Ch-5; Organising; Business Studies

Class 12 (2026-27, Ch-5, Organising, Business Studies, Full Chapter in Book Language

What is <b>Organizing</b> a means for?

Organizing is a means for translating plans into action.

Define <b>Organizing</b>.

Organizing can be defined as a process that initiates implementation of plans by clarifying jobs and working relationships and effectively deploying resources for attainment of organizational goals.

List the 4 steps in the Process of Organizing.

1. Identification and division of work
   2. Departmentalization (Grouping of work)
   3. Assignment of duties
   4. Establishing reporting relationships

Explain Identification and Division of Work in the Process of Organizing.

1. The first step in the organizing process is to identify and divide the total work to be done in accordance with previously determined plan.

2. The work is divided into manageable activities so that duplication of efforts can be avoided and the burden of work can be shared among the employees.

What happens under Departmentalization?

1. After the identification and division of work, the next step is to group related and similar jobs under one department. Such grouping is known as departmentalization.

2. It facilitates specialization.

Mention the 3 popularly used bases of grouping under Departmentalization.

1. Function — on the basis of function like purchase, marketing, finance

2. Product — like appliances, clothes, cosmetics

3. Territory — like north, southwest

Explain <b>Assignment of Duties</b> after grouping activities into departments.

After grouping various activities into department, it is necessary to define the work of different job positions and to allocate work to various employees.<br>Each department is placed under the charge of an individual.<br>Duties should be charged to the member of each department on the basis of their skills and competencies.

What is important for effective performance under <b>Assignment of Duties</b>?

A proper match between <b>nature of job</b> and <b>ability of an individual</b> is very important for the effective performance.

Explain <b>Establishing Reporting Relationships</b> in the organizing process.

After assigning duties, the next step is to clearly define the authority and responsibility associated with each job.<br>Each individual should also know who he has to take order from and to whom he is accountable.<br>The establishment of such clear relationships helps to create a <b>hierarchical structure</b>, and principle of <b>scalar chain</b> follows this hierarchy. That is, <b>degree of authority</b> goes down from top to bottom in hierarchy.<br>It helps in <b>coordination</b> amongst various departments.

What does the <b>Principle of Scalar Chain</b> mean in the hierarchy?

Degree of authority goes down from top to bottom in hierarchy.

State the 7 points showing the Importance of Organizing.

1. Benefits of specialization
   2. Clarity in working relationships
   3. Optimum utilization of resources
   4. Adaptation to change
   5. Effective administration
   6. Development of personnel
   7. Expansion and growth

Explain <b>Benefits of Specialization</b> as an importance of organizing.

The process of organizing leads to a systematic allocation of jobs among the workforce.
Such division of work reduces the workload and increases productivity.
Repetitive performance of a particular work also leads to specialization.

Explain <b>Clarity in Working Relationships</b> as an importance of organizing.

Organizing establishes the working relationships, which clarifies the lines of communication and specifies who is to report to whom.<br>Each person knows his superior from whom he has to take orders.<br>This removes ambiguity in transfer of information and instructions.

What does <b>Optimum Utilization of Resources</b> ensure?

Organizing ensures optimum utilization of <b>human, financial, and material resources</b>.<br>In organizing, work is assigned as per ability and proper assignment of jobs avoids overlapping of work and also makes possible the best use of resources.<br>Avoidance of duplication of work helps in preventing confusion and minimizing the wastage of resources and efforts.

How does <b>Adaptation to Change</b> contribute to organizing?

An organization operates in a dynamic environment, and such an ever-changing environment poses both challenges and opportunities to the business.<br>The process of organizing helps the enterprise to adjust itself as per changes in the business environment.<br>It allows the organization structure to be suitably modified and revision of interrelated relationships amongst managerial levels to pave the way for a smooth transition.<br>It also provides stability to the enterprise so that it can continue to survive and grow in spite of changes.

Explain <b>Effective Administration</b> as an importance of organizing.

Organization provides a clear description of jobs and clarifies authority and responsibility relationship.<br>It helps to avoid confusion and duplication of efforts.<br>Clarity in working relationships enables proper execution of work and brings effectiveness in administration.

How does organizing contribute to <b>Development of Personnel</b>?

Organizing stimulates creativity among the managers through the use of <b>delegation of authority</b>.<br>Effective delegation allows the managers to reduce their workload by assigning routine to their subordinates.<br>It gives them time to concentrate on strategic issues and explore new areas for growth.<br>It also gives them opportunity to innovate which helps to strengthen the company's competitive position.<br>Delegation also develops the subordinate by giving them the ability to deal effectively with challenges and realizing their full potential.

Explain <b>Expansion and Growth</b> as an importance of organizing.

Organizing process creates favorable conditions for expansion and diversification of enterprises by enabling it to deviate from existing norms and take up new challenges.<br>It allows a business enterprise to add more jobs, departments, and even diversify their product line.<br>It helps in expansion and growth of business.<br>New geographical territories can also be added to current areas of operation and it will help increase customer base, sales, and profit.

Define <b>Organization Structure</b>.

Organization structure refers to the framework within which managerial and operating tasks are performed.

What does <b>Organization Structure</b> specify?

Organization structure specifies the relationship between people, work, and resources.

Why should an <b>Organization Structure</b> be subjected to periodic review?

As business operates in a dynamic environment, management must continuously review its plan and organization structure of the enterprise should also be subjected to periodic review to determine if modification is required.

What should be the nature of a good <b>Organization Structure</b>?

A good <b>organization structure</b> should be <b>dynamic</b> so that it can change and adjust as per situations and business environment.

What is the <b>Need for Organization Structure</b>?

A proper organization structure is essential to ensure a <b>smooth flow of communication</b>, <b>good coordination</b>, and a <b>better control</b> over business operations.<br>In case of a one-man show, business structure is not needed as all activities are performed by the owner himself. However, when the organization grows, it becomes difficult to coordinate the function and activities of the different members.

Mention the 2 Benefits of Organization Structure.

1. A proper organization structure ensures a good flow of communication and better control over the operations of a business enterprise.
   2. It provides a framework that enables the enterprise to function as an integrated unit by coordinating the responsibilities of individuals and departments.

How is an <b>Organization Structure</b> created?

The structure of an organization is deliberately designed and planned. It is greatly influenced by <b>span of management</b>.<br><b>Span of management</b> refers to the number of subordinates that can be effectively managed by a superior.<br>This determines the levels of management in the structure. So managers must consider the span of management while creating the organization structure.

Mention the 2 types of Organization Structure.

1. Functional structure
   2. Divisional structure

Define <b>Functional Structure</b>.

Functional structure refers to the grouping of jobs of similar nature under one department.
All related and similar functions are grouped in one department under one executive.
This department may be further divided into sections.

Which companies follow the <b>Functional Structure</b>?

Companies like <b>Britannia Industries</b>, <b>Bata</b>, etc. follow the functional structure.

State the 3 conditions indicating the Suitability of Functional Structure.

1. When the size of the organization is large
   2. When organization has to carry out diversified activities
   3. When the task requires a high degree of specialization

Explain <b>Functional Specialization</b> as an advantage of functional structure.

It promotes <b>specialization</b> since each department has to perform a specific function.<br>As employees perform similar tasks within a department, it improves their efficiency and they are able to gain specialization.

Explain <b>Avoids Duplication</b> as an advantage of functional structure.

It helps in avoiding duplication of efforts which leads to <b>economies of scale</b> and reduces the <b>cost of production</b>.

What does <b>Proper Attention</b> ensure in a functional structure?

Functional structure ensures that different functions get due attention.

List the 4 selected Advantages of Functional Structure.

1. Functional specialization
   2. Avoids duplication
   3. Ease in training
   4. Proper attention

Explain <b>Ease in Training</b> as an advantage of functional structure.

It makes training of employees easier as focus is only on the <b>limited range of skills</b>.

List the <b>5</b> <b>Disadvantages of Functional Structure</b>.

1. Functional empire<br>2. Difficulty in coordination<br>3. Conflict of interest<br>4. Inflexibility<br>5. Difficult to hold accountable

Explain <b>Functional Empire</b> as a disadvantage of functional structure.

1. Functional structure places less emphasis on overall enterprise objectives than objectives pursued by a functional head.<br>2. Such practices lead to <b>functional empire</b> where departmental functions are given more importance.<br>3. Pursuing departmental interest at the cost of organizational interest can also hinder the interaction between the two or more departments.

What is the problem of <b>Difficulty in Coordination</b> in functional structure?

1. It may cause problems in coordination as information has to be exchanged across different departments.

How can <b>Conflict of Interest</b> arise in functional structure?

1. It may lead to conflict between two or more departments if their interests are not compatible.<br>2. Interdepartmental conflicts also arise when responsibilities are not clearly separated.

Why is it <b>Difficult to Hold Accountable</b> under functional structure?

1. It becomes difficult to hold a particular department accountable if the organizational goal is not achieved and no department takes the blame on its own.<br>2. Moreover, the departmental heads may also blame each other.

Explain <b>Inflexibility</b> as a disadvantage of functional structure.

1. It may lead to inflexibilities as employees get training of one function only.<br>2. Functional heads are not trained for top management positions as they are unable to gather experience in diverse areas.<br>3. As a result, people cannot be shifted to other departments or positions.

Define <b>Divisional Structure</b>.

When the organization is in the production of more than one type of product, and jobs related to one product are grouped under one department, it is termed as <b>divisional structure</b>.<br>This type of structure is suitable for large organizations which have various product lines or several products.<br>Under this method, a separate business unit or department or division is created for each major product.<br>Each department operates as a <b>multifunctional unit</b> as all necessary functions, such as production, purchase, finance, etc., are performed together to achieve a common goal.<br>Each division works as a <b>profit center</b> where divisional head is responsible for the profit or loss of his division.

State the <b>3</b> conditions indicating the <b>Suitability of Divisional Structure</b>.

1. When large varieties of products are manufactured using different productive resources<br>2. When an organization plans to add more departments or more lines of product in the future<br>3. When it is important to determine profit and losses made by each product line so that decision can be taken to expand, continue, or close a particular product line

List the <b>4</b> <b>Advantages of Divisional Structure</b>.

1. Product specialization<br>2. Greater accountability<br>3. Flexibility<br>4. Expansion and growth

Explain <b>Product Specialization</b> as an advantage of divisional structure.

1. The divisional head gains experience in all functions related to a particular product.<br>2. Product specialization helps in the development of varied skills and prepares him for higher position.

Explain <b>Greater Accountability</b> as an advantage of divisional structure.

1. In the divisional structure, each product department is treated as a <b>profit center</b> and is accountable for its own profit or losses.<br>2. This provides a base for measuring performance and helping in fixing responsibility in case of poor performance.

Explain <b>Flexibility</b> as an advantage of divisional structure.

It promotes <b>flexibility and initiative</b> as each division functions as an autonomous unit.<br>It leads to faster decision-making.

Explain <b>Expansion and Growth</b> as an advantage of divisional structure.

It facilitates <b>expansion, diversification, and growth</b> as new divisions can be added without interrupting the existing operations.

List the <b>3</b> <b>Disadvantages of Divisional Structure</b>.

1. Departmental conflicts<br>2. Costly<br>3. Ignore organizational goals

Explain <b>Departmental Conflicts</b> as a disadvantage of divisional structure.

1. Conflicts may arise among different divisions with respect to allocation of fund.<br>2. A particular division may seek to maximize its profit at the cost of other divisions.

Why is divisional structure considered <b>Costly</b>?

1. Each division has to maintain its own facilities, equipment, and personnel.<br>2. It may lead to increase in operating costs since there may be <b>duplication of activities</b>.

How can divisional structure <b>Ignore Organizational Goals</b>?

1. Divisional structure provides managers with the authority to supervise all activities related to a particular division.<br>2. Managers focus on their own product without thinking of the rest of the organization.<br>3. Thus, organizational goals and objectives suffer and become difficult to accomplish.

On the basis of relationship, into which <b>2</b> broad categories may an organization be divided?

1. Formal organization<br>2. Informal organization

Define <b>Formal Organization</b>.

Formal organization refers to the organization structure which is designed by the management to accomplish a particular task.
In formal organization, position, responsibility, authority, and accountability of each level is clearly and explicitly defined.
The structure in a formal organization can be functional or divisional.

What are the <b>Features of Formal Organization</b>? <b>(Not concrete headings)</b>

1. It specifies the relationship among various job positions and their nature of interrelationship.<br>2. It is a means to achieve the objectives as it lays down <b>rules and procedures</b> essential for their achievement.<br>3. It is deliberately designed by top management to facilitate smooth functioning of the organization.<br>4. It places more emphasis on work than interpersonal relationship among the employees.

List the <b>5</b> <b>Advantages of Formal Organization</b>.

1. Fixation of responsibility<br>2. Clarity of duties<br>3. Unity of command<br>4. Helpful in achieving objectives<br>5. Provides stability

Explain <b>Fixation of Responsibility</b> as an advantage of formal organization.

It is easier to fix responsibility as mutual relationships are clearly defined and inefficient employees can be easily held accountable.

Explain <b>Clarity of Duties</b> as an advantage of formal organization.

Role and duties of each member are clearly and explicitly specified.<br>So there is no confusion and it helps in avoiding duplication of efforts.

How does <b>Unity of Command</b> exist in formal organization?

There is <b>unity of command</b> as formal organization makes more use of official channels of command and communication.

How is formal organization <b>Helpful in Achieving Objectives</b>?

It leads to effective accomplishment of objectives by providing framework for operations to be performed and clarity of roles in the minds of employees.

How does formal organization <b>Provide Stability</b>?

It provides stability to the organization as behavior of employees can be fairly predicted since there are specific rules to guide them.

List the <b>3</b> <b>Disadvantages of Formal Organization</b>.

1. Procedural delays<br>2. Inadequate recognition to creative talent<br>3. Ignores human element

Explain <b>Procedural Delays</b> as a disadvantage of formal organization.

The formal communication may lead to delay in decision making and action as the official chain of command has to be followed, which increases the time taken for decision making.

Why is there <b>Inadequate Recognition to Creative Talent</b> in formal organization?

Formal organization does not allow any deviations from rigidly laid down policies and strict rules.<br>Such poor organizational practices may not provide adequate recognition to the <b>creative talent</b>.

How does formal organization <b>Ignore Human Element</b>?

Formal organization places more emphasis on structure and work.<br>It ignores the importance of <b>interpersonal relations</b> and <b>human needs</b>.

Define <b>Informal Organization</b>.

Informal organization refers to network of social relations which emerges on its own due to formal roles and relationships among people.
Informal organization emerges from within the formal organization when people interact beyond their officially defined roles.

How does <b>Informal Organization</b> emerge?

It means informal organization is not pre-planned.<br>It arises automatically due to frequent contact of people with each other.<br>It does not have any prescribed rules or policies and does not have any fixed lines of communication.

What are the <b>Features of Informal Organization</b>? <b>(Not concrete headings)</b>

1. It originates from within the formal organization as a result of social interactions among people.<br>2. Standards of behavior evolve from the <b>group norms</b> and not officially laid down rules and regulations.<br>3. There is no specific direction of flow of information.<br>4. It emerges spontaneously out of <b>mutual liking and taste</b> and not created by management.

List the <b>3</b> <b>Advantages of Informal Organization</b>.

1. Faster communication<br>2. Fulfill social needs<br>3. Helps in achieving organizational objectives

Explain <b>Faster Communication</b> as an advantage of informal organization.

It allows the independent channels of communication as there is no prescribed official channel.

How does informal organization <b>Fulfill Social Needs</b>?

It satisfies the social needs of members which is not satisfied in a formal organization.<br>It enhances their job satisfaction as it gives them a <b>sense of belongingness</b>.

How does informal organization <b>Help in Achieving Organizational Objectives</b>?

It contributes toward fulfillment of organizational objectives by compensating for inadequacies in formal organization.

List the <b>3</b> <b>Disadvantages of Informal Organization</b>.

1. Spread of rumors<br>2. Resistant to change<br>3. Pressure of group norms

Explain <b>Spread of Rumors</b> as a disadvantage of informal organization.

When an informal organization spreads rumors, it becomes a destructive force and goes against the interests of the formal organization.

Why can informal organization be <b>Resistant to Change</b>?

The management may not be successful in implementing changes if the informal organization opposes them.<br>Such resistance to change may delay or restrict growth.

How does <b>Pressure of Group Norms</b> become a disadvantage of informal organization?

In case of informal organization, people are under pressure to observe <b>group norms</b>.<br>This can be harmful to organization if norms set by group are against organizational interests.

Can <b>Informal Organization</b> be altogether eliminated?

Informal organization cannot be altogether eliminated.

How does <b>Informal Organization</b> support formal organization?

Informal organization supplements the functional of formal organization and makes it more efficient in achieving organizational goals.<br>It can also provide useful communication channels.

What should management do regarding <b>Formal and Informal Organizations</b>?

Instead of confronting them, the management should skillfully take advantage of both the formal and informal organizations so that both continue to work smoothly.

When can the <b>Goals of an Organization</b> be achieved?

The goals of an organization can only be achieved when <b>personal needs of members are satisfied</b>.

Define <b>Delegation</b>.

Delegation is the transfer of authority from superior to subordinate, entrustment of responsibility and creation of accountability for performance.

What is the significance of <b>Delegation of Authority</b>?

The whole process of sharing <b>work, authority</b> and creating <b>accountability</b> is done through delegation of authority.<br>It is a downward transfer of authority from a superior to subordinate.<br>It is a prerequisite for the efficient functioning of an organization as it enables a manager to concentrate on higher priority activities.<br>It also satisfies the subordinates' need for recognition and provides them an opportunity to develop and exercise initiative.

What are the terms used for the two persons involved in <b>Delegation</b>?

The person who delegates is known as <b>delegator</b> and the other person is <b>delegatee</b>.

What principle is the concept of <b>Delegation</b> based upon?

The concept of <b>delegation</b> is based upon the principle of <b>division of work</b>.

Why is there <b>No Delegation in One-Man Business</b>?

In one-man business, everything is done by the owner himself, so delegation is not needed.<br>Delegation becomes necessary when people work together in groups to achieve some common objective.

What happens to the <b>Manager's Accountability</b> after delegation?

The process of delegation does not relieve the superior of his accountability. <b>Delegation does not mean abdication.</b><br>Moreover, the authority granted to a subordinate can be taken back and re-delegated to another person.<br>Irrespective of extent of delegated authority, the manager shall still be accountable to the same extent as before delegation.

List the <b>3</b> <b>Elements/Process of Delegation</b>.

1. Authority<br>2. Responsibility<br>3. Accountability

Define <b>Authority</b> as an element of delegation.

Authority refers to the right of an individual to command his subordinates and to take action within the scope of his position.
It originates by virtue of an individual's position.

How does <b>Authority</b> flow through the organizational hierarchy?

1. Extent of authority is the highest at top level and reduces successively as we go down the organizational hierarchy.<br>2. Thus, <b>authority flows from top to bottom</b>.

How does <b>Authority</b> help maintain order in an organization?

Authority helps to maintain order in organization by giving the manager the right to <b>exact obedience</b> and give direction to workforce under them.

Define <b>Responsibility</b> as an element of delegation.

Responsibility is the obligation of a subordinate to carry out the assigned duties.
It originates from superior-subordinate relationship as subordinate is bound to perform the duty assigned to him by a superior.

How does <b>Responsibility</b> flow in an organization?

Responsibility flows upward as subordinate is responsible to his superior.

What is the relationship between <b>Authority and Responsibility</b> in effective delegation?

When an employee is given responsibility for a job, then he must also be given necessary authority to carry it out.<br>For effective delegation, the authority granted must <b>commensurate with the assigned responsibility</b>.<br>If authority granted is more than responsibility, it may lead to misuse of authority.<br>If responsibility assigned is more than authority, it may make a person ineffective.

Define <b>Accountability</b> as an element of delegation.

Accountability is the obligation to carry out a responsibility, that is, being answerable for the final outcome.

What are the key characteristics of <b>Accountability</b>?

1. Once authority has been delegated and responsibility accepted, one cannot deny accountability.<br>2. Accountability <b>cannot be delegated</b> or flowed upward.<br>3. Subordinate is accountable to superior.<br>4. Even after delegation of authority, superior is accountable if the subordinates fail to perform the delegated work.

List the <b>6</b> <b>Importance of Delegation of Authority</b>.

1. Effective management<br>2. Employee development<br>3. Motivation of employees<br>4. Facilitation of growth<br>5. Basis of management hierarchy<br>6. Better coordination

Explain <b>Effective Management</b> as an importance of delegation of authority.

1. Through delegation, managers are able to function more efficiently as they get more time to concentrate on important matters.<br>2. It gives them freedom from doing routine work and provides them with opportunities to excel in new areas.

Explain <b>Employee Development</b> as an importance of delegation of authority.

1. Due to delegation, employees get more opportunity to utilize their talent and skills and improve their career prospects.<br>2. It makes them better leaders and decision makers.<br>3. Thus, delegation develops future managers.<br>4. It empowers the employee by giving them a chance to use their skills, gain experience, and develop themselves for higher positions.

Explain <b>Motivation of Employees</b> as an importance of delegation of authority.

1. Delegation motivates the subordinates to work with greater responsibility and helps in developing their talent.<br>2. It also has psychological benefit.<br>3. It shows the trust and confidence of superior on his subordinate.<br>4. He feels encouraged and tries to improve his performance further.

Explain <b>Facilitation of Growth</b> as an importance of delegation of authority.

Delegation acts as a good training ground and helps in the expansion of an organization by providing a ready workforce to take up leading position in new ventures.

Explain <b>Basis of Management Hierarchy</b> as an importance of delegation of authority.

1. Delegation establishes superior-subordinate relationship which is the basis of hierarchy management.<br>2. It is the degree and flow of authority which determines who has to report to whom.