This page contains the NCERT Business Studies class 12 chapter 5 ORGANISING from Part 1 Principles and Functions of Management. You can find the solutions for the chapter 5 of NCERT class 12 Business Studies, for the Short Answer Questions, Long Answer Questions and Projects/Assignments Questions in this page. So is the case if you are looking for NCERT class 12 Business Studies related topic ORGANISING question and answers.
Very Short Answer Type:
1. Identify the network of social relationships which arises spontaneously due to interaction at work.
The network of social relationships that arises spontaneously due to interaction at work is known as the “Informal Organisation”.
2. What does the term ‘Span of management’ refer to?
The term ‘Span of management’, also known as ‘Span of control’, refers to the number of subordinates that a manager can efficiently and effectively manage. It indicates the capacity of an individual manager or supervisor to direct and oversee the work of a number of employees under them. The span can be wide (with many subordinates) or narrow (with fewer subordinates), depending on the nature of the job, the skills of the manager, and the complexity of tasks.
3. State any two circumstances under which the functional structure will prove to be an appropriate choice.
The following are two circumstances under which the functional structure will prove to be an appropriate choice:
Specialisation Required: When an organization requires specialized knowledge or skills in specific areas or functions, a functional structure is beneficial. This structure groups together people with similar skills and expertise, ensuring that specialized tasks are handled by experts in that particular field.
Large-Scale Operations: Functional structure is suitable for organizations that operate on a large scale. This is because such organizations have diverse operations and they need experts in each function to achieve efficiency and effectiveness.
4. Draw a diagram depicting a functional structure.
Functional Structure Managing Director Human Resources Marketing Research and Development Purchasing Managing Director Human Resources Human Resources Marketing Research and Development Purchasing
Functional Structure
5. company has its registered office in Delhi, manufacturing unit at Gurgaon and marketing and sales department at Faridabad. The company manufactures the consumer products. Which type of organisational structure should it adopt to achieve its target?
The company should adopt a Divisional Organisational Structure due to the following reasons:
Geographical Division: Given that the company has distinct locations for its registered office, manufacturing unit, and marketing and sales department, a divisional structure based on geography would be appropriate. Each location can operate as a semi-autonomous unit with its own set of functions.
Focus on Product Lines: Since the company manufactures consumer products, it might have different product lines. A divisional structure allows each product line to have its own division, ensuring specialized attention and faster decision-making tailored to the specific needs of each product.
Flexibility and Responsiveness: Divisional structures are more flexible and can respond quickly to the specific needs of each division. This would be beneficial for a consumer products company that might need to adapt to changing market demands.
Clear Accountability: Each division can be held accountable for its profits and losses, ensuring responsibility and encouraging efficiency.
Expertise Utilization: The divisional structure allows for better utilization of expertise specific to each division. For instance, the manufacturing unit in Gurgaon can have experts in production, while the marketing and sales department in Faridabad can have experts in sales strategies.
Short Answer Type:
1. What are the steps in the process of organising?
The following are the steps in the process of organising:
Identification of Activities:
Begin by identifying and defining all the activities that need to be performed in the organization.
This can be done by breaking down the main activity into smaller tasks.
Grouping of Activities:
Once the activities are identified, they need to be grouped based on their similarities and functions.
For instance, all marketing-related activities can be grouped under the marketing department.
Assignment of Duties:
After grouping the activities into departments or teams, assign specific tasks to individuals within those groups.
Ensure that each individual clearly understands their roles and responsibilities.
Establishing Reporting Relationships:
Define the hierarchy and establish who reports to whom.
This helps in creating a clear chain of command and establishes superior-subordinate relationships.
Delegation of Authority:
Along with responsibilities, the necessary authority to perform the tasks should also be delegated.
This ensures that individuals have the power to make decisions and take actions required for completing their tasks.
Ensure that all the departments and individuals work in harmony.
Coordination ensures that all activities are directed towards achieving the organizational goals without any overlaps or conflicts.
2. Discuss the elements of delegation.
Elements of Delegation (Short Answer):
Authority: It is the right of an individual to command subordinates and take action within their position. It originates from one’s formal position in the organisation and flows from top to bottom.
Responsibility: This is the obligation of a subordinate to perform the assigned duty. It arises from delegated authority and flows upwards, meaning a subordinate is always responsible to their superior.
Accountability: It implies being answerable for the final outcome. Originating from responsibility, accountability flows upwards, ensuring a subordinate is answerable to a superior for their performance.
Elements of Delegation (Long Answer):
Meaning: Authority refers to the right of an individual to command his subordinates and to take action within the scope of his position. It arises from the established scalar chain linking various job positions and levels in an organisation.
Origin: In a formal organisation, authority originates from an individual’s position. The extent of authority is highest at the top management levels and reduces as we move down the hierarchy.
Flow: Authority flows from top to bottom, meaning the superior has authority over the subordinate.
Limitations: Authority is restricted by laws and the rules and regulations of the organisation.
Meaning: Responsibility is the obligation of a subordinate to properly perform the assigned duty. It arises from a superior-subordinate relationship.
Origin: Responsibility arises from delegated authority.
Flow: Responsibility flows upwards, meaning a subordinate is always responsible to his superior.
Balance with Authority: For effective delegation, the authority granted must be commensurate with the assigned responsibility.
Meaning: Accountability implies being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot deny accountability.
Origin: Accountability arises from responsibility.
Flow: Accountability flows upwards, meaning a subordinate will be accountable to a superior for satisfactory performance of work.
Nature: Accountability cannot be delegated and is enforced through regular feedback on the extent of work accomplished.
In conclusion, while authority is delegated, responsibility is assumed, and accountability is imposed. Responsibility is derived from authority, and accountability is derived from responsibility.
3. How does informal organisation support the formal organisation?
The informal organisation supports the formal organisation in the following ways:
Faster Communication: It leads to a quicker spread of information and feedback as prescribed lines of communication are not followed.
Fulfillment of Social Needs: It helps meet the social needs of members, giving them a sense of belongingness and enhancing job satisfaction.
Compensates for Formal Shortcomings: The informal organisation can fill gaps or inadequacies in the formal organisation, such as gauging employee reactions to plans and policies.
4. Can a large sized organisation be totally centralised of decentralised? Give your opinion.
No, a large-sized organisation cannot be totally centralised or decentralised. Every organisation will have elements of both centralisation and decentralisation. Complete centralisation would mean all decision-making functions are at the top, eliminating the need for a management hierarchy. Conversely, complete decentralisation would delegate all decision-making functions to the lower level, making higher managerial positions redundant. Therefore, a balance between the two is essential for efficient functioning.
5. Decentralisation is extending delegation to the lowest level. Comment.
Yes, decentralisation refers to the delegation of authority throughout all the levels of the organisation. It means that decision-making authority is shared with lower levels and is placed nearest to the points of action. In other words, decision-making authority is pushed down the chain of command, allowing even the lowest levels in the hierarchy to take decisions within their scope of operations.
6. Neha runs a factory wherein she manufactures shoes. The business has been doing well and she intends to expand by diversifying into leather bags as well as western formal wear thereby making her company a complete provider of corporate wear. This will enable her to market her business unit as the one stop for working women. Which type of structure would you recommend for her expanded organisation and why?
For Neha’s expanded organisation, I would recommend a Divisional Structure. This is because each product line – shoes, leather bags, and western formal wear – has its own unique processes and target markets. By adopting a divisional structure, each product line can operate as a semi-autonomous unit with its own dedicated resources, allowing for specialization and focused strategies for each product category.
7. The production manager asked the foreman to achieve a target production of 200 units per day, but he doesn’t give him the authority to requisition tools and materials from the stores department. Can the production manager blame the foreman if he is not able to achieve the desired target? Give reasons.
No, the production manager cannot blame the foreman if he is not able to achieve the desired target. This is because while the foreman was given the responsibility to achieve a target production of 200 units per day, he was not provided with the necessary authority to requisition tools and materials from the stores department. For effective delegation, the authority granted must be commensurate with the assigned responsibility. Without the necessary authority, the foreman’s ability to fulfill his responsibility is hindered.
Long Answer Type
1. Why delegation is considered essential for effective organising?
Delegation is considered essential for effective organising due to the following reasons:
Effective Management:
Delegation allows managers to function more efficiently by empowering employees.
Managers get more time to focus on crucial matters, leading to better decision-making.
It frees the top management from routine tasks, allowing them to excel in new areas.
Employee Development:
Delegation provides employees with opportunities to utilize their talents.
It brings out latent abilities in employees, preparing them for future leadership roles.
Employees gain practical experience by handling assignments independently.
Motivation of Employees:
Delegation builds the self-esteem and confidence of employees.
It signifies trust from the superior and commitment from the subordinate.
Employees feel encouraged and strive to improve their performance further.
Facilitation of Growth:
Delegation fosters a sense of competition among departments.
Each department tries to outperform the other, increasing overall productivity.
The organization can generate more returns, which can be reinvested for expansion.
Basis of Management Hierarchy:
Delegation establishes superior-subordinate relationships, forming the foundation of the management hierarchy.
It defines who reports to whom, ensuring clarity in roles and responsibilities.
Better Coordination:
Delegation helps avoid overlapping of duties and duplication of efforts.
It provides clarity in reporting relationships, ensuring effective coordination among various departments and levels of management.
Quick Decision Making:
In a decentralized organization, decisions are taken faster as they don’t require approval from multiple levels.
Faster decision-making enables the organization to adapt quickly to dynamic conditions.
Relief to Top Management:
Decentralisation reduces the direct supervision required by superiors.
It allows top management to focus on major policy decisions rather than getting involved in both policy and operational decisions.
In conclusion, delegation is a key element in effective organizing as it not only ensures efficient management but also aids in employee development, motivation, and overall organizational growth.
2. What is a divisional structure? Discuss its advantages and limitations.
A divisional structure is an organizational structure in which divisions are created based on products, services, market types, or geographies. Each division operates as a semi-autonomous unit with its own resources and objectives but aligns with the overall business strategy of the organization.
Advantages of Divisional Structure:
Flexibility: Each division can make decisions quickly, adapting to its specific market conditions.
Enhanced Accountability: Divisions are accountable for their profits and losses, leading to a clearer responsibility.
Specialization: Divisions can focus on specific products or markets, leading to specialized knowledge and expertise.
Growth and Expansion: It’s easier to add a new division when the company wants to introduce a new product or focus on a new market.
Healthy Competition: Divisions may compete with each other for resources, leading to innovation and efficiency.
Limitations of Divisional Structure:
Duplication of Resources: Each division might have its own set of resources, leading to potential duplication and inefficiency.
Conflict: Divisions might compete for the same organizational resources, leading to potential conflicts.
Loss of Synergy: Divisions operating independently might miss out on the benefits of pooling resources and knowledge.
Increased Costs: Maintaining multiple divisions with separate resources can increase overhead costs.
Potential Misalignment: If not managed properly, a division’s objectives might not align with the overall organizational goals.
3. Decentralisation is an optional policy. Explain why an organisation would choose to be decentralised.
Decentralisation refers to the systematic delegation of authority throughout all the levels of the organisation. While it is an optional policy, many organisations opt for decentralisation due to the following reasons:
Develops Initiative Among Subordinates: Decentralisation promotes self-reliance and confidence among subordinates. When they are given the freedom to make decisions, they learn to rely on their judgment, fostering a proactive approach.
Develops Managerial Talent for the Future: Decentralisation provides real-life situations for subordinates to handle assignments independently. This experience is invaluable in grooming future leaders and decision-makers for the organisation.
Quick Decision Making: Decisions are made faster in a decentralised organisation since they are taken at levels closest to the points of action. This eliminates the need for approvals from multiple levels, leading to quicker responses to dynamic situations.
Relief to Top Management: By decentralising, top management can focus on major policy decisions and strategic planning, leaving operational decisions to lower levels. This ensures efficient use of top management’s time and expertise.
Facilitation of Growth: Decentralisation fosters a sense of competition among departments. With each department striving for excellence, the overall productivity of the organisation increases, facilitating growth and expansion.
Better Control: Decentralisation allows for performance evaluation at each level. Individual departments can be held accountable for their results, leading to better control and improved operations.
Employee Motivation: Entrusting employees with decision-making powers can boost their morale and motivation. It gives them a sense of ownership and belongingness in the organisation.
Adaptability: Decentralised organisations can adapt more quickly to local conditions since decisions are made closer to the operational level.
Innovation and Creativity: With more autonomy, different divisions or departments can experiment with new ideas, leading to innovative solutions and practices.
Better Customer Service: Decisions made closer to the customer or client can often lead to better understanding and quicker response to their needs.
Given these benefits, it’s evident that decentralisation can significantly enhance the efficiency, adaptability, and growth potential of an organisation.
4. Distinguish between centralisation and decentralisation.
Centralisation and decentralisation are distinguished as follows:
Basis of Comparison
Centralisation implies that the decision-making authority is retained by higher management levels.
Decentralisation refers to the systematic delegation of authority throughout all the levels of the organisation.
Freedom of Action
There is more control by superiors, leading to less freedom for subordinates to take their own decisions.
There is less control over executives, granting them greater freedom of action.
It is a natural outcome of the organisational process.
It is the result of a policy decision by the top management.
It has a narrow scope as it focuses on concentration of authority at the top.
It has a wider scope as it implies extension of delegation to the lowest level of management.
To retain decision-making power at the top and ensure uniformity in decisions.
To increase the role of subordinates in the organisation by giving them more autonomy and promoting faster decision-making.
Decision-making Speed
Decision-making might be slower as it has to pass through various hierarchical levels.
Decision-making is faster as decisions are taken closer to the points of action.
5. How is a functional structure different from a divisional structure?
The functional structure is different from a divisional structure in the following ways:
Basis of Comparison
Functional Structure
Divisional Structure
Basis of Formation
It is based on the primary functions of the organization, such as marketing, finance, production, etc.
It is based on different divisions or departments, which can be formed based on products, services, geographical areas, or customer groups.
The focus is on specialization and efficiency in specific functions.
The focus is on product lines or market areas, allowing for flexibility and adaptability to changes in the market or product.
Coordination within departments is easier, but there might be challenges in inter-departmental coordination.
Coordination within a division is easier, but there might be duplication of efforts across divisions.
Decision-making might be slower due to the need for coordination among different functional departments.
Decision-making is often faster within a division because it is more autonomous.
Accountability is centralized, with each function reporting to the top management.
Each division operates as a separate profit center and is accountable for its own performance.
It might be less flexible to changes in the external environment due to its focus on specialized functions.
It is more flexible and can quickly adapt to changes in the market or external environment.
6. A company, which manufactures a popular brand of toys, has been enjoying good market reputation. It has a functional organisational structure with separate departments for Production, Marketing, Finance, Human Resources and Research and Development. Lately to use its brand name and also to cash on to new business opportunities it is thinking to diversify into manufacture of new range of electronic toys for which a new market is emerging. Which organisation structure should be adopted in this situation? Give concrete reasons with regard to benefits the company will derive from the steps it should take.
Given the company’s situation, it should consider adopting a Divisional Organisational Structure.
Reasons for Adopting Divisional Structure based on the passage:
Specialization: As the company is diversifying into a new range of electronic toys, a divisional structure will allow it to create a separate division specializing in electronic toys. This ensures that the specific needs and challenges of the electronic toy market are addressed.
Better Coordination: With a divisional structure, there will be better coordination within the electronic toys division as all functions related to this product will be under one division.
Flexibility: Divisional structures offer more flexibility. The electronic toys market might have different dynamics compared to traditional toys. A separate division can quickly adapt to these changes.
Enhanced Focus: A divisional structure will ensure that there’s a dedicated focus on the electronic toys, from production to marketing, without any distractions from the traditional toy segment.
Optimal Use of Resources: Resources can be allocated specifically to the electronic toys division based on its needs, ensuring optimal utilization.
Benefits the Company Will Derive:
Enhanced Market Presence: By having a dedicated division for electronic toys, the company can establish a strong presence in the emerging market.
Increased Profitability: With clear focus and specialization, the electronic toys division can drive profitability for the company.
Brand Diversification: The company can leverage its popular brand name and create a sub-brand for electronic toys, helping in targeted marketing.
Efficient Decision Making: Decisions specific to the electronic toys market can be made faster within the division.
Innovation and Growth: A dedicated division can lead to more innovations tailored to the electronic toys market, driving growth for the company.
In conclusion, based on the passage, adopting a divisional structure will allow the company to effectively tap into the emerging electronic toys market while maintaining its stronghold in the traditional toys segment.
7. A company manufacturing sewing machines set up in 1945 by the British promoters follows formal organisation culture in totality. It is facing lot of problems in delays in decision making. As the result it is not able to adapt to changing business environment. The work force is also not motivated since they cannot vent their grievances except through formal channels, which involve red tape. Employee turnover is high. Its market share is also declining due to changed circumstances and business environment. You are to advise the company with regard to change it should bring about in its organisation structure to overcome the problems faced by it. Give reasons in terms of benefits it will derive from the changes suggested by you.
The company described is facing issues primarily because of its strict adherence to a formal organizational structure. To overcome the problems of delays in decision-making, lack of adaptability, low employee motivation, and declining market share, the company should consider transitioning to a blend of formal and informal organizational structures. Here’s what the company should do:
Adopt an Informal Organisational Structure:
Faster Decision Making: Informal structures lead to quicker decision-making processes as they bypass the hierarchical channels. This will help the company adapt swiftly to the changing business environment.
Employee Motivation: An informal structure allows employees to communicate freely, share their grievances, and provide feedback without the fear of red tape. This can lead to increased job satisfaction and motivation among employees.
Flexibility: Informal structures are more flexible, allowing the company to adapt to changes more efficiently. This can be crucial in a dynamic business environment.
Decentralisation of Authority:
Quick Decision Making: Decentralising authority means that decision-making power is given to lower levels of management. This can lead to faster decisions as they don’t have to go through multiple layers of approval.
Employee Empowerment: When employees at lower levels are given more authority, they feel more valued and empowered. This can lead to increased motivation and reduced turnover.
Adaptability: Decentralisation allows different departments or units to make decisions that are best suited for their specific circumstances, leading to better adaptability to market changes.
Introduce Feedback Mechanisms:
Continuous Improvement: Regular feedback from employees can provide insights into areas of improvement, leading to better processes and strategies.
Employee Engagement: When employees see that their feedback is valued and acted upon, they feel more engaged and connected to the company.
Encourage Cross-Functional Teams:
Holistic Decision Making: Cross-functional teams consist of members from different departments. This ensures that decisions are made after considering various aspects of the business.
Innovation: Such teams can lead to innovative solutions as they bring diverse perspectives together.
5. Regular Training and Development Sessions:
Skill Enhancement: Regular training ensures that employees are equipped with the latest skills and knowledge.
Adaptability: Training can help employees adapt to the changing business environment and market dynamics.
In Conclusion, by blending formal and informal structures, decentralizing authority, introducing feedback mechanisms, encouraging cross-functional teams, and investing in regular training, the company can overcome its current challenges. These changes will not only help in quicker decision-making and increased adaptability but will also boost employee morale and motivation, leading to reduced turnover and a better market position.
8. A company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, new liberalised environment has seen entry of many MNC’s in the sector. With the result the market share of X limited has declined. The company had followed a very centralised business model with Directors and divisional heads making even minor decisions. Before 1991 this business model had served the company very well as consumers had no choice. But now the company is under pressure to reform. What organisation structure changes should the company bring about in order to retain its market share? How will the changes suggested by you help the firm? Keep in mind that the sector in which the company is FMCG.
Given the changing business environment post-1991, with the entry of MNCs in the cosmetics sector, Company X Limited needs to adapt its organizational structure to remain competitive in the FMCG sector. Here are the organizational structure changes the company should consider:
Decentralisation of Decision Making: Company X Limited should move from a centralized model to a decentralized one.
Quick Decision Making: Decentralisation allows decisions to be made at lower levels, closer to the ground realities, leading to faster and more efficient decision-making processes.
Adaptability: Different regions or markets might have unique needs. Decentralisation allows regional heads or managers to make decisions tailored to their specific markets, helping the company adapt to diverse consumer preferences.
Adopt a Divisional Structure based on Product Lines or Geographical Markets: Given the vast product range in the cosmetics sector, the company can organize its structure based on different product lines or geographical markets.
Specialization: Each division can focus on its specific product line or market, leading to specialization and better strategies tailored for each product or region.
Better Resource Allocation: Resources can be allocated more efficiently based on the performance or potential of each product line or market.
Introduce Cross-Functional Teams: These teams should consist of members from different departments like marketing, R&D, production, etc., working together on specific projects or product lines.
Holistic Decision Making: Decisions made after considering inputs from various departments can be more comprehensive and effective.
Innovation: Diverse perspectives can lead to innovative solutions and products, helping the company differentiate itself in a competitive market.
Embrace an Informal Organisational Structure: While the formal structure is essential, the company should also encourage informal communication and interactions.
Faster Communication: Informal channels can lead to quicker dissemination of information and feedback.
Employee Morale: An informal environment can boost employee morale and motivation, leading to increased productivity.
Invest in Market Research and R&D Departments: Given the entry of MNCs and changing consumer preferences, the company should strengthen its market research and R&D departments.
Stay Updated: Market research can provide insights into changing consumer preferences, helping the company adapt its product offerings.
Innovation: A strong R&D department can lead to the development of new and innovative products, helping the company differentiate itself from competitors.
In Conclusion, by decentralizing decision-making, adopting a divisional structure, introducing cross-functional teams, embracing an informal organizational structure, and investing in market research and R&D, Company X Limited can adapt to the changing business environment and retain its market share in the FMCG sector.