authority is the right to give commands, orders and get the things done. The top level management has greatest authority.
  • Responsibility - is the duty of the person to complete the task assigned to him. A person who is given the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was held responsible are not completed, then he should not give explanations or excuses. Responsibility without adequate authority leads to discontent and dissatisfaction among the person. Responsibility flows from bottom to top. The middle level and lower level management holds more responsibility. The person held responsible for a job is answerable for it. If he performs the tasks assigned as expected, he is bound for praises. While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that.


Four Mark Question:
"Organisation is the harmonious adjustment of specialised parts of the accomplishment of some common purpose or purposes." In the light of this statement, explain any four points of importance of organising.

1. Facilitates Efficient Management: A good organisation avoids confusion, delays and duplication of work. It increases the promptness and efficiency, and it motivates the employees to do their best. All this results in efficient management. Thus, we can say, good organisation facilitates efficient management.
2. Helps in Growth of Enterprise: A good organisation helps in the growth, diversification and expansion of the enterprise. Today's big and giant enterprises are the results of their best organisation.
3. Facilitates Co-ordination: A good organisation co-ordinates the activities of different individuals, groups and departments in order to achieve the objectives of the business.
4. Encourages Creativity, Initiative and Innovation: A good organisation encourages creativity in the enterprise. This results in brings new ideas, imaginations, visions, methods, etc. It also encourages initiative and innovations.


Four Mark Question:
State the steps in the organising process.

Organizing is a process of establishing work relation, flow of work and information and grouping of activities, identification of authority and responsibility of employees in the organisation. Various steps of organizing process are as follows.
  1. Identification of tasks: All the relevant activities and tasks are identified. Number of activities depends upon the objectives of the organization. It should be done effectively such that no important activity is omitted or repeated.  
  2. Grouping jobs: Once all the activities are identified the next step is grouping of the related jobs. This leads to set up of the departments and divisions in the organization like production department, finance department, marketing department, and personnel department.
  3. Assigning work: When activities are divided among departments the next step would be to appoint suitable persons for the various tasks. Experts in their fields are appointed as appointed as heads of their departments and for lower positions peoples are appointed.
  4. Delegation of authority: When some work is assigned to someone then he must be given some authority to do that work effectively. Assigning work and delegation goes parallel to each other. Assigning work without proper authority is meaningless.
  5. Coordination: As all activities in organization are distinct but they are interdependent so their must be coordination among the departments. In absence of coordination ultimate goal of the organization will not be achieved. Success of the organization is fully dependent on better coordination between the different divisions and managers.


Six Mark Question:
What is meant by 'functional structure' of organisation? Explain any two advantages and two limitations of this structure. 

Functional organization has been divided to put the specialists in the top position throughout the enterprise. This is an organization in which we can define as a system in which functional department are created to deal with the problems of business at various levels. Functional authority remains confined to functional guidance to different departments. 
Merits of Functional Organization
  • Specialization- Better division of labour takes place which results in specialization of function and it’s consequent benefit.
  • Effective Control- Management control is simplified as the mental functions are separated from manual functions. Checks and balances keep the authority within certain limits. Specialists may be asked to judge the performance of various sections.
Demerits of Functional Organization
  • Confusion- The functional system is quite complicated to put into operation, especially when it is carried out at low levels. Therefore, co-ordination becomes difficult.
  • Lack of Co-ordination- Disciplinary control becomes weak as a worker is commanded not by one person but a large number of people. Thus, there is no unity of command.


Four Mark Question:
State any four advantages of formal organisation.

Advantages of Formal Organisation:
1. Systematic Working:Formal organisation structure results in systematic and smooth functioning of an organisation.

2. Achievement of Organisational Objectives:Formal organisational structure is established to achieve organisational objectives.

3. No Overlapping of Work:In formal organisation structure work is systematically divided among various departments and employees. So there is no chance of duplication or overlapping of work.

4. Co-ordination:Formal organisational structure results in coordinating the activities of various departments.


Six Mark Question:
Delegation is the entrustment of responsibility and authority to another and the creation of accountability for performance. Explain the elements of delegation in the light of this statement.

  1. Responsibility: The responsibility means, assigning the work to an individual. The managers assign certain responsibility to the subordinates for the completion of certain tasks on his behalf. An individual has to apply all his physical and mental ability to get the task completed efficiently. Here it is to be noted, that manager can only assign the responsibility, and in the case of the subordinate fouls, the manager will be answerable to his seniors. Thus, the responsibility flows upwards.
  2. Authority: To fulfill the responsibility, certain authority is delegated to the subordinate. Authority means the power to take decisions. Hence, the manager along with the responsibility also delegates authority to enable the subordinate to take decisions independently and accomplish the task efficiently.
  3. Accountability: Accountability means, to check whether the subordinates are performing their responsibilities in an expected manner or not. The Accountability cannot be delegated which means, in the case of non-completion of the task, the manager will only be held responsible for it, not the subordinates. The accountability also flows upward, i.e. subordinates will be accountable to the manager and the manager to his superior.


Six Mark Question:
'Delegation is a key element in effective organising'. How? State by giving any six reasons.

The Importance of Delegation is because it leads to;
Efficiency: Efficiency arises when duty is transferred to people with skills that match the role. Let the team members carry out routine activities for themselves while you plan and strategize for the next step. This will ensure you have adequate time for planning, less stress and improved efficiency
Development: Team leaders have skills and abilities that can be passed down to other team members. The best way to do this is to teach them the new skills and then delegate duties to them for them to utilize the already learnt skills. The importance of delegation is in team development as well; as you can outsource team development to experienced members of your team thereby increasing their mentoring skills as well as decision making.
Empowerment: To empower is to allow others become experts at what they do even if they surpass your ability. This encourages personal development of team members leading to the overall team success.
Leadership: A good leader does not do, he plans and coaches. After coaching, team members will take roles assigned to them and accomplish with or without supervision. When tasks are completed, new tasks can be taken with maximum confidence.


Six Mark Question:
A Steel Manufacturing Company has the following main jobs:
(i) Manufacturing
(ii) Finance
(iii) Marketing
(iv) Personnel and
(v) Research and development.
Which type of organisational structure is to be chosen for this type of a company and why? State any five advantages of this organisational structure.

Functional organization has been divided to put the specialists in the top position throughout the enterprise. This is an organization in which we can define as a system in which functional department are created to deal with the problems of business at various levels. Functional authority remains confined to functional guidance to different departments. This helps in maintaining quality and uniformity of performance of different functions throughout the enterprise.

Merits of Functional Organization
  • Specialization- Better division of labour takes place which results in specialization of function and it’s consequent benefit.
  • Effective Control- Management control is simplified as the mental functions are separated from manual functions. Checks and balances keep the authority within certain limits. Specialists may be asked to judge the performance of various sections.
  • Efficiency- Greater efficiency is achieved because of every function performing a limited number of functions.
  • Economy- Specialization compiled with standardization facilitates maximum production and economical costs.
Expansion- Expert knowledge of functional manager facilitates better control and supervision.


Six Mark Question:
What is meant by 'Delegation'? Explain any four points which highlight the importance of delegation in an organisation. 

Delegation of authority is a process in which the authority and powers are divided and shared amongst the subordinates. When the work of a manager gets beyond his capacity, there should be some system of sharing the work. This is how delegation of authority becomes an important tool in organization function.

Importance of Delegation:
1. Effective management:In the delegation process managers pass routine work to the subordinates. So they are free to concentrate on other important matters. The main job of managers is to get the work done effectively and by delegating the authorities and responsibilities managers can get the work done effectively and efficiently from the subordinates.
2. Employees’ Development:As a result of delegation employees get more opportunities to utilize their talents. It allows them to develop those skills which help them to perform complex task. Delegation help in making better future managers by giving them chance to use their skills, gain experience of work related to higher job position.
3. Motivation of employees:In the delegation when the manager is sharing his responsibilities and authority with the subordinates it motivates the subordinates as they develop the feeling of belonging and trust which is shown to them by their superiors. Some employees can be motivated by such kind of non-financial incentives.
4. Facilitates organisational growth:In the process of delegation when the managers are passing their responsibility and authority to the subordinates they keep in mind the qualification and capability of all the subordinates. This leads to division of work and specialization which is very important for organisational growth.


Four Mark Question:
Explain any four differences between 'Delegation' and 'Decentralization', specifying the bases of difference.

 Basis of comparison Delegation  Decentralization
 Meaning Delegation means handing over an authority from one person of high level to the person of low level. Decentralization is the final outcome achieved when the delegation of authority is performed systematically and repeatedly to the lowest level.
 
Accountability

 Superiors are accountable for the acts done by subordinates. Department heads are accountable for the acts of the concerned department.
 Requirement for all organization delegation of authority is very necessary.  It is an optional philosophy which may or may not is adopted by the organization.
 Relationship Creates a superior-subordinate relationship. A step towards the creation of semi-autonomous units.


Six Mark Question:
What is meant by 'decentralisation'? Explain any four points which highlight the importance of decentralisation in an organisation

Decentralization of authority means conscious/systematic efforts to bring dispersal (spreading) of decision making power to the lower levels of the Organisation. In decentralization, only broad powers will be reserved at the top level. Such powers include power to plan, organise, direct and control and maximum powers will delegated to the authority at the lower level.
Importance of Decentralization:
  • There is less burden on the Chief Executive as in the case of centralization.
  • In decentralization, the subordinates get a chance to decide and act independently which develops skills and capabilities. This way the organization is able to process reserve of talents in it.
  • In decentralization, diversification and horizontal can be easily implanted.
  • In decentralization, concern diversification of activities can place effectively since there is more scope for creating new departments. Therefore, diversification growth is of a degree.


Six Mark Question:
What is meant by 'Divisional Structure' of an organisation? Explain any two advantages and two limitations of this structure

Dividing the whole organisation according to the major products to be manufactured by them is known as Divisional Organizational Structure. For example Samsung, Reliance etc. This type of structure is devised by the business firms when they are dealing in different categories of products. It helps in coping with the emerging complexities due to diversification of products.
Following are the important advantages of divisional structure:
1. Development of Skills: Handling all aspects relating to a product line enhances various skills in a divisional head and thus makes him worthy of promotion to next higher level.
2. Accountability: Performance measurement of each division is easily possible since the divisional heads are accountable for profits. This further helps in fixing responsibilities and taking appropriate remedial action in case of poor performance.
Disadvantages of divisional structure are as under:
1. Duplication of Activities: Similar types of activities performed in all divisions leads to duplication of work and increased expenditure.
2. Conflict: There may be conflicts among different divisions over allocation of funds. Further, the divisions may also try to maximize their profits at the cost of other divisions.


Six Mark Question:
What is meant by Organisation Structure? Explain any one type of organisation structure.

An organizational structure is defined as “a system used to define a hierarchy within an organization. It identifies each job, its function and where it reports to within the organization.”
Functional organization has been divided to put the specialists in the top position throughout the enterprise. This is an organization in which we can define as a system in which functional department are created to deal with the problems of business at various levels. Functional authority remains confined to functional guidance to different departments. This helps in maintaining quality and uniformity of performance of different functions throughout the enterprise.


Six Mark Question:
Explain any four points of importance of delegation.

The importance of delegation can be justified by -
  1. Through delegation, a manager is able to divide the work and allocate it to the subordinates. This helps in reducing his work load so that he can work on important areas such as - planning, business analysis etc.
  2. With the reduction of load on superior, he can concentrate his energy on important and critical issues of concern. This way he is able to bring effectiveness in his work as well in the work unit. This effectivity helps a manager to prove his ability and skills in the best manner.
  3. Delegation of authority is the ground on which the superior-subordinate relationship stands. An organization functions as the authority flows from top level to bottom. This in fact shows that through delegation, the superior-subordinate relationship become meaningful. The flow of authority is from top to bottom which is a way of achieving results.
  4. Delegation of authority in a way gives enough room and space to the subordinates to flourish their abilities and skill. Through delegating powers, the subordinates get a feeling of importance. They get motivated to work and this motivation provides appropriate results to a concern. Job satisfaction is an important criterion to bring stability and soundness in the relationship between superior and subordinates. Delegation also helps in breaking the monotony of the subordinates so that they can be more creative and efficient


Six Mark Question:
Give the meaning of 'Organising' as a function of management. Explain the steps in the process of organising. 

Organizing is a process of establishing work relation, flow of work and information and grouping of activities, identification of authority and responsibility of employees in the organisation. Various steps of organizing process are as follows.
  1. Identification of tasks: All the relevant activities and tasks are identified. Number of activities depends upon the objectives of the organization. It should be done effectively such that no important activity is omitted or repeated.  
  2. Grouping jobs: Once all the activities are identified the next step is grouping of the related jobs. This leads to set up of the departments and divisions in the organization like production department, finance department, marketing department, and personnel department.
  3. Assigning work: When activities are divided among departments the next step would be to appoint suitable persons for the various tasks. Experts in their fields are appointed as appointed as heads of their departments and for lower positions peoples are appointed.
  4. Delegation of authority: When some work is assigned to someone then he must be given some authority to do that work effectively. Assigning work and delegation goes parallel to each other. Assigning work without proper authority is meaningless.
  5. Coordination: As all activities in organization are distinct but they are interdependent so their must be coordination among the departments. In absence of coordination ultimate goal of the organization will not be achieved. Success of the organization is fully dependent on better coordination between the different divisions and managers


Six Mark Question:
What is meant by 'Informal Organisation'? State the features of Informal organisation.

The informal organisation may be defined as “a network of personal and social relationships that arise spontaneously as people associate with one another in a work environment. It is composed of all the informal groupings of people within a formal organisation.”
Features of informal organisation:
(1) Informal organisational structure gets created automatically without any intended efforts of managers.
(2) Informal organisational structure is formed by the employees to get psychological satisfaction.
(3) Informal organisational structure does not follow any fixed path of flow of authority or communication.
(4) Source of information cannot be known under informal structure as any person can communicate with anyone in the organisation.
(5) The existence of informal organisational structure depends on the formal organisation structure.


Six Mark Question:
Explain any four points of importance of organising. 

  1. Specialization - Organizational structure is a network of relationships in which the work is divided into units and departments. This division of work is helping in bringing specialization in various activities of concern.
  2. Well defined jobs - Organizational structure helps in putting right men on right job which can be done by selecting people for various departments according to their qualifications, skill and experience. This is helping in defining the jobs properly which clarifies the role of every person.
  3. Effective administration - The organization structure is helpful in defining the jobs positions. The roles to be performed by different managers are clarified. Specialization is achieved through division of work. This all leads to efficient and effective administration.
  4. Sense of security - Organizational structure clarifies the job positions. The roles assigned to every manager is clear. Co-ordination is possible. Therefore, clarity of powers helps automatically in increasing mental satisfaction and thereby a sense of security in a concern. This is very important for job- satisfaction.


Six Mark Question:
What is meant by 'Informal organisation'? State any three advantages and any two disadvantages of this form of organisation. 

The informal organisation may be defined as “a network of personal and social relationships that arise spontaneously as people associate with one another in a work environment. It is composed of all the informal groupings of people within a formal organisation.”

Informal organisation has the following merits:
1. Promotes social and cultural values: Members of informal organisation share common thoughts, social and cultural beliefs. Their interests are promoted which strengthens the organisation and promotes commitment to accomplish its formal goals.
2. Relief to top managers: Social interactions lead to cooperation and coordination amongst people of different groups. It helps top managers achieve the formal goals efficiently. They do not have to officially inspire the workers to work.
3. Supplement to managers’ capacities: Sometimes managers are unable to take official decisions without the support of members. People of informal organisation help managers by providing them the help and support that cuts across official chain of command.

Limitations of Informal Organisation:
1.Role conflict: As members of formal and informal organisation, people face role conflict. If group goals are different from formal goals, members conform to group goals. If the organisation allows lunch break of 30 minutes but group extends it to 45 minutes to socialize, members face conflict in their formal and informal roles.
2. Rumour: “Rumour is grapevine information that is communicated without secure standards of evidence being present.” It means spreading false information. Information flows virtually in all directions, to every individual at every level of the organisation. False information (rumor) spreads in informal organisation at a very fast speed.



Six Mark Question:
With the help of any four points, explain the importance of 'delegation in an organisation'. 

The Importance of Delegation is because it leads to;
  1. Efficiency: Efficiency arises when duty is transferred to people with skills that match the role. Let the team members carry out routine activities for themselves while you plan and strategize for the next step. This will ensure you have adequate time for planning, less stress and improved efficiency
  2. Development: Team leaders have skills and abilities that can be passed down to other team members. The best way to do this is to teach them the new skills and then delegate duties to them for them to utilize the already learnt skills. The importance of delegation is in team development as well; as you can outsource team development to experienced members of your team thereby increasing their mentoring skills as well as decision making.
  3. Empowerment: To empower is to allow others become experts at what they do even if they surpass your ability. This encourages personal development of team members leading to the overall team success.
  4. Leadership: A good leader does not do, he plans and coaches. After coaching, team members will take roles assigned to them and accomplish with or without supervision. When tasks are completed, new tasks can be taken with maximum confidence.


Six Mark Question:
Give the meaning of essential elements of 'Delegation'. 

  1. Responsibility: The responsibility means, assigning the work to an individual. The managers assign certain responsibility to the subordinates for the completion of certain tasks on his behalf. An individual has to apply all his physical and mental ability to get the task completed efficiently.Here it is to be noted, that manager can only assign the responsibility, and in the case of the subordinate fouls, the manager will be answerable to his seniors. Thus, the responsibility flows upwards.
  2. Authority: To fulfill the responsibility, certain authority is delegated to the subordinate. Authority means the power to take decisions. Hence, the manager along with the responsibility also delegates authority to enable the subordinate to take decisions independently and accomplish the task efficiently.
  3. Accountability: Accountability means, to check whether the subordinates are performing their responsibilities in an expected manner or not. The Accountability cannot be delegated which means, in the case of non-completion of the task, the manager will only be held responsible for it, not the subordinates. The accountability also flows upward, i.e. subordinates will be accountable to the manager and the manager to his superior


Six Mark Question:
 "If we delegate the authority, we multiply it by two; if we decentralise it, we multiply it by many." In the light of this statement, explain any four points of importance of decentralisation.

Decentralization is an optional policy, yet it is important in the organisation.
It refers to systematic delegation of authority at all levels of management and in all departments of organisation to take decision.

Importance of decentralization:
A- Develops Initiative Among Subordinates
It helps to promote self-reliance and confidence amongst ’the subordinates. This is because, lower managerial levels have been given freedom to take their own decisions and they learn to depend on their own judgement. It also helps to identify those executives, who have the potential to become dynamic leaders.
B- Develops Managerial Talent for the Future
Formal training along with experience of handling independent assignments helps to create a reservoir of qualified and capable managers, who can take up more challenging positions in the upcoming ventures of the organisation.
C- Quick Decision-making
Under decentralization, authority to make decisions is placed in the hands of those, who are responsible for executing the decisions. Since, decisions are taken at levels nearest to the point of execution, there is no delay or distortion of information.
D- Relief to Top Management
It helps to reduce the amount of direct supervision over subordinates by giving them freedom to take decision and act on their own. This reduces the workload of top executives and they can devote their time and attention to important policy matters.
E- Facilitates Growth
It provides greater autonomy to lower level managers and departmental heads.This encourages them to function more efficiency to prove their supremacy, and facilitate expansion and growth of the organisation.


Six Mark Question:
What is meant by 'Formal Organisation'? State any three advantages and any two limitations of 'Formal Organisation'. 

Formal organisation is “a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability, the whole consciously designed to enable the people of the enterprise to work most effectively together in accomplishing their objectives.”

Formal organisation has the following merits:
1. It clearly defines objectives of the organisation and authority- responsibility relationships amongst people to attain those objectives.
2. It results in optimum utilisation of scarce organisational resources.
3. Division of work and relationships amongst people develops effective system of communication in the organisation.

Disadvantages of Formal Organisation:
1. Delay in Action: While following scalar chain and chain of command actions get delayed in formal structure.
2. Ignores Social Needs of Employees: Formal organisational structure does not give importance to psychological and social need of employees which may lead to demotivation of employees.


Six Mark Question:
What is meant by 'Functional Structure' of an organisation? State any five advantages of this form of organisational structure. 

This is the simplest & the most prevalent form of organizational structure. Functional organisational structure refers to the structure in which different departments are created on the basis of major functions performed in the organisation.
Advantages of functional structure are as follows:
1. Specialisation: Under functional organisation, an employee is required to perform the same job within a department regularly. Thus, this improves the performance of the employees and leads to specialisation in the organisation.
2. Coordination: Since the workers perform similar jobs, it becomes very easy to control and coordinates their activities.
3. Increasing Managerial Efficiency: Functional structure helps in increasing managerial and operational efficiency and thus leads to increase in profits.
4. Economical: It helps in avoiding duplication of work leading thereby to economies of scale and minimum cost.
5. Effective Training: Providing training to employees is very easy since focus is only on a limited range of skills.


Tanishq, the director of Leather Footwear Company is manufacturing bags for the utilization of waste material of one of his Leather Footwear Company unit. He also thought of giving equal opportunities to men and women. He also decides that there will be pre-determined relation structure in the new company with proper division of work among people. He decided that every work in new company will be done according to plan made by him with no permission of change. He appoints Shefali, Arpit, Kunal and Rajesh as heads.of, Sales, Accounts, Purchase and Production departments. He also provides them required authority to do work and fix their responsibilities.
(a) Identify two limitations of planning stated in above paragraph.
(b) Also identify two values which Tanishq wants to communicate to the society by setting up the manufacturing unit. Which type of organization structure would you recommend for manufacturing unit? State any two reasons.

(a) Limitations of planning-
(1) Planning Creates Rigidity:
Although the quality of flexibility is inherent in planning, meaning thereby that in case of need changes can be brought in, but it must be admitted that only small changes are possible.
(2) Planning Involves Huge Costs:
Planning is a small work but its process is really big. Planning becomes meaningful only after traversing a long path. It takes a lot of time to cover this path.
During this entire period, the managers remain busy in collecting a lot of information and analyzing it. In this way, when so many people remain busy in the same activity, the organization is bound to face huge costs.

(b) Value of equality.
     proper division of work among its employees.



'If anything goes wrong with the performance of key activities, the entire organization suffers. Therefore, the organization should focus on them.' Explain the statement with a suitable example. 

The statement refers to use of 'Critical Point Control', while analyzing deviations. It emphasizes that deviations in the key areas need to be attended more urgently as compared to deviations in certain insignificant areas. Control should, therefore focus on these key result areas which are critical to the success of an organization. 
For example, in a manufacturing organization, an increase of 5 percent in the labour cost may be more troublesome than a 15 percent increase in postal charges.


Renu is the Principal of a school. She decides to take meeting of all the staff members in the conference halL In the meeting she instructs admission department that in upcoming session the school will give admission to those students who secured more than 85% marks. She also assigns duties, authority Sc creates accountability of the person to whom work has been handed over. In addition to this, she tells to new teachers what is to be done & what is not be done in specific situations.
(a) Name the types of plans highlighted in the given situation by quoting the lines from the paragraph.
(b) Name the process through which Renu assigns duties, authority & creates accountability of the person to whom work has been handed over. Also explain any two points which highlight the importance of this process. 

a- Following are the types of plan highlighted in the given situation-
1- Policy- she instructs the admission department that in the upcoming session the school will give admission to those students who secured more than 85% marks.
- Rules- she tells new teachers what is to be done & what is not be done in specific situations.
b- Delegation
importance of delegation-
 Empowerment: To empower is to allow others to become experts at what they do even if they surpass your ability. This encourages the personal development of team members leading to the overall team success.
Leadership: A good leader does not do, he plans and coaches. After coaching, team members will take roles assigned to them and accomplish with or without supervision. When tasks are completed, new tasks can be taken with maximum confidence.


How planning and organising reduces overlapping of activities?

Planning reduces overlapping by ensuring all the employees follow a plan course of action. Organizing reduces overlapping by creating departments and role clarity.


Mr. Abhishek Gupta, the Managing Director of 'XYZ Sportswear Limited' wants to expand his business. Currently, this company deals in sportswear for kids, females and males. Mr. Abhishek Gupta called a meeting of all four departmental managers. He asked all of them to express their views on expansion of the company. Two of them said that a factory should be set up to make Sports Bags. The other two said that a factory for making sports material like Bats, balls, Rackets, etc. should be set up. There was a discussion on all the two options in the meeting and ultimately, the option for making Sports Material was thought to be right. Mr. Abhishek Gupta further decides that 10% of jobs will be reserved for women in every department of new factory.
(a) Name the type of plan highlighted in the paragraph by quoting the line from the paragraph.
(b) Which type of organization structure would you recommend form recycling unit? State any two reasons.
(c) Name one value highlighted in above paragraph. 

(a) Policy 10% jobs reserved for women
(b) Divisional- following are the two reasons-
     () work best for companies with a wide variance in product offerings
     ()  it affords the company greater operational flexibility.
(c) women empowerment
      



'Rose Ltd' is manufacturing - Textiles, Cosmetics and Kitchenware items. The company has recruited all female freshers directly from a Management Institute located in the city. Each product is headed by different female manager. Ms Pooja is looking after Textile. She believes in decentralisation and takes decisions regarding different work by consulting her subordinates. Ms. Mona, head of Cosmetics, takes little interest in managerial functions and the subordinates are left on their own. 
Ms Anu is heading Kitchenware items. She has kept all the authority in her own hands and makes employees perform the work exactly as per her orders.
Which kind of organisational structure has the company adopted?
State the specific source of recruitment used by the company.
Identify the leadership styles practised by the 3 heads.
State any one value adopted by the company. 

1. Divisional structure 
2. Campus recruitment 
3. Democratic, Free rein, Authoritative 
4. Providing employment opportunities to females.


'Himalaya Ltd' . is engaged in manufacturing of washing machines. The target of the organisation is to manufacture 500 washing machine a day. There is an occupation specialization in the organisation which promotes efficiency of employees. There is no duplicate of efforts in such type of organisation structure.
Identify the type of organisation structure described above. 

In the above situation, the type of organization structure described is functional structure. Under a functional structure, activities of similar nature are grouped together in different departments. Each department specializes in its own particular task. All such departments in turn report to a head.


Out of formal and informal organisation which one is planned by managers and which gets created automatically give advantages of planned organisation?  

Formal Organisation:
When the managers are carrying on organising process then as a result of organising process an organisational structure is created to achieve systematic working and efficient utilization of resources. This type of structure is known as formal organisational structure.
Formal organisational structure clearly spells out the job to be performed by each individual, the authority, responsibility assigned to every individual, the superior- subordinate relationship and the designation of every individual in the organisation. This structure is created intentionally by the managers for achievement of organisational goal.

Features of Formal organisation:
(1) The formal organisational structure is created intentionally by the process of organising.
(2) The purpose of formal organisation structure is achievement of organisational goal.
(3) In formal organisational structure each individual is assigned a specific job.
(4) In formal organisation every individual is assigned a fixed authority or decision-making power.
(5) Formal organisational structure results in creation of superior-subordinate relations.
(6) Formal organisational structure creates a scalar chain of communication in the organisation.
Advantages of Formal Organisation:
1. Systematic Working:
Formal organisation structure results in systematic and smooth functioning of an organisation.
2. Achievement of Organisational Objectives:
Formal organisational structure is established to achieve organisational objectives.
3. No Overlapping of Work:
In formal organisation structure work is systematically divided among various departments and employees. So there is no chance of duplication or overlapping of work.

4. Co-ordination:

Formal organisational structure results in coordinating the activities of various departments.

5. Creation of Chain of Command:

Formal organisational structure clearly defines superior subordinate relationship, i.e., who reports to whom.

6. More Emphasis on Work:

Formal organisational structure lays more emphasis on work than interpersonal relations.

Disadvantages of Formal Organisation:
1. Delay in Action:

While following scalar chain and chain of command actions get delayed in formal structure.

2. Ignores Social Needs of Employees:

Formal organisational structure does not give importance to psychological and social need of employees which may lead to demotivation of employees.

3. Emphasis on Work Only:

Formal organisational structure gives importance to work only; it ignores human relations, creativity, talents, etc.

Informal Organisation:
In the formal organisational structure individuals are assigned various job positions. While working at those job positions, the individuals interact with each other and develop some social and friendly groups in the organisation. This network of social and friendly groups forms another structure in the organisation which is called informal organisational structure.

The informal organisational structure gets created automatically and the main purpose of such structure is getting psychological satisfaction. The existence of informal structure depends upon the formal structure because people working at different job positions interact with each other to form informal structure and the job positions are created in formal structure. So, if there is no formal structure, there will be no job position, there will be no people working at job positions and there will be no informal structure.

Features of informal organisation:
(1) Informal organisational structure gets created automatically without any intended efforts of managers.

(2) Informal organisational structure is formed by the employees to get psychological satisfaction.

(3) Informal organisational structure does not follow any fixed path of flow of authority or communication.

(4) Source of information cannot be known under informal structure as any person can communicate with anyone in the organisation.

(5) The existence of informal organisational structure depends on the formal organisation structure.

Advantages of Informal Organisation:
1. Fast Communication:

Informal structure does not follow scalar chain so there can be faster spread of communication.

2. Fulfills Social Needs:

Informal communication gives due importance to psychological and social need of employees which motivate the employees.

3. Correct Feedback:

Through informal structure the top level managers can know the real feedback of employees on various policies and plans.

Strategic Use of Informal Organisation. Informal organisation can be used to get benefits in the formal organisation in the following way:

1. The knowledge of informal group can be used to gather support of employees and improve their performance.

2. Through grapevine important information can be transmitted quickly.

3. By cooperating with the informal groups the managers can skillfully take the advantage of both formal and informal organisations.


Geet and Meet are Science graduates and very good friends. They are very concerned about environment form pollution. They are thinking to establish a recycling unit to manufacture fertilizer for waste material and garbage. They mutually decided that this recycling unit will be setup in a rural area of Bihar where people have very few job opportunities & labour is available at reasonable rates. They also decided not to sell fertilizer on credit.
(a) One of the plan is highlighted in the above paragraph. Name it by quoting the line from there.
(b) Which type of organisational structure would you recommend for recycling unit? State any two reasons.
(c) Name two values highlighted in above paragraph. 

(a)- Policy- not to sell fertilizers on credit
(b)- functional structure
1- optimal utilization of resources
2- Minimize cost
(c)- Providing job opportunities in the rural area 
      the safety of the environment.


Six Mark Question:
Explain the concept of 'Functional Structure'. Also, explain any four disadvantages of functional structure.

This is the simplest & the most prevalent form of organizational structure. Functional organisational structure refers to the structure in which different departments are created on the basis of major functions performed in the organisation.
Disadvantages of functional structure are as under:
1. Hindrance in Organisational Objectives: Under functional structure, more emphasis is given on achieving of departmental objectives rather than the overall organisational objectives. Such a practice leads to functional empires and places hindrance in the interaction between two or more departments. Hence, organisational objectives may not get achieved.
2. Ineffective Coordination: Establishing coordination in functionally differentiated departments becomes very difficult.
3. Conflicts: Sometimes, interests of two or more departments may not be compatible. In such a situation, it leads to conflicts among different departments.
4. Inflexibility: It leads to inflexibility in the organisation since people with same skills and knowledge develop a narrow outlook and face difficulty in understanding and appreciating other jobs.


What is meant by 'formal organisation'? State its any two advantages.  

A formal organization is a well defined structure of authority and hierarchy that clearly specifies the boundaries of authority and responsibility in an organization. The rules and policies to be followed are clearly stated.
The following are the advantages of a formal organization:
(i) It is easier to fix responsibility since mutual relationships are clearly defined;
(ii) Unity of command is maintained through an established chain of command.


Give the meaning of 'organising'. State the steps in the process of organising.

Organising is the process of identifying and grouping entire work to be performed assigning duties to job positions and establishing relationships for the purpose of accomplishing objectives.
The following are the steps involved in the process of organising:
1. Identification and Division of Work
The first step in the process of organising involves identifying and dividing the work that has to be done in accordance with previously determined plans. Work is divided into manageable tasks, so that duplication can be avoided and workload can be shared among employees.
2. Departmentalization
Once, work has been divided into small and manageable activities, then those activities which are similar in nature, are grouped together. This process is called departmentalization. Departments can be created on the basis of products, functions and territory. This brings specialization in operations.
3. Assignment of Duties
Once the departments are created, each department is placed under the charge of an individual, called departmental head. Then, each job is allocated to an individual, according to his knowledge and skill. There should be a proper match between the nature of jobs and the ability of an individual.
4. Establishing Reporting Relationships
In the organisation, each employee has some authority as well as responsibility. It is necessary that every individual must know whom he has to take orders from and to whom he is answerable. This creates superior subordinate hierarchy and helps in coordinating various activities in the organisation.


Neeraj Gupta started a company 'YoYo 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 decisions for the company, had to selectively disperse the authority. He believed that people are competent, capable and resourceful and can assume responsibility for 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. 
(a) Identify the concept used by Neeraj Gupta through which he was able to steer his company to greater heights.
(b) Also explain any three points of importance of this concept. 

(a) The concept used by Neeraj Gupta through which he was able to steer his company to greater heights is decentralisation.
(b) The following is the importance of decentralisation:
(i) Greater motivation: Decentralisation improves the morale and motivation of subordinates which is reflected in better work performance.
(ii) Develops managerial talent for the future: As a result of decentralisation, employees get more opportunities to develop new skills. It makes them better future managers.
(iii) Quick decision-making: Decentralisation in an organisation, provides more freedom to lower level managers to take their own decisions. There is no need to get approval from higher level. It helps in quick and better decision-making.


Answer the following question in a sentence or a word.
State any one type of organisational structure.

Functional Structure of an Organization

Functional structure is set up so that each portion of the organization is grouped according to its purpose. In this type of organization, for example, there may be a marketing department, a sales department and a production department. The functional structure works very well for small businesses in which each department can rely on the talent and knowledge of its workers and support itself.

However, one of the drawbacks to a functional structure is that the coordination and communication between departments can be restricted by the organizational boundaries of having the various departments working separately.



Answer the following question in $$2$$ or $$3$$ sentences.
Give the meaning of organising.

" 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."


Answer the following question in $$2$$ or $$3$$ sentences.
Write the first two steps involved in the organising process.

Step 1. Consideration of Plans and Goals:
Organisational plans and their goals affect organising and its outcome, the organisation. The purposes and activities that organisations have at present or are likely to have in future are dictated by plans. Certain basic purposes and some general activities are likely to remain fairly constant in the long run. For example, from its very inception a business firm will continue to seek profit and in this endeavour it will continue to employ human and non-human (material) resources.
But with the passage of time new plans will be formulated. This will surely lead to a change in the ways in which basic activities are carried out. Certain departments or divisions may be closed (as has been done by the G.K.W. in 1986) some old ones may be entrusted with additional responsibility and some new departments may be created or set up.
Moreover there may emerge new relationships among groups of decision makers. Organising is supposed to create the new structure and relation­ships and modify the old ones.

Step 2. Determining the Work Activities Necessary to Accomplish Objectives:
It is necessary to determine those work activities which are necessary to accomplish organisation objectives. Prima facie, it is absolutely essential to prepare a list of tasks to be done. Therefore, there is the need to classify the tasks into two categories: on-going tasks and once-for-all tasks. Examples of the former are hiring, training, and record-keeping. Such tasks may also include assembling, machining, shipping, storing, inspecting, selling, advertising etc.
An example of the latter is setting up a new plant or department or installing a new plant in an existing plant. In an ongoing business such specific programmes — which are essentially single-use plans-may require temporary re-or­ganisation within a business or department to handle them. For example, the Finance Department may temporarily look after the newly set up corporate planning department.
Likewise, a pilot project conducted for an ongoing business may identify which activities should be performed in a work unit or incorporated into the business. Once managers come to know what tasks must be done, they are ready to classify and group those activities into manageable work units.


Answer the following question in $$15$$ to $$20$$ sentences.
Write in brief any five importance of organisation.

The importance of organising becomes clear with the help of the following points:
(1) Benefits of Specialisation:
Under organising all the activities are subdivided into various works or jobs. For all the sub works, competent people are appointed who become experts by doing a particular job time and again. In this way, maximum work is accomplished in the minimum span of time and the organisation gets the benefit of specialisation.

(2) Clarity in Working Relationship:
Organising clarifies the working relations among employees. It specifies who is to report to whom. Therefore, communication becomes effective. It also helps in fixing accountability.

(3) Optimum Utilisation of Resources:
Under the process of organising the entire work is divided into various small activities. There is a different employee performing every different job.
By doing so, there is no possibility of any activity being left out or any possibility of unnecessary duplicating any job. Consequently, there is optimum utilisation of all the available resources (e.g., material, machine, financial, human resource, etc.) in the organisation.

(4) Adaptation to Change:
Organising process makes the organisation capable of adapting to any change connected with the post of the employees. This becomes possible only because of the fact that there is a clear scalar chain of authority for the manager’s right from the top to the lower level.
Whenever a managerial post falls vacant, it is immediately filled up by promotion. Since every subordinate is well aware of the working of his boss, there is no difficulty for his taking up the new post.

(5) Effective Administration:
It has generally been observed that there is always a condition of doubt about the authority of the managers among themselves. The process of organising makes a clear mention of each and every activity of every manager and also of their extent of authority.
It is also made clear as to whom a manager order for a particular job shall. Everybody also knows to whom they are accountable. In this way, the confusion on authority is put to an end. Consequently, effective administration becomes possible.


Answer the following question in a sentence or a word.
What is meant by decentralisation?

Decentralization or decentralisation (see spelling differences) is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.[1] Concepts of decentralization have been applied to group dynamics and management science in private businesses and organizations, political science, law and public administration, economics, money and technology.


Answer the following question in $$15$$ to $$20$$ sentences.
Write any five differences between Formal and informal organisation.


1.Origin: 

A formal organisation is created to fulfil some objectives.Hence, a formal organisation is basically goal-oriented. It is built around the general principles or organisation and the members of formal organisation are fully aware of these principles. Informal organisation, on the other hand, develops automatically and spontaneously. In other words, formal organisations are deliberately created whereas informal organisations are spontaneously formed.


2.Structure: 

A formal organisation has a definite and specially designed structure reflected in organisation chart rendering a pictorial representation of the authority relationships. The authority structure is rigid and defined. Informal organisations are structure less groups. These are initiated by the workers themselves to serve the needs of workers.

3.Purpose:

Formal organisations are created to achieve goals defined by management. Normally, profit maximisation or wealth maximisation are the fundamental objectives of a formal organisation. On the other hand, the basic aim of an informal organisation is to satisfy the individual goals of members. Social satisfaction is the fundamental objective of an informal organisation.

4.Control:

In formal organisations, control points are established to constrain behaviour, restrain the members from going off the prescribed track. Thus, there exist a rigid system of rules and regulations which all the members are supposed to follow. Informal organisations are not tied to a rigid system of rules and regulations. However, every informal group outlines specific norms which the entire members are not supposed to violate in order to continue their membership. 

5.Influence Process:

In formal organisations, authority is equated with influence. The person at the top becomes the most influential person. People enjoying authority become powerful in the minds of subordinates. In a sharp contrast, influence in informal organisation is attached to the individual person. Informal group attaches more value to that man who is able to satisfy the needs of the group members.


Answer the following question in a sentence or a word.
Give the meaning of formal organisation.

A formal organization is an organization with a fixed set of rules of intra-organization procedures and structures. As such, it is usually set out in writing, with a language of rules that ostensibly leave little discretion for interpretation. In some societies and in some organizations, such rules may be strictly followed; in others, they may be little more than an empty formalism.


Answer the following question in $$2$$ or $$3$$ sentences.
State any two importance of delegation.

The importance of delegation can be justified by -
1. Through delegation, a manager is able to divide the work and allocate it to the subordinates. This helps in reducing his work load so that he can work on important areas such as - planning, business analysis etc.
2. With the reduction of load on superior, he can concentrate his energy on important and critical issues of concern. This way he is able to bring effectiveness in his work as well in the work unit. This effectivity helps a manager to prove his ability and skills in the best manner


Answer the following question in $$2$$ or $$3$$ sentences.
What is delegation?

 Delegation is the assignment of any authority to another person (normally from a manager to a subordinate) to carry out specific activities. It is one of the core concepts of management leadership. However, the person who delegated the work remains accountable for the outcome of the delegated work.


Answer the following question.
Draft the functional chart of an organisation.


Image result for functional chart of organization


Answer the following question in $$20$$ to $$25$$ sentences.
What is organising? Explain the importance of organising.

"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.''

Importance of Organizing :-

  • Efficient Administration
It brings together various departments by grouping similar and related jobs under a single specialization. This establishes coordination between different departments, which leads to unification of effort and harmony in work.

It governs the working of the various departments by defining activities and their authority relationships in the organizational structure. It creates the mechanism for management to direct and control the various activities in the enterprise.

  • Resource Optimization
Organizing ensures effective role-job-fit for every employee in the organization. It helps in avoiding confusion and delays, as well as duplication of work and overlapping of effort.

  • Benefits Specialization
It is the process of organizing groups and sub-divide the various activities and jobs based on the concept of division of labor. This helps in the completion of maximum work in minimum time ensuring the benefit of specialization.

  • Promotes Effective Communication
Organizing is an important means of creating coordination and communication among the various departments of the organization. Different jobs and positions are interrelated by structural relationship. It specifies the channel and mode of communication among different members.

  • Creates Transparency
The jobs and activities performed by the employees are clearly defined on the written document called job description which details out what exactly has to be done in every job. Organizing fixes the authority-responsibility among employees. This brings in clarity and transparency in the organization.

  • Expansion and Growth
When resources are optimally utilized and there exists a proper division of work among departments and employees, management can multiply its strength and undertake more activities. Organizations can easily meet the challenges and can expand their activities in a planned manner.


Distinguish between Functional and Divisional structure on the basis of the following points:
(a) Coordination;
(b) Managerial Development; and 
(c) Cost.

 BasisFunctional structuralDivisional structure 
 CoordinationDifficult for a multi product company.Easy, because all functions related to a particular product are integrated in one department.
 Managerial developmentIt does not help in managerial development as functional manager lacks autonomy It helps in managerial development, as they have autonomy and knowledge of varied aspect of a product. 
CostIt is a economical as there is no duplication.It is costlier, as there is duplication of resources. 


Explain briefly any two rights which Sumit could have exercised had he fulfilled his responsibility identified in part (a).

Responsibility which Sumit had to fulfil as an aware consumer -'learn about the risk associated, to follow the manufactures instructions and to use the product safely'.

Two rights which Sumit could have exercised:
(1) Right to seek redressal: A consumer has the right to seek redressal and to get compensation in case of any exploitation. The Consumer Protection Act provides for compensation in the from of replacement of product, cash compensation, repair/removal of defects, etc.
(2) Right to be Heard:
(i) The consumer has right to file a complaint and to be heard in case of dissatisfaction with a product or a service.
(ii) It is because of this reason, many firms have set up their own consumer service and grievance cells. 


Differentiate between Authority and Responsibility on the basis of
flow.

Authority is downward flowing, from top to bottom. On the other hand, responsibility is upwards flowing.


Distinguish between Responsibility and Accountability on the basis of
meaning.

Responsibility is the state of having duty, to do whatever it takes to complete the task. However, Accountability is the condition, wherein a person is expected to take ownership of one's actions or decisions.


'E-Solutions Ltd. started its operations in the year $$2000$$. At the time of its inception, the company had only ten employees with two departments, a Production department and an Administration department. The products supplied and the services provided by the company started gaining popularity over the years. The management had faith in the abilities of the employees and thus they allowed them freedom of action. The management recognised that the decision-makers at different levels of the organisation need to be given more autonomy. They took a policy decision that there will be less control of superiors over subordinates. This increased the role of the subordinates in the organisation and now they were in a position to take numerous as well as important decisions. As a result, its business has diversified into many areas. Presently, it has its operations throughout the country with seven branches overseas. Its organisational structure has now changed into divisional structure and ten thousand people are working with the company.
(a) Identify the concept of management which helped the company to diversify into many areas and branches abroad.
(b) Explain five points of importance of the concept identified in (a) above.

(a) The Concept of Management which helped the Company to Diversify into many Areas and Branches Abroad is “Decentralization”. 

(b) Importance of Decentralization can be explained with the help of following points: 
(i) Developing Initiative among Subordinates: Passing of authority at middle and lower level shows the trust and faith of top level in their subordinates and this trust and faith motivate the employees working at different levels as they are allowed to take decisions without seeking the approval of superiors.
(ii) Develop Managerial Talent for Future: In decentralization, Managers working at lower and middle level also learn the art of making decisions. They get the experience of performing activities of top executives and learn to manage the authority given to them. So, decentralization process prepares the managers working at lower and middle level to perform the task of top level. So, whenever there is vacant job position at top level management, the managers working at lower or middle level can be promoted. This is how it level talent for future. 
(iii) Quick Decision-making: In Decentralization process decision-making is not restricted in few hands only by decision-making power is entrusted to all the managers who are taking actions or performing the activities. This leads to faster decision because employees who have to perform the activities are allowed to take decision also.
(iv) Relief to Top Level Management: In the process of Decentralization top level managers are not overburdened with the responsibilities and authority as they systematically pass the authority and responsibilities at different levels and they become free to concentrate on core and important issues.
(v) Facilitates Growth: Decentralization grants more autonomy or freedom to lower level. This helps the subordinates to do the work in the manner best suited for their department. When each department is doing to their best then productivity increases and it will generate more revenue which can be used for expansion.



Define 'Organising'.

Organising is a 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.


Answer the following question.
Draw the organisation chart showng divisional and functional structure.



1451791_1692254_ans_b092b51ee8d64abc9869d79fe0d43eab.PNG


Answer the following question in $$2$$ or $$3$$ sentences.
Give the meaning of formal organisation.

A formal organization is an organization with a fixed set of rules of intra-organization procedures and structures. 
They have a definite place in the organization due to a well defined hierarchical structure which is inherent in any formal organization.


What are the disadvantages of Informal Organisation?

Following are the disadvantages of Informal Organisation:
(a) When an informal organisation spreads rumours, it becomes a destructive force and goes against the interest of the organisation.
(b) The management may not be successful in implementing changes if the informal organisation opposes them. Such resistance to change may delay or restrict growth. 
(c) It pressurises members to conform to group expectations. This can be harmful to the organisation if the norms set by the group are against organisational interests.


Give the meaning of 'Organising as a process'.

Organising as a process refers to a structural framework in which an organisation operates to achieve its desired goals. It attempts to determine a methodical approach to use the available resources and workforce of the organisation in an optimum manner.


Name the type of organisational structure which promotes flexibility and initiative.

Divisional Structure is the type of organisational structure which promotes flexibility and initiative.


'My 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 'My Car Ltd.' The company also decided to provide facilities like school, hospital, market etc. in the factory premises so that the people are attracted to join the factory as workers.
'My Car Ltd.' started earning huge profit. Another competeting 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 co-ordination among the various activities to achieve 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, where as 'My Car Ltd.' was allowing flow of communication in all the directions as per the requirement which lead to faster spread of information as well as quick feed-back.
(a) Identify the type of organisation which permits the flow of communication in all the directions in 'My Car Ltd.'.
(b) Also state an advantage of the type of organisation identified in part (a) above.
(c) State any two values which My Car Ltd.' wants to communicate to the society. 

(a) In the given case, ‘Informal Organisation’ allows the communication to flow in all directions.

(b) Another advantage of the informal organization is that it allows and benefits the employees to feel interactive, sociable, and competitive. This results in better employee engagement and work culture. All these improve the productivity of the employees towards the organization.

(c) The following are the values that ‘My Car Ltd.’ wanted to communicate to the society:
 (i) Fulfilling the social responsibility towards society;
 (ii) Working for the benefits of the employees.


Class 12 Commerce Business Studies Extra Questions