A STEP TOWARDS BRIGHT FUTURE Dr.

Prabhjot Singh
UGC-Net Qualified
(Creating Toppers Since 2011)
[BUSINESS STUDIES XII]
CHAPTER 5 : ORGANISING

Important topics/questions in this lesson: Especially for slow learners – in order of preference
Explain the importance of delegation of authority.
Explain the process of Organising.
Differentiate between Formal and Informal Organisations.
Explain the merits and demerits of Functional Structure.
Explain the merits and demerits of Divisional Structure.
Explain the importance of Decentralisation of Authority.
What are the elements of Delegation?
Explain the importance of Organising.

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

KEY CONCEPT IN NUTSHELL

Organizing is the process of defining and grouping, activities and establishing authority
relationships among them.

Process: the process of organizing consists of the following steps:

(a) Identification and division of work
(b) Departmentalization
(c) Assignment of Duties
(d) Establishing reporting relationships.

Importance: Organising is considered important because it leads to division of work,

clarity in reporting relationships, optimum utilization of resources, growth, better
administration and greater creativity.

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

Span of management is the number of subordinates under a superior.

Functional structure groups activities on the basis of functions. The advantages of such
a structure are specialization, better control, managerial efficiency and ease in training
employees. The disadvantages are functional empires, conflict of interest, inflexibility and
restriction in managerial development.
Divisional structure groups activities on the basis of Product. The advantages are
integration, product specialization greater accountability, flexibility, better coordination
and more initiative .The disadvantages are departmental conflicts, costly process, ignoring
of organizational interests, and increase in requirements of general managers.

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

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

Delegation is the transfer of authority from superior to subordinate.

It has three elements: Authority, Responsibility and Accountability.

Importance of delegation is that it helps in effective management, employee

development, motivation, growth and coordination.

Decentralizationis delegation of authority throughout the organization.

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

MULTIPLE CHOICE QUESTIONS: (01 MARKS)

Q.1 systematic
Due to proper organizing and division of work, a company goes for
assignment of jobs among the employees, which importance of organizing is
highlighted here?
(a) Benefits of specialization (b) Clarity in working relationship.
(c) Adaptation to change. (d) Effective administration.

Q.2 Assertion(A): Better control systems, such as balancing score Cards and
management information systems, are being developed.
Reason(R): One of the issues of decentralisation is performance Accountability.
(a) Both A and R are correct and R is the correct explanation of A
(b) Both A and R are correct and R is not the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true

Q.3 ‘Delegation helps in developing the talents of the has

employees. It also
psychological benefits.’ Which Importance of delegation is highlighted in this
statement?
(a) Effective management (b) Employee development
(c) Motivation of employees (d) Better coordination

Q.4 “It arises from a superior– subordinate relationship because the subordinate is
bound to perform the duty assigned to him by his superior.” Which element of
delegation is highlighted in this statement?
(a) Authority (b) Responsibility (c) Accountability (d) All of these

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Q.5 After delegating the job or the task to the subordinates, the manager
(a) Is not accountable for the result of the assigned task
(b) Is accountable for the result of the assigned task
(c) Subordinate is responsible to the top management
(d) None of these

Q.6 “Grouping of jobs of similar nature under functional and organising these major
functions as separate departments.” Which organizational structure is
highlighted in this line?
(a) Functional structure (b) Divisional structure
(c) Both (a) and (b) (d) None of these

Q.7 The level of management in the organizational structure is determined by

(a) Authority (b) Responsibility
(c) Span of management (d) All of these

Q.8 Which concept helps a manager to extend his area of operation as without it, his
activities would be restricted to only what he himself can do?
(a) Delegation (b) Decentralisation
(c) formal organisation (d) span of management

Q.9 Which concept of management

is highlighted in the picture below
(a) Deccentralisation
(b) Delegation
(c) Organising
(d) Planning.

Q.10 In which of the following organisational structure a manpower is grouped on the basis
of different products manufacture?
(a) Divisional structure (b) Functional structure
(c) Both (a) and (b) (d) None of the above

Q.11 Which of the following is not an advantage of formal organisation?

(a) It establish a chain of command
(b) There is no ambiguity in the role of each member
(c) It leads to procedure delays as the establish change of command has to be followed
(d) It provides stability to the organisation

Q.12 Netflix has adopted “Freedom and Responsibility Culture" gives employeesthe power
to make decisions in the best interests of the company. This approach has helped
Netflix to stay ahead of the curve in the highly competitive entertainment industry.
identify the concept of organising discussed in the above case.
(a) Delegation (b) Decentralisation
(c) Organisational structure (d) Organising process

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Q.13 It refers to the right to take decisions inherit in a manager position to tell people what
to do and expect them to do . Which element of delegation is discussed here?
(a) Responsibility (b) Authority (c) Accountability (d) None

Q.14 Everything which goes to increase the importance of subordinate role is ……. ,
everything that goes to reduce it is ………. .
(a) Centralisation , Decentralisation (b) Decentralisation, centralisation
(c) Delegation, centralisation (d) Decentralisation, delegation

Q.15 ……. is a framework within which managerial and operating task are performed.
(a) Span of management (b) Organisational structure
(c) Organising process (d) Organising

Q.16 Assertion (A): Responsibility flows upwards

Reason (R): A subordinate will always responsible to his superior as he is bound to
per for the duty assigned to him.
(a) Both A and R are correct and R is the correct explanation of A
(b) Both A and R are correct and R is not the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true

Q.17 Identify the type of the organization shown in the

picture below:
(a) Formal Organisation
(b) Informal Organisation
(c) Functional Structure
(d) Divisional Structure

Q.18 An a manufacturing concern, division of work into key functions will include
production, purchase, marketing accounts and personnel. These department may be
further divided into sections. Which type of structure is highlighted here?
(a) Divisional structure (b) Functional structure
(c) Rational structure (d) Organisational structure

Q.19 Asthe span of management increasesin an organisation, the number of levels of

management in the organisation:
(a) Increases (b) Decreases
(c) Remains unaffected (d) None of the above

Q.20 Which of the following statement is not true?

(a) Top management has the highest level of authority and it reduces successively
(b) Excess of authority over responsibility will lead to misuse of authority
(c) Authority is delegated; Responsibility is assumed; accountability is imposed.
(d) Both responsibility and accountability can be delegated

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THREE MARKS QUESTIONS (03 MARKS)

Q.21 “Authority can be delegated but accountability cannot.” Do you agree? Justify with example.

Q.22 Identify the types of organization discussed in the following cases.

1. Mountain cold storage has a well-defined structure of authority relationships. This
structure is created after a lot of planning by the top level management.
2. Tanuj Drinks is an organisation which helps quench the thirst of people sitting on
roadside and parks on Sundays. This organisation has originated from Mountain
cold storage spontaneously.
3. An organisation holds its meeting according to the mood of the members. It has no
set pattern of behavior.
4. An organisation which is run in Central Delhi is known for its rigid nature.
5. Cricket Club is an organisation in which the authority of the members, constituting
it, is because of their positions in the management.
6. Translife is an organisation in which only the managers are the leaders.

Q.23 Identify the type of organisation structure in the following cases:

1. Apexa Glue is a manufacturing company based upon functions and has important
departments like HR, Marketing, Finance, etc.
2. Ravi runs a company in Hyderabad. The company is known for its product
specialisation and has a lot of reputation in the market.
3. Nitin is an owner of a reputed manufacturing company. However in his firm it is
difficult to fix responsibility on a particular department.
4. Archana is a dynamic CEO. In her organisation she allows for autonomy and
opportunity to perform multiple functions. This had led to managerial development
in her employees.
5. Rajiv Bulbs is a city based flourishing company. Recently it has won award for
being the most economical company as the functions are not duplicated in it.
6. Synchronisation of efforts is easy in Sigma Tubelights Ltd. As all the related
functions related to a particular product are integrated within one department.

Q.24 Kaamna is a bright young management trainee. After six months of testing by her
organisation she is given charge of her office as an assistant manager. She starts her
job with a lot of enthusiasm but realises that it won’t be possible for her to continue
without sharing her tasks. She keeps a secretary who takes orders from her. This has
reduced her burden of work and has helped her to focus on priority assignments.
Which concept of management is discussed in the above case? Name two importance
of this concept.

Q.25 What is meant by ‘Informal Organisation’ ? State any two advantages.

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FOUR MARKS QUESTIONS (04 MARKS)

Q.26 State any four features of ‘Informal Organisation’.

Q.27 Mr. Ajay after completing MBA from USA comes to India to start a new business under
the banner Ecom creations Ltd. He launches a new product in e-learning for Senior
Secondary School students in commerce stream. Which already has an established
market in UK and USA but not in India? His business starts flourishing in India. Now
more Indian companies entered into the market with other subjects also Identify and
quote the lines from above para which highlight the significance of understanding
business environment.

Q.28 State any three limitations of ‘Divisional Structure’ of an organisation

Q.29 What is meant by ‘Divisional Structure’ of organisation ? State any three advantages

Q.30 Explain the concept of ‘functional structure‘. Also explain any four disadvantages of
functional structure.

SIX MARKS QUESTIONS (06 MARKS)

Q.31 Give the meaning of ‘Organising’. State the steps in the process of Organising

Q.32 With the help of any four points, explain the crucial role of ‘Organising’ function in an
enterprise.

Q.33 What is meant by “Divisional Structure” of an organisation ? For which type of

business enterprise is this structure most suitable ? State any four advantages of this
form of organisational structure

Q.34 What is meant by ‘Functional Structure’ of organisation ? Explain its any two
advantages and two limitations.

Q.35 A company has been registered under the Companies Act with an authorised Share
Capital of ` 20,000 crore. Its registered office is situated in Delhi and manufacturing
unit in a backward district of Rajasthan. Its marketing department is situated in
Bhopal. The company is manufacturing Fast Moving Consumer Goods (FMCG).
(i) Suggest with the help of a diagram a suitable organisation structure for the
company. (ii) State any three advantages of this organisation structure.

--o0o--

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(Creating Toppers Since 2011)

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(Creating Toppers Since 2011)

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(Creating Toppers Since 2011)

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