ORGANISING

CHAPTER – 10

ORGANISING
Organising together. This grouping is called departmentalisation.
Identifying and grouping different activities in the Work is divided into jobs to facilitate unity of effort. It
organisation and bringing together the physical, financial facilitates specialization. The department so created
and human resources to establish most productive relations linked together on the basis of their interdependence.
for the achievement of specific goal of organisation. Departments can be created on the following basis :
According to Henry Fayol, “To organise a business is to (a) On the basis of Functions: For example, Finance
provide it with everything useful to its functioning; raw Department for financing activities, Production
materials, machines and tools, capital and personnel.” Department for production activities etc.
Process of Organising (b) On the basis of Products: For example,
(i) Identification and division of work: The first step in the Medicine, Textile, Garments, Cosmetics, Bottles
process of organizing involves identifying and dividing etc.
the work in accordance with predetermined plans. The (c) On the basis of Territory: For example East,
work is divided into manageable activities (called jobs) West, North, South etc.
so that duplication of work can be avoided and the (iii) Assignment of duties: Once departments are formed,
burden of work can be shared among the employees. individual department heads are appointed for each
Division of work facilitates specialization in work and department according to their skills and
skills which is necessary because the work cannot be competencies. The work must be assigned to those
done by one individual very effectively and efficiently. who are best fitted to perform it well.
(ii) Departmentalisation: Once work is divided into
small activities, similar and related jobs are related
(iv) Establishing reporting relationships: Establishing authority and responsibility relationship help to create the
hierarchal structure and helps in coordination among various departments. Superior subordinate relations between
different people and job position is to be created, so that everybody knows from who is he/she is taking orders and to
whom he/she can issue orders.
 Importance of Organising business environment by suitably modifying the
(i) Benefits of specialisation: In organising function, organisation structure. It also helps provides stability
work is divided into different parts. Such division of in the enterprise so that it continues to survive and
work reduces the work load and enhances the grow in spite of changes.
productivity. Efforts are made to place the right man
at the right job on the basis of his ability, knowledge
and skill. Repeatedly doing a particular work helps a
worker to gain experience and get specialized in that
area. As a result, organising leads to specialisation.
(ii) Clarity in working relationships: In Organising, the
employees are assigned jobs and managers clearly (v) Effective administration: Organising clarifies
define the jobs. The jobs are defined on written jobs/duties and authority-responsibility
document which is called job description which relationships. This helps in avoiding confusion and
explain what has to be done in every job. There is duplication, and enables proper execution of work.
clearly defined line of communication and line of Thus managing the enterprise becomes easy and this
authority and responsibility. This helps in fixation of brings effectiveness in administration.
responsibility and removes ambiguity in transfer of
(vi) Development of personnel: It helps in development
information and instructions.
of personnel by delegation of work to subordinates.
(iii) Optimum utilisation of resources- In Organising, Effective delegation allows manager to assign works of
functions are clearly defined and differentiated. The routine nature to their employees. The reduction of
proper allocation of work helps in avoiding overload enables the managers to develops new
overlapping/duplication of work, which help in methods and way of performing efficiently. It give
avoiding confusion and minimising the wastage of them time to innovate latest techniques and to explore
resources and efforts. Thus organising leads to the new ideas for the growth of the companies. On the
optimum use of all material, financial and human other hand, delegation develops an ability among the
resources. subordinate to deal effectively with the challenges and
(iv) Adaptation to change: Organising helps the also help them to realise their full potential.
enterprise to adjust itself according to the changes in
(vii) Expansion and growth: Organising promotes growth and diversification of an enterprise. It enables the business
enterprise to add more job positions, departments and even diversify their product lines.

Organisation Structure Types of Organisation Structure

It can be defined as “Network of job positions, The organisational structure can mainly be of two
responsibilities and authority at different levels.” types which are
The considerations to be kept in mind while farming (a) Functional Structure: When the activities or jobs are
the organisational structure are grouped keeping in mind the functions or the job then
(i) Job design it is called functional structure. All departments report
(ii) Departmentation to a coordinating head. For example, in a
(iii) Span of management manufacturing firm, all jobs related to production are
(iv) Delegation of authority grouped in production department, jobs related to
Benefits of an adequate organisation structure finance under finance department.
(i) It will result to increased profitability of an Suitability
enterprise. (i) When the size of the organisation is large and
(ii) It allows corelation and coordination among producing single product or small number of related
physical, human and financial resources and this products.
enables a business enterprise to accomplish the (ii) When the organisation has to carry diversified
desired goals. activities.
(iii) A proper organisation structure is essential to (iii) When the operations of the business need high degree
ensure a smooth flow of communication and of specialisation.
better control over the operations of business
enterprise.
(a) Advantages (b) Divisional Structure: Divisional Structure is a type of
(i) Functional Specialisation: A functional organisational comprising of separate business units
structure leads to functional/occupational or divisions, created on certain basis. When the
structure since emphasis is laid on specific organisation is large in size and is producing more
functions. This promotes efficiency in utilisation than one type of product then activities related to one
of manpower as employees are required to product are grouped under one department.
perform the similar tasks within a department (a) Advantages
regularly. (i) Product specialisation: A divisional heads
(ii) Better Control and Coordination: It promotes gains experience in all functions related to a
control and coordination within a department particular product. Product specialisation helps
because employee perform similar tasks. in development of varied skills in a divisional
(iii) Efficiency: It helps in increasing managerial head and this prepares him for higher positions.
and operational efficiency and this results in (ii) Greater Accountability: In this structure, each
increased profits. product department is treated as a ‘profit
(iv) Minimises Costs: It leads to minimum centre’ and is accountable for its own profit and
duplication of efforts which results in lower loss. This provides a base for evaluating
costs. performance and helps in fixation of
responsibility of poor performance.
(v) Facilitates Training: It makes training of the
employees more easy as they are trained in (iii) Flexibility and Initiative: It promotes
limited range of skill i.e employee of marketing flexibility and initiative because each division
department are given training of marketing functions as an autonomous or independent
techniques only. unit which leads to faster decision making.

(vii) Proper Attention: It ensures that different (iv) Expansion and growth: In division structure,
functions like marketing, financing etc. get due new divisions can be easily added without
attention. interrupting the existing operations. Thus, it
facilitates expansion and growth.
(b) Disadvantages
(i) De Emphasis on Organisational Objectives: (b) Disadvantages
Under functional structure, more emphasis is (i) Expensive: It may lead to increase in costs
given on accomplishing departmental because of duplication of resources in various
objectives than overall objectives. It will have departments since each department has set of
adverse effect on the company. similar functions.
(ii) Inter-departmental Conflicts: It may lead to (ii) Conflicts: There may be conflicts among
conflict between two or more departments. different divisions with reference to allocation of
funds. Also, a particular division may try to
(iii) Problems in Coordination: It may be difficult
maximise its profits at the cost of other divisions.
to achieve coordination as information has to be
exchanged across functionally differentiated (iii) Organisational Interest Ignored: It provides
departments. managers with the authority to supervise all
activities related to a particular division.
(iv) Inflexibility: Employees get training of single Managers focus on their products and pay no
function only i.e., the department to which they
attention to overall organisational objectives.
belongs so they can’t be shifted to other
Thus organisational objectives suffer and
department or positions.
become difficult to achieve.
(v) Difficulty in Fixing Responsibility: It becomes
difficult to hold a particular department
responsible for any problems.

(c) Suitability
(i) When organisation is producing multiple products with distinctive products.
(ii) When organisation require product specialisation.
(iii) When an organisation grows and needs to add more employees, create more departments and introduce new levels
of management.
Difference between Functional and Divisional Structure
S.No. Points of Difference Functional Structure Divisional Structure
1. Basic of Formation This structure is formed on the basis of This structure is formed on the basis of
function. product.
2. Accountability and Difficult to make accountable as departments Easy to fix the accountability as
Responsibility are interdependent. departments work independently.
3. Economy Cost It is economical. It is not very economical because all the
resources are required in different
departments.

4. Development of Less chances as manager becomes specialised More chances as managers perform
Managers in one function only. multi functions.
5. Specialisation This type of structure brings functional It brings product specialisation.
specialisation.
6. Co-ordination Compared to Divisional less when Better co-ordination because all the
activities related to one product are in
one department only.

7. Autonomy of Less autonomy of action. More autonomy.

operations
8. Suitable It is suitable for all types of organisations. It is suitable for multiproduct or
diversified firms.

Formal Organisation (iii) Unity of Command: Unity of command is maintained

When the managers are carrying on organising process then through the scalar chain
as a result of organisation process an organisational
structure is created to achieve systematic- working and (iv) Accomplishment of Organisational Objectives:
efficient utilisation of resources. This type of structure is Formal organisation helps in achieving the objectives
known as formal organisational structure. of the organisation by providing a framework
regarding operations to be performed and ensuring
Features of Formal Organisation that each employee know the role he has to play.
(i) It is intentionally created by the top management to
facilitate smooth functioning of the organisation. (v) Stability: This type of organisation provides stability
to the organisation through policies, procedures, rules
(ii) It’s purpose is to achieve organisational objectives. and regulations. Formal organisation is long lasting
(iii) It clarifies the official line of communication and because functioning of various departments continues
official relationships. despite the leaving of old employees and joining of
(iv) It coordinates and integrates the efforts of various new hands
departments. (b) Disadvantages
(v) Formal organisation is impersonal as it places more (i) Procedural Delays: The formal communication may
emphasis on work to be performed rather than an lead to procedural delays as the established chain of
inter-personal relationship among employees. command has to be followed which increases the time
taken for decision making. For example, Suppose a
(vi) It concentrates on the jobs to be performed and not the salesman has an order of 2,000 packets of pens
individuals who performs the jobs. immediately. The marketing manager is there but he
(vii) Formal organisation specifies clearly the authority- cannot be approached because the salesman can
responsibility relationships among various job consult the sales manager only.
positions. This clarifies who has to report to whom. (ii) Lack of Initiative: Formal organisation may not
(a) Advantages provide adequate recognition to creative talent, since
(i) Fixation of Responsibility: It is easy to fie it does not allow any deviations from rigidly laid down
responsibility in case of failures as mutual policies.
relationships are clearly defined. (iii) Difficult to Fully Understand Human
(ii) Clarity of Duties: In this type of organisation, role and Relationships: This is because it gives more emphasis
duties of each member are clearly defined which helps on structure and work, rather than on inter-personal
in avoiding confusion and duplication of work and relationships among the employees
efforts.
Informal Organisation objectives by compensating the limitations of
It is a network of personal and social relations not formal organisations.
established or required by the formal organisation but (b) Disadvantages
arising spontaneously as people associate with one another. (i) Spread rumours: Informal Organisation may
When people have frequent contacts, they cannot be forced become a disturbing force when it spreads
into rigid formal structure. Rather, based on their interaction rumours. This may cause serious harm to the
and friendship they tend to form informal groups to fulfil organisation and its management.
their social needs. It increases their job satisfaction. (ii) Resistance to Change: It is very difficult for the
Features of Informal Organisation management to bring changes in the
(i) It is formed by the individual to get social and organisation opposes them. Such resistance to
psychological satisfaction. change may delay or restrict growth of the
organisation.
(ii) It has no definite structure or form.
(iii) It is not deliberately created by the organisation but (iii) Priority to Group Interests: Informal groups
arises spontaneously can be harmful to the organisation if the norms
set by the groups are against the interest of the
(iv) Under informal organisation, information can flow in
organisation.
any direction.
Delegation
(v) An informal organisation originates from within the
“A process of entrusting responsibility and authority to the
formal organisation because of personal interaction
subordinates and creating accountability on those
among employees.
employees who are entrusted responsibility and authority.”
(a) Advantages
Delegation is a pre-requisite to the efficiency functioning of
(i) Fast communication: In informal organisation
an organisation because it enables a manger to use his time
prescribed lines of communication are not
on high priority activities. It also satisfies the subordinates
followed. Thus, the informal organisation leads
need for recognition and provides them opportunities to
to faster spread of communication as well as
develop and exercise initiative. The person who delegates
quite feedback.
the authority is called delegator and the person who receives
(ii) Fulfills social needs: Informal organisation the authority is known as delegate. Delegation helps a
helps to fulfil the social needs of the members. manager to extend his area of operations as without it, his
This enhance their job satisfaction since it gives activities would be restricted to only what he himself can do.
them a sense of belongingness However, delegation does not abdication. The manager shall
(iii) Fill Inadequacies of Formal Structure: It still be accountable for the performance of the assigned
contributes towards fulfilment of organisational tasks. Moreover, the authority granted to a subordinate can
be take back and redelegated to another person.
Elements of Delegation

1. Responsibility: Responsibility means the obligation of a subordinate to properly perform the assigned duty.
Responsibility arises from a superior-subordinate relationship because the subordinate is bound to perform the duty
assigned to him by his superior. Responsibility always flows upwards from a subordinate to a superior.
2. Authority: Authority refers to the right of an individual to command his subordinates and to take action within the scope
of his/her position. It arises from the established which links the various job positions and levels of an organisation.
Authority is required to perform a given responsibility. It always moves downwards from a superior to a subordinate.
3. Accountability: Accountability means answerability for the final outcome of the assigned work. Authority can be
delegated by a superior to his subordinates but accountability cannot be passed or delegated because it is absolute in
nature. Accountability always flows upwards from a subordinate to a superior. Even when a manager delegates his part
of responsibility and authority to his subordinates, he remains accountable to his superior for his own work as well as
work of his subordinates.
Comparative Study of Elements of Delegation
S.No. Basis Authority Responsibility Accountability
1. Meaning Power to take decision. Obligation to perform a task. Answerable for the output of
assigned task.
2. Delegation Can be delegated. Cannot be fully delegated. Cannot be delegated at all.
3. Origin Arises from formal Arises from delegation of Arises from responsibility.
position. authority.
4. Flow of Flows downward from Flows upward from Flows upward from subordinate to
direction superior to subordinate. subordinate to superior. (As superior.
subordinate will always be
responsible to his superior.)

Importance of Delegation efforts; and also helps in developing and

(i) Effective management: Delegation of maintaining effective coordination amongst
authority of manager helps a manager to share various departments, levels and functions of
his work load with subordinates. It lightens the management.
burden of work on top executives. By passing Decentralisation
routine or minor work to the subordinates, a Decentralisation explains the manner in which
manager can create greater time on important decision-making responsibilities are divided among
matters. hierarchical level.
(ii) Employee development: Delegation of Importance of Decentralisation
authority provides more opportunities to (i) Develops initiative among subordinate:
employees to utilise their talent. It allows them Decentralisation helps the lower level managers
to develop those necessary skills which help to to take all those decisions, which are for the
perform complex tasks. Thus delegation is a improvement of enterprise, on their own and
technique for developing managers for future develop appropriate solutions for solving
by giving them chance to use their skills, gain different kinds of difficulties or problems they
experience and develop themselves for higher face. This help in increasing confidence and self-
job positions. reliance among the subordinates.
(iii) Motivation of employees: Delegation is an (ii) Develops managerial talent for the future:
important instrument to motivate the Under decentralisation, managers working at
subordinates. When authority is delegated to middle level and lower level learn the art to take
the subordinates, they are encouraged to do independent decisions. Decentralisation
their job with greater responsibility. Delegation provides them a chance to prove their talent by
provides a feeling of status and recognition to handling various assignments independently.
subordinates. Their job satisfaction increases Such kind of knowledge and experience at all
due to authority they enjoy and the rewards levels in an organisation.
they get reward for better performance. (iii) Quick decision making: It helps in quick
Responsibility for work improves self-esteem decision making, as there is no requirement for
and confidence of employees. approval from many levels. There are also less
(iv) Facilitation of growth: Delegation facilitates chances of information getting distorted
expansion and growth of an organisation by because it does not have to through long
providing trained and experience personnel to channels.
take leading positions in new ventures or
projects. (iv) Relief to top management: It gives relief to the
top management who can now concentrate on
(v) Basis of management hierarchy: Delegation
important policy decision, e.g develop new
of authority establishes superior-subordinate
strategies, coordination and control etc.
relationship, which are basis of hierarchy of
management. Everyone knows who has to
(v) Facilitates growth: Decentralisation provides
report to whom.
considerable liberty to the managers at lower
(vi) Better co-ordination: The three elements of level. This allows them to do the work in manner
delegation namely, authority, responsibility and best suited to their department. When each
accountability help to define powers, duties and department is doing its best then the overall
answerability attached to various job positions productivity increases and organisation is able
in an organisation. This helps to avoid to generate more revenues which an be used for
overlapping of activities ad duplication of growth and expansion process.
(vi) Better control: Decentralisation helps to evaluate the work performance at each level of management. Managers
working at various levels are allowed to take their decisions and they are personally accountable for their decisions.
They cannot pass the blame to their employees. Decentralisation helps in ascertaining the contribution of each
department for the achievement of the objectives of the organisation by using control techniques like balance score card,
management information system etc. Thus, in case of shortfalls, corrective action can be taken quickly at the right time.

Difference between Delegation and Decentralisation.

Basis Delegation Decentralisation

Nature It is a compulsory act. Decentralisation is an optional policy decision.
Freedom of action Less freedom to take decisions due to more Less control over executives hence greater freedom
control by the superiors. of action.
Status It is a process followed to share tasks. It is the result of the policy decision of the top
management.
Scope It has narrow scope, as it is limited to superior It has wide scope as it implies extension of
and his immediate subordinate. delegation to the lowest level of management.
Purpose Narrow as it is confined to a superior and his To increase the role of the subordinates in the
immediate and subordinate. organisation by giving them more autonomy.

QUESTIONS FOR PRACTICE

Q5. A company is very flexible in its working. It wants the
MCQ proper participation of all the employees in the
organisation. Also, the company wants to expand and
Q1. I refer to a network of personal and social hence it uses the feature ‘development of managerial
relationships which spontaneously originates within talent for future.’ In which aspect is it covered?
the formal set up. Who am I? (a) Decentralisation (b) Formal organisation
(a) Informal organisation (b) Party organisation (c) Authority (d) Continuity
(c) Social organisation (d) Formal organisation Q6. Being answerable to the final outcome is a phrase
Q2. Identify the correct statement about accountability? which can be associated with
(a) Accountability can be entirely delegated (a) authority (b) duty
(b) Accountability flows downward (c) responsibility (d) accountability
(c) Accountability refers to answerability for final
Q7. Which of the following statements is not true?
outcome of assigned task
(a) Formal organisation originates as a result of
(d) Accountability means the right of an individual to
command his subordinates. company’s rules and policies
(b) Informal organisation arises out of personal
Q3. An organisation structure in which various qualities of individuals
departments are created on the basis of products, (c) Under formal organisation, flow of
territory or region is called a
communication takes place in any direction
(a) Divisional structure (b) Functional structure
(d) Formal organisation is rigid in nature
(c) Matrix structure (d) Staff structure
Q4. Which of the following is not an importance of Q8. Informal organisation provides necessary
delegation of authority? environment for individual’s ……… .
(a) Effective management (a) authority
(b) Fulfills social needs (b) accountability and responsibility
(c) Facilitation of growth (c) creativity and innovation
(d) Basis of management hierarchy (d) None of the above
Q9. What explains informal organisation the best? Questions 18–19 contain two statements–– Assertion (A)
(a) All departments in an organisation reports to a and Reason (R). Each question has FOUR choices (a), (b), (c),
coordinating head (d), only one of which is correct.
(b) Network of personal and social relationships that In the light of these statements, choose the most appropriate
arise as people associate with other people in a option:
work environment (a) (A) is incorrect but (R) is correct.
(c) This structure is created intentionally by the (b) (A) is correct but (R) is incorrect.
managers for achievement of organisational goal (c) Both (A) and (R) are correct and (R) is the correct
(d) None of the above explanation of (A)
Q10. Mrs. Identify the correct statement about Organising. (d) Both (A) and (R) are correct but (R) is not the correct
(a) Leads to systematic allocation of jobs and explanation of (A).
facilitates specialisation Q18. Assertion (A): Organising ensures optimum utilisation
(b) Reduces the risk of uncertainty of material, financial & human resources. Reason (R):
(c) Helps in obtaining competent personnel Organising leads to systematically allocating all the
(d) Judges accuracy of standards jobs thereby ensuring specialisation.
Q11. If a firm wants to diversify its business into different Q19. Assertion (A): Organisation structure is an
products and expand to different territories, which indispensable means and a wrong structure will
organisation structure would be suited for this firm? seriously impair business performance and even
(a) Divisional structure destroy it.
(b) Functional structure Reason (R): For an organisation to function smoothly
(c) Informal structure and face environmental changes, it becomes necessary
(d) Network structure to pay attention to its structure.
Q12. Functional structure of organisation is most suitable Q20. Identify the type of organisational structure which
(a) In case of diversification of activities makes training of employees easier, as the focus is on
(b) In case of large organisation only limited range of skills.
(c) When high degree of specialisation is required (a) Formal Structure (b) Informal Structure
(d) All of the above (c) Functional Structure (d) Divisional Structure
Q13. Which of the following is/are true about functional SUBJECTIVE QUESTIONS
structure?
(a) It leads to minimum duplication of efforts which Q1. “An organisation is manufacturing medicines,
leads in lower costs. cosmetics, textiles and soaps.” What kind of
(b) It is costlier as there is duplication of resources organisational structure is suitable for this
(c) It is easier to fix responsibility on each division organisation and why?
(d) Both (b) and (c)
Q2. The directors of Yamuna Ltd. have asked their
Q14. Once departments are created, each department is marketing manager to achieve a target sale of 100
placed under the charge of a ………… . units per day. The marketing manager has delegated
(a) branch manager (b) departmental head the task to his deputy sales manager working under
(c) HR manager (d) marketing head him. The deputy sales manager could not achieve the
Q15. Among the following, which is an obligation to target. Who is responsible for non-completion of task?
perform certain functions and achieve certain results? Explain in brief the relevant principle related to this
(a) responsibility. (b) decentralisation. case.
(c) centralisation. (d) delegation. Q3. Naresh Medical Ltd. has grown in size. It was a market
Q16. The organisation process starts with leader but with changes in business environment and
(a) assignment of duties with the entry of MNCs, its market share is declining.
(b) establishing reporting relationships To cope up with the situation CEO starts delegating
(c) identification and division of work some of his authority to the General Manager, who also
(d) departmentalization felt himself overburdened and with the approval of
CEO disperses some of his authority to various levels
Q17. In which of the following organizing function jobs are
allocated to the members of each department is throughout the organisation. Identify the concept of
accordance with their skills competencies. management discussed above.
(a) Identification and division of work Q4. Name the process of entrusting responsibility,
(b) Departmentalisation authority and creating accountability of the person
(c) Assignment of duties whom work has been handed over. Explain the
(d) Establishment of reporting relationships importance of this process.
Q5. The number of subordinates that can be effectively employees focus on objectives, he issued instructions
managed by a superior refers to which aspect of that during working hours only official matters will be
management? discussed. He made certain rules and code of conduct
Q6. Grouping of jobs of similar nature and organising for the employees to follow, according to which
these jobs as separate departments creates a employees are not allowed to visit and talk to the
particular type of organisational structure. Name that employees of other departments except for official
type of structure and explain any two advantages and work. He emphasised on work performance which
disadvantages of that structure. resulted in smooth functioning of the organisation.
(a) Identify and state the type of organisation
Q7. Anju Industries is a company manufacturing office mentioned in the above para.
furniture. The company chose to diversify its (b) State one feature of the concept identified in part
operations to improve its growth potential and as mentioned in the above para.
increase market share. As the project was important, (c) What was the purpose behind the formulation of
many alternatives were generated for the purpose and rules for the employees that restricted their
were thoroughly discussed amongst the members of personal communication with the employees of
the organisation. After evaluating the various other departments?
alternatives Sukhvinder, the Managing Director of the
company decided that they should add ‘Home Q9. Rohan a sole proprietor was running food catering
Interiors and Furnishings’ as a new line of business business in South Delhi. He got great success and profit
activity. margin in this business. Due to excess demand in the
(a) Name the framework, which the diversified market he expanded his business and separated
organisation should adopt, to enable it to cope up departments as purchase, production, finance and
with the emerging complexity? Give one reason in marketing.
support of your answer. Which type of organisational structure would you
(b) State any two limitations of this framework. suggest him? Enumerate its two benefits.
Q8. ‘Lucky Spices Ltd.’ is the manufacturer of different Q10. The Principal of Ram Public School ordered the staff
food specific spices like Rajmaa Masala, Cholley that they will be allowed to sit in the staffroom
Masala, Aaloo Parantha Masala, etc. Mr Raghav, the situated in their block. No teacher will be allowed to sit
owner of the company has created different in another staffroom. During school's hours, teachers
departments for purchase, production, marketing, can meet teachers of their department only for work-
finance and human resource. There are thirty related matters. He wants each teacher to strictly work
employees working in the organisation. Planning is of as per rules and directions given by him.
paramount importance to the company as Mr Raghav Identify the type of organisation in this and state
believes that effective planning leads to achievement disadvantage of such organisation.
of organisational objectives. So in order to make
 HOMEWORK QUESTIONS
To cope up with the situation CEO starts delegating
MCQ some of his authority to the General Manager, who also
felt himself overburdened and with the approval of
Q1. Name the process which co-ordinates human efforts, CEO disperses some of his authority to various levels
assembles resources and integrates both into a unified throughout the organisation. Identify the concept of
whole to be utilised for achieving specified objectives, management discussed above.
(a) Management (b) Planning (a) Decentralisation (b) Delegation
(c) Organising (d) Directing (c) Centralisation (d) None of these
Q2. A network of social relationship that arise Q9. This type of organisational structure is most suitable
spontaneously due to interaction at work is called: when the size of the organisation is large, has
(a) Formal Organisation (b) Informal Organisation diversified activities and operations require a high
(c) Delegation (d) None of the above degree of specialisation,
(a) Divisional structure (b) Functional structure
Q3. In an electrical goods manufacturing company, there
(c) Network structure (d) Matrix structure
are four main activities-marketing, production,
finance and personnel. The general manager is Q10. Under this type of organisational structure, manpower
planning to structure the organisation. Which type of is grouped on the basis of different products
organisation structure should he adopt? manufactured.
(a) Divisional Structure (b) Functional Structure (a) Divisional structure (b) Functional structure
(c) Horizontal structure (d) None of these (c) Network structure (d) Matrix structure
Q4. It refers to the number of subordinates that can be Q11. Which of the following is not the limitation of informal
effectively managed by a superior. organisation?
(a) Organisational structure (a) Spread Rumours
(b) Informal organisation (b) Procedural delays
(c) Span of management (c) Priority to group interests
(d) None of the above (d) Resistance to change
Q5. One of the steps in the process of organising explains Q12. Which of the following is not a merit of functional
that work is concerned with allocating the work to the structure?
employee to their experience, skills and competencies. (a) It promotes control and co-ordination within a
For this plans need to made regarding decision department.
making. Application of mind which involves foresight (b) It makes training of employees easier, as the focus
and vision, intelligence imagination and sound is only on a limited range of skills.
judgement is required as planning is thinking rather (c) It ensures that different products get due attention.
than doing function of management. Identify the step (d) It leads to occupational specialisation.
in the process of organizing referred above. Q13. Rishabh has joined as a Creative Head in an
(a) Identification and division of work entertainment company. He always ensures that the
(b) Departmentalisation work has been divided into small and manageable
(c) Assignment of duties activities. Identify the related step in organising
(d) Establishing reporting relationships process being mentioned in the above lines.
Q6. Uranus Limited is a company dealing in metal (a) Identification and division of work
products. The work is mainly divided into functions (b) Departmentalisation
including production, purchase, marketing, accounts (c) Assignment of duties
and personnel. Identify the type of organisational (d) Establishing reporting relationships
structure followed by the organisation. Q14. Indigo Limited has a staff of 300 people which is
(a) Functional structure grouped into different departments. The
(b) Relational structure organisational structure depicts that 100 people work
(c) Divisional structure in Production department, 150 in Finance department,
(d) None of the above 20 in Technology department and 30 in Human
Q7. Identify the type of organisational structure which Resource department. Identify the type of
facilitates occupational specialisation, organisational structure being followed by the
(a) Functional structure (b) Horizontal structure company.
(c) Network structure (d) Divisional structure (a) Functional structure
Q8. National Vritech Ltd. has grown in size. It was a market (b) Divisional structure
leader but with changes in business environment and (c) Informal structure
with the entry of MNCs its market share is declining. (d) None of the above
Q15. Which of the following is not a merit of divisional Q20. In connection with New year celebration the
structure? employees of Idea have formed a small group who
(a) It promotes product specialisation. organized a feast and conducted entertainments. What
(b) It ensures that different functions get due type of organisation is this ?
attention. (a) Formal Organisation (b) Informal Organisation
(c) It promotes flexibility and faster decision (c) Either (a) or (b) (d) None of these
making.
Q21. Which of the following is not an element of delegation?
(d) It facilitates expansion and growth as new
(a) Responsibility (b) Authority
divisions.
(c) Accountability (d) Decentralisation
Q16. Which of the following is not a demerit of divisional
structure? Q22. It arises from the established scalar chain which links
(a) It is an expensive structure to maintain, since the various job positions and levels of an organisation.
there may be a duplication of activities across (a) Responsibility (b) Authority
products. (c) Accountability (d) Decentralisation
(b) All functions related to a particular product are Q23. In Bharti Ltd. Sales are declining. The marketing
integrated in one department. manager cannot focus on important aspects like
(c) Conflict may arise among different divisional knowing reasons from customers for not creating
heads due to different interests. demand for their products, decisions related to sales
(d) Managers focus on their own product and pay no strategy, etc. His senior instructs him to give his
need or attention to overall organisational routine nature jobs to someone else so that he can
objectives. concentrate on important issues. Identify the concept
Q17. Identify the correct sequence of steps to be followed in of management followed above.
an organising process. (a) Delegation
(a) Departmentalisation, Establishing reporting (b) Decentralisation
relationships, Assignment of duties, (c) Centralisation
Identification and division of work (d) None of these
(b) Identification and division of work, Q24. The scope of authority _________ as we go higher up in
Departmentalisation, Assignment of duties, the management hierarchy.
Establishing reporting relationships
(a) Increases (b) Decreases
(c) Identification and division of work, Assignment
(c) Remains same (d) None of the above
of duties, Departmentalisation, Establishing
reporting relationships Q25. It is the obligation of a subordinate to properly
(d) Identification and division of work, Establishing perform the assigned duty.
reporting relationships, Departmentalisation, (a) Responsibility
Assignment of duties (b) Authority
Q18. Which of the following is not a demerit of functional (c) Accountability
structure? (d) All of the above
(a) It places more emphasis on the objectives Q26. In a company, top level management has not
pursued by a functional head than on overall distributed work among the subordinates according
enterprise objectives. to their abilities and skill but has been distributed on
(b) It may lead to conflict of interests among the basis of caste and religions. Identify the step of the
departments due to varied interests. organizing function not followed by the management.
(c) It leads to occupational specialisation. (a) Assignment of duties
(d) It may lead to difficulty in co-ordination among (b) Identification and division of work
functionally differentiated departments. (c) Departmentalisation
Q19. A company is manufacturing washing machines. There (d) Establishing reporting relationships
is well defined system of jobs with a clear and definite
Q27. Authority granted to an employee should be
responsibility and accountability in the company. But
(a) More than the responsibility entrusted to him
people are not allowed to interact beyond their
officially defined roles. As a result company is not able (b) Less than the responsibility entrusted to him
to adapt the changing business environment. The (c) Equal to the responsibility entrusted to him
workforce is also not motivated due to lack of social (d) All of the above
interaction. Identify the kind of organisation that Q28. It helps the managers to ensure that their subordinate
management should introduce to solve the above discharges his duties properly.
problem. (a) Responsibility
(a) Formal Organisation (b) Delegation (b) Authority
(c) Informal Organisation (d) None of these (c) Accountability
(d) All of the above
Q29. Krishna Foods Limited’ is a famous company making companies also joined the firm. But within few days
different food materials. Mr. Vikram is the Managing they realised that the firm has pre-determined relation
Director of the company. He is fully attached to the structure without free communication.
employees of his company. This is the main reason On the basis of this, answer the following questions.
that before taking any decision he consults all the (a) Identify the type of organisation described here.
concerned employees. A suggestion box has also been (b) Point out any two limitations of this type of
provided in the company. It is opened once in fifteen organisation.
days. The employees giving positive suggestions are
suitably rewarded. Besides, all the employees of the Q5. Lakhan & Co. are running a shoe manufacturing
company also enjoy complete freedom to company successfully. So they planned to expand their
communicate with any senior officer any time, for all business activities by adding more line of products, i.e.,
types of matter whether it is job related or personal. leather bags, belts and garments. Which type of
Identify the type of organisation highlighted in the structure would you recommend after expansion and
above case. why?
(a) Formal Organisation (b) Informal organisation Q6. A company manufacturing sewing machines set up in
(c) Divisional structure (d) None of these 1938 follows formal organisation structure. It is facing
lot of problems such as delays in decision-making. As
Q30. Palian Ltd. has been awarded recently with the ‘Best
a result, it is not able to adapt to the changing business
Employer of the Year Award’. The company has
environment. The work force is also not motivated.
believed in the ideas and suggestions of the There is a problem of red tapism and employees’
employees. There is systematic dispersal of decision turnover is very high.
making at all levels. There is no delay in delivery of
orders to customers due to prompt decision taken by You advise the company with regard to change it
employees. Identify the function of management should bring about in its organisation structure to
referred in the above case- overcome the problems faced by it. Give reasons in
(a) Responsibility terms of benefits it will derive from the changes
(b) Delegation suggested by you. In which sector can the company
(c) Planning diversify keeping in mind the declining market for the
(d) Decentralisation product the company is manufacturing.
Q7. After completing a course in Travel and Tourism,
SUBJECTIVE QUESTIONS Brijesh started his own travel agency. In order to
ensure smooth functioning of his business, he decided
Q1. Rajesh is a production manager in an auto company. to create fourteen job positions divided into four
He held a meeting with production unit including departments on the basis of functions namely front
supervisor, foreman and employees. He sets the target office department, including online query, reservation
to produce 1,000 units in one month and assures them department, accommodation booking department and
to give full co-operation. He delegates powers to securing payment department. In order to avoid
operational level to achieve the targets in the time. conflicts, he clearly assigned the line of authority and
Identify organisational activity which Rajesh area of responsibilities for each job position.
communicated to his subordinates and explain its (a) Which function of management is being
benefits. described in the above lines?
Q2. A Manager increased the production target from 500 (b) Identify the framework created by Brijesh.
units to 700 units per month but the authority to draw (c) Name the type of framework created by Brijesh.
raw material was not given by him. The employees (d) Give two advantages of that frame work.
were not able to meet the new target. Who should be Q8. Kulpreet Singh owns a pet clinic in Delhi. The clinic is
held responsible for this and which principle has been being run by a team of experienced Veterinary
violated here? Explain. professionals for last 25 years. Kulpreet pet in special
Q3. Manager of MNO Ltd. is over burdened with routine efforts to improve inter-personal relationships. When
work and is unable to concentrate on its objectives and he interacts with his employees. He arranges every
other important issues of the firm. To solve this year a picnic for his staff so that they become fresh
problem which management concept should be from their routine life. He always take employees
followed by the manager? Also explain the related suggestions towards new plans and policies.
function. (a) Identify the type of organisation encouraged by
Q4. Karan Ltd. decided that whenever a person reaches a Kulpreet Singh.
particular age he will be promoted. Influenced by this (b) State any three disadvantages of that
plan of the company, several employees from other organisation.
Q9. Karan opens a retail mart in local market. As he knows (ii) Give four points of difference between both the
it will be impossible for him to handle all work alone, concepts.
he appoints Karan to perform task on his behalf, Q10. Sita and Gita are twin sisters. After completing a
thereby reducing the workload. This decision course in Journalism both of them joined a leading
provided Karan with more time to concentrate on newspaper company as sub-editors. Over the years,
important matters. Besides he recruits, eight other due to their hardwork, they are promoted to the post
persons as support staff. Over the year his business of chief editor in different divisions. However, the way
earned a good name for itself. So he opens another of their functioning is totally different. Sita believes in
outlet in the city. Considering Karan's competence, he capabilities of her subordinates. Therefore, follows
gives the independent charge of running the new policy of selective dispersal of authority in all levels of
outlet to him, thereby empowering him autonomy in other division.
functioning of the outlet.
(i) Identify the two concepts which reflect the role of On the other hand, Gita prefers to function through
Karan in above case. strict control and retains all the decisions making
authority with herself. In the above context, state the
concept used by Sita and Gita.
 SOLUTION FOR PRACTICE QUESTIONS
production manager has asked his five foremen
SOLUTION FOR MCQ QUESTIONS to achieve this target. Two of them could not
achieve the target. In this case, production
manager is responsible and accountable for
S1. (a) non-completion of target because by passing
S2. (c) authority and work to foremen, manager cannot
S3. (a) get rid of his responsibilities and accountability.
S4. (b) S3. Decentralisation.
S5. (a) S4. Delegation. For importance refer page no. 70.
S6. (d) S5. Span of management.
S7. (c) S6. Functional structure. For advantages and
disadvantages refer page no. 67.
S8. (c)
S7. (a) Divisional Structure:
S9. (b)
Reason in support of the answer (any one)
S10. (a) (i) Product specialisation helps in the
S11. (a) development of varied skills in a divisional head
S12. (d) and this prepares him for higher positions.
(ii) Divisional heads are accountable for profits, as
S13. (a) revenues and costs related to different
S14. (b) departments can be easily identified and
S15. (a) assigned to them.
(iii) It promotes flexibility and initiative because
S16. (c) each division functions as an autonomous unit
S17. (c) which leads to faster decision-making.
S18. (d) (iv) It facilitates expansion and growth as new
divisions can be added without interrupting
S19. (c)
existing operations by merely adding another
S20. (c) divisional head and staff for the new product
line.
SOLUTIONS FOR SUBJECTIVE (b) Limitations of the Divisional Structure: (any
QUESTIONS two)
(i) Conflict may arise among different divisions
S1. This organisation must adopt divisional with reference to allocation of funds.
organisational structure. (ii) It may lead to increase in costs since there may
be a duplication of activities across products.
S2. The marketing manager is responsible for non- (iii) Divisional interests may supersede
completion of task, because Marketing manager organisational interests.
is accountable for the work assigned to him and S8. (a) Formal organisation.
accountability can never be delegated according
(b) Focus on objective and work performance.
to the principle of absolute responsibility or
(c) Avoidance of the emergence of informal
principle of abdication. The accountability organisation which may obstruct the fulfilment
remains with the manager even after delegating
of organisational goals.
the work. For example, the directors of a
computer manufacturing company have asked S9. Functional.
their production manager to achieve a target S10. Formal organisation. For disadvantages refer
production of 100 computers per day. The page no. 68
 SOLUTION FOR HOMEWORK QUESTIONS
S3. Delegation
SOLUTION FOR MCQ S4. (a) Formal.
QUESTIONS (b) Limitations
S5. Presently, Lakhan & Co. are manufacturing only
one product so the most suitable organisation
S1. (c) structure is functional but on expansion if they are
S2. (b) adding more line of products then the suitable
S3. (b) organisation structure will divisional structure.
S4. (c) For advantages refer page no. 67
S5. (c)
S6. (a) as the people are being grouped on the basis of S6. My advice to the company is to give due
functions importance to informal organisational structure
S7. (a) it emphasises on specific functions along with formal. They should allow informal
S8. (a) structure also to develop. This will help company
S9. (b) it relates to single product companies to overcome the problems of delay in decisions,
S10. (a) the divisions are created on the basis of products lack of motivation, etc. As information travel very
S11. (b) fast in informal organisational structure.
S12. (c) The company may get following benefits with
S13. (a) informal organisational structure. For advantages
S14. (a) as people are grouped on the basis of functions refer page no. 69.
S15. (b) Company can diversify its activities by
S16. (b) introducing embroidery machines, it can also
S17. (b) design special machines keeping in mind the
S18. (c) requirement of ready-made garment
S19. (c) manufacturers, etc. By diversifying in the same
S20. (b) field it can get maximum utilisation of existing
S21. (d) resources only.
S22. (b) S7. (a) Organising function
S23. (a) (b) Organisational Structure
S24. (a) (c) Functional Structure
S25. (a) (d) For advantages refer page no.67
S26. (a)
S8. (a) Informal Organisation
S27. (c)
(b) Refer to Page no. 69
S28. (c)
S29. (b) S9. (i) (a) Delegation: When Karan's role is restricted, he
S30. (d) is given limited authority to reduce the work load
of Karan.
SOLUTION FOR SUBJECTIVE (b) Decentralisation: When Karan is given
independent charge of new outlet.
QUESTIONS (ii) Difference: For difference refer page no. 71
S10. Concept used by Sita — Decentralisation
S1. Delegation. Concept used by Gita — Centralisation
S2. Principle of Authority and Responsibility.