AHSEC - 12: Organising Important Notes for March 2022 - 23 Exam | Business Studies Class 12 Notes

Objective Questions (1 mark)

Q.1 What is meant by organising?

Ans: Organising can be defined as identifying and grouping different activities in the organisation and bringing together the physical, financial and human resources for the achievement of specific goal of organisation.

Q.2 Mention various types of organisation.

Ans: Formal and Informal organisation

Q.3. Name the organisation which is based on rules and procedures.

Ans: Formal Organisation

Q.4. Name the organisation in which employees are allowed to communicate freely and friendly and there are no rules and regulations.                                               

Ans: Informal organisation

Q.5. In which structure of organisation there is scope for spread of rumours?

Ans: Informal

Q.6. Out of formal and informal organisation which is dependent upon which?

Ans: Informal organization depends on formal organization.

Q.7. How is informal organisation created?        2010

Ans: Informal organisation is created spontaneously by the employees working together and interacting with each other. It is an unintentional creation.

Q.8. Which level of managers are responsible for determining formal organisation?

Ans: Top level management

Q.9. Name the type of organisation which does not have any predetermined objectives.

Ans:  Informal organisation

Q.10. Give the meaning of organisation as structure.  2007

Ans: Organisation structure can be defined as a framework within which managerial and operating tasks are performed. It specifies the relationship between people, work, and resources.

Q.11. A company is manufacturing cosmetics, readymade garments, toilet items and biscuits. What kind of organization structure is suitable for this company?

Ans:  Divisional organization structure (Multi Products Company)

Q.12. Which organizational structure is suitable for a uni-product manufacturing company?

Ans: Functional organization structure

Q.13. Authority can be delegated, but what cannot be delegated?

Ans: Responsibility

Q.14. Mention the essential elements of delegation of authority.

Ans: Authority, Responsibility and Accountability

Q.15. Can responsibility be delegated?                 2008, 2010, 2013

Ans: According to the principle of absolute responsibility, authority can be delegated but responsibility can’t be delegated by a manager. The manager remains responsible our accountable to his own superior for the tasks which he may assign to his subordinate.

Q.16. A subordinate receives orders from whom?

Ans: Superior

Q.17. What is the basis of functional organisation?

Ans: Specialisation

Q.18. A superior is responsible to his subordinates.                        2008

Ans: This statement is false.

Q.19. What is decentralization?

Ans: Decentralization means the delegation of all decision making functions to the lower level of the hierarchy. Decision making authority is shared with lower levels of Management Mangers have more freedom of action. It is suitable for large organisation.

Q.20. Define span of control.

Ans: It refers to the number of subordinates coming under direct control and supervision of the superior.

Q.21. “Delegation can take place without decentralisation”. Explain.                    2009

Ans: This statement is true because delegation is necessary in every organisation but decentralisation is not necessary.

Q.22. Authority always flows downwards, while responsibility always flows upwards.                  2009, 2018

Q.23. Authority flows downward from whom to whom?

Ans: From Superior to Subordinates

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ALSO READ (AHSEC ASSAM BOARD CLASS 12)

1. AHSEC CLASS 12 BUSINESS STUDIES CHAPTERWISE NOTES

2. AHSEC CLASS 12 BUSINESS STUDIES QUESTION PAPERS (FROM 2012 TILL DATE)

3. AHSEC CLASS 12 BUSINESS STUDIES SOLVED QUESTION PAPERS (FROM 2012 TILL DATE)

4. AHSEC CLASS 12 BUSINESS STUDIES IMPORTANT QUESTIONS

5. BUSINESS STUDIES MCQs

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Short and long Answer Type Question (2/3/5/8 marks)

Q.1. What is Organising? Mention its nature or characteristics.                 2008, 2010, 2015

Ans: Meaning: Organising can be defined as “identifying and grouping different activities in the organisation and bringing together the physical, financial and human resources for the achievement of specific goal of organisation.

In the words of Henry Fayol, “To organise a business is to provide it with everything useful to its functioning: raw materials, machines and tools, capital and personnel”.

Nature or characteristics of organisation

From the study of the various definitions given by different management experts we get the following information about the characteristics or nature of organization:

1)      Division of Labour: Every organisation is characterized by the division of work.  The total efforts of the group are divided into different functions and each function is assigned the function for which he is observed to be suited best.

2)      Co-ordination: As different persona are assigned different functions and all these functions aim at achieving organisational goals, hence necessary relationships are established between them so as to co-ordinate all the activities of all the people of the organisation.

3)      Objectives: Organisations exist to achieve objectives. Without objectives organisations cannot exist for a long period.

4)      Authority and Responsibility structure: In an organisation the positions are so ranked that each of them is subordinate to the one above it and is superior to the one below it.  Each position is delegated necessary authority and responsibility so as to enable it functions effectively.

5)      Communication: Every organisation has its own channels or methods of communication.  Effective communication is vital for success of management.

Q.2. Discuss the steps of Organising. 2016, 2020

Ans: Steps in Organising:                                                            

a)      Identification and Division of Work: The first step in the process of organizing involves identifying and dividing the total work to be done into specific activities (called jobs) in accordance with previously determined plans. Such division of work into jobs is necessary because one individual cannot perform the entire work. While identifying the activities it should be borne in mind that no activity has escaped, there is no duplication of activities and various activities are performed in a co-ordinated way.

b)      Grouping jobs and Departmentalisation: The second step in organizing is to combine or group similar/related jobs into larger units called departments, divisions or sections. This grouping process is called “Departmentalisation”. Departmentation can be done in two ways – functional departmentation and divisional departmentation. Under functional departmentation jobs related to common functions are grouped for example production department, sales department etc. Under divisional departmentation jobs relating to one product are grouped together for example sale and marketing of cosmetics.

c)       Assignment of Duties: It is necessary to allocate work to various employees. Once departments have been formed, each of them is placed under the charge of an individual, called departmental head. Jobs are then allocated to the members of each department according to their skills and competencies.

d)      Delegation of Authority: Since so many individuals work in the same organization, it is the responsibility of management to lay down structure of relationship in the organization. Everybody should clearly know to whom he is accountable and authority is delegated to the subordinates to enable them to show work performance. This will help in the smooth working of the enterprise by facilitating delegation of responsibility and authority.

Q.3. Discuss various principles of organising.

Ans: Principles of Sound Organisation: There are many principle of organisation. The main principles are:

1.       Principle of Objectives: The principle of Objectives stresses the need for setting the objectives of the enterprise. The setting of the objectives of the enterprise is necessary, because the formulation of the organisation structure s very much influence by objectives of the enterprises

2.       Principle of Unity 'of Objectives: The Principle of unity of objectives implies that / every part of the organisation and the organisation as a whole should be geared to the basic objectives of the enterprise, in other words the main objectives of the enterprise.

3.       Principle of division of work and specialization: Specialization has become the / order of the day. So, sound and effective organisation must be built on the principle of specialization

4.       Principle of Functional definition: The principle of functional definition implies that / the functions, duties and responsibilities of the different departments and position in the organisation their authorities and their relationships with other departments and position must be clearly defined.

5.       Principle of balance of various factors: The principle of balance of various factors suggests that there should be popper balance in the formal structure of the organisation in regard to various factors; For instance, there should be proper balance among the; different segments or departments' of the undertaking. That ism, the work- load should be properly distributed among the various departments to maintain balance and harmony the working of the organisation. There should be balance in authority allocation to different departments.

6.       Principle of simplicity: The principle of simplicity means that the organisation structure should be simple with a minimum number of managerial levels. If there are a large number of managerial levels in the organisation structure, there may raise the problem of effective co-ordination and communication

Q.4. Why is organising considered an important function of management? Give any six reasons.  2007, 2009, 2011, 2014, 2016, 2020

Ans: Importance of Organising: Organising is the fundamental activity of management.  The importance of organisation may be explained as follows:

a)      Efficiency of Management: A Good organisation helps in making optimum use of available resources for achieving organisational objectives, increasing efficiency of management.

b)      Facilities Administration: A properly designed and balanced organisation facilitates both management and operation of the enterprise.

c)       Facilitates growth and diversification: On account of sound organisational structure growth and diversification can be successfully achieved for improving competitive strength of the organisation.

d)      Facilitates Technological progress: Sound organisational structure is useful for coping with technological changes which have become inevitable under modern conditions.

e)      Encourages healthy human relations: Scientific and balanced organisational structure when manned by right type of people tends to motivate people through job satisfaction that promotes healthy human relations in the organisation.  It helps maintaining morale at a higher level.

f)       Stimulates initiative and creativity: Sound organisation stimulates creative thinking and initiative by providing opportunities to experiment with new ideas for developing new ways of doing things.

Q.5. Write a note of Formal Organisation.           2008

Ans: Formal organisation is that type of organisation in which the authority and responsibility relationship amongst various people working in an enterprise are clearly defined. It is an official framework for taking up every activity. In the words of Chester Barnard, "An organisation is formal when the activities of two or more persons are consciously co-ordinated towards a common objective".

Features of Formal Organisation: The main features of formal organisation are:

(a)    In a formal organisation, the position, authority, responsibilities, accountability of each level are clearly defined.

(b)   It prescribes the relationships amongst the people working in the organisation.

(c)    The formal relations in the organisation arise from the pattern of responsibilities that are created by the management.

(d)   A formal organisation is bound by rules, regulation and procedures.

(e)   It is deliberately impersonal.

Advantages of Formal Organisation

1)      As definite duties and responsibilities of each employee are clearly fixed, it tends to reduce conflicts among employees.

2)      Over lapping of authority and responsibility is avoided.

3)      Entire organisation is systematically controlled.

4)      On account of classification of tasks, right person in place at a right place, hence job satisfaction and security is experienced by the employees.

5)      It makes organisation less dependent on one man.

Disadvantages of Formal Organisation

1)      In certain cases, formal organisation may reduce the spirit of initiative, and dependence on superiors tends to increase.

2)      Authority may be used, sometimes for sake of convenience of the employees without considering the need for using the authority.

3)      As size and activities of formal organisation increases, problems of co-ordination and control become difficult.

4)      It tends to neglect sentiments and values of the employees in the organisation.

5)      It may reduce speed of informal communication.

Q.6. Write a note of Informal Organisation.                        2009, 2011, 2013, 2017

Ans: Informal organisation refers to the relationship between people in an organisation based not on formal hierarchy but on personal attitudes, whims, likes and so on. It is an unofficial framework. In the words of Keith Davis, “Informal organisation is a network of personal and social relations not established or required by the formal organisation but arising spontaneously as people associate with one another.”

Causes of Emergence of informal Groups:

1)      To satisfy social needs which are not satisfied by formal organisations.

2)      To enjoy sense of belongingness and identification.

3)      To get outlet of employees’ frustration.

4)      To get opportunities for influence and creativity.

5)      To perpetuate cultural values.

6)       To promote communication and obtain information.

Features of Informal Organisation: The chief features of informal organisation are:

1)      Informal Organisation is not established by any formal authority. It arises from the personal and social relations amongst the people working in the organisation.

2)      Informal Organisation arises spontaneously, and not by deliberate or conscious efforts.

3)      It is influenced by the personal attitudes, emotions, whims, likes and dislikes, etc. of the people in the organisation.

4)      It is based on rules, regulations and procedures.

5)      The inter-relations amongst the people in an informal organisation cannot be charted (i.e., cannot be shown in an organisation chart).

Advantages of Informal Organisations:

1)      Informal group gives social satisfaction to the employees.

2)      It promotes sense of belongingness.

3)      It provides safety valve for emotional problems of the employees

4)      It helps developing communication channels in the organisation

5)      It provides help on the job to the employees during illness, accidents etc.

6)      it supports in achieving organisational goals

7)      It may help manager to overcome their natural limitations of ability.

Disadvantages of Informal Organisations:

1)      Informal groups generally resist change.

2)      Interest of formal and informal groups may clash with each other.

3)      Members of informal organisation may adopt group think philosophy by way of assuming that group decision is the only right decision.

4)      Informal group ends to promote rumors, grapevine which spreads at a much faster rate and hence harmful to the organisation.

5)      Mangers should not resist formation of in formal groups but try to convince it to contribute to organisational goals.

Q.7. Distinguish between Formal and Informal Organisation.  2007, 2010, 2014

Q.8. What is organisational structure? Mention the points to be taken into consideration while framing organisational structure. What are its two types?          2007, 2015

Ans: Organisational structure can be called as a framework within which managerial and operational tasks are performed by various managers. It specifies the relations between people, work and resources.

Points to be taken while framing organisational structure:

a)      Job design and expected result of the job: In the organising process the total work is divided into various jobs and the manager has to get the jobs done from his employees. So, it must be specified very clearly what all activities have to be performed in a particular job.

b)      Departmentation of various jobs: After division of work into jobs, the jobs are grouped together to form departments.

c)       Span of management: It means how many subordinates can be effectively managed by one superior. After deciding the span a scalar chain is developed of all the superiors and subordinates because the span of control clearly specifies who has to report to whom.

d)      Delegation of authority: Delegation of authority means sharing of authority between the managers and subordinates. It helps them to work as a team and achieve the group goal.

Types of Organisational Structure:                           2019

a)      Functional Structure

b)      Divisional Structure

Q.9. What is meant by functional structure? Give its features, merits & demerits.                                          2017

Ans:  FUNCTIONAL ORGANISATION: Functional organisation is a type of organisation in which the work of the whole enterprise is divided into a number of specialized functions like production, purchasing, marketing, office management, personnel relations, etc. and each of these specialised functions is entrusted to a functional expert or specialist.

Features of Functional Organisation: Functional organisation has certain characteristic features. The main features of functional organisation are:

1)      The entire work of the organisation is divided into different specialised functions.

2)      Each function is put under the charge of a specialist.

3)      The functional expert has authority to command person in other departments concerning his function.

4)      There are two types of managers – line managers and specialist managers.

5)      There is no unity of command and subordinates receive instructions from a number of functional bosses.

Advantages/Merits

a)      Specialisation: A functional structure leads to occupational specialization. This promotes efficiency in utilization of manpower as employee performs similar tasks within a department.

b)      Efficiency: It helps in increasing managerial and operational efficiency and these results in increased profit.

c)       Minimises costs: It leads to minimum duplication of efforts thus lowers cost.

d)      Better control and coordination: It promotes control and coordination within a department because of similarity in the tasks being performed.

e)      Flexibility: Functional organisation allows changes in organisation without disturbing the whole work. the span of supervision can also be adjusted according to the requirements.

Disadvantages/Demerits

a)      Functional empires: A functional structure places less emphasis on overall organizational objectives than the departmental objectives.

b)      Problems in coordination: Pursuing departmental interests at the cost of organizational interests can also hinder the interaction between two or more departments. It may lead to problems in coordination.

c)       Conflict of interests: A conflict of interests may arise among departments when the interests of two or more departments are not compatible.

d)      Lack of coordination: The appointment of several specialists creates problems of coordination, especially when the advice of more than one is needed for taking decisions.

e)      Difficulty in fixing responsibility: Since there is not unity of command, it becomes difficult to fix the responsibility for slackness in work.

Q.10. What is meant by divisional structure? Give its features, merits and demerits.                     2015, 2018

Ans: When the organisation is large in size and is producing more than one type of product then activities related to one product are grouped under one department. This type of organisation is called divisional structure organisation. In divisional structure all activities associated with a product or line can be easily co-ordinated.

Features:

1. This structure is formed on the basis of product.

2. This type of structure brings product specialisations.

3. It is suitable for multiproducts or diversified firms.

4. There is unity of command and subordinates receive instructions from one boss only.

Advantages/Merits

a)      Product specialisations as one type of product are grouped under one department.

b)      Fast decision making since there is no dependence of one department on other department.

c)       Fast decision making leads to flexibility.

d)      Expansion of new department without disturbing existing departments.

Disadvantages\Demerits

a)      Each department will require all the resources as every division will be working as an independent unit.

b)      Conflict on allocation of resources.

c)       Each department focuses on their product only.

Q.11. State any two circumstances in which Divisional organization structure is more suitable. 2013

Ans: Suitability (i) Divisional structure is suitable for those business enterprises where a large variety of products are manufactured using different productive resources (Cosmetics). (ii) When an organisation grows and needs to add more employees, create more departments and introduce new levels of management, it will decide to adopt a divisional structure.

Q.12. What do you mean by Delegation of authority? Mention its elements (Responsibility, Authority and Accountability). Distinguish between authority and responsibility.                                        2016, 2020

Ans: In every organisation managers are assigned lot of work and manager alone cannot perform all the work. So, he divides the work among different individuals working under his according to their qualification and gets the work done from them. After passing the responsibilities the manager also shares some of his authority with his subordinates. To make sure that his subordinates perform all works effectively and efficiently the manager creates accountability and this whole process is known as delegation of authority.

Elements of Delegation of Authority:                    2009, 2016, 2019

a)      Responsibility: Responsibility means assigning the work amongst subordinates. The process of delegation begins when manager divides his work among different individuals.

b)      Authority: Authority means power to take decision. To carry on the responsibilities every employee needs to have some authority, so, when managers are passing their responsibilities to the subordinates, they also pass some of the authority to the subordinates.

c)       Accountability: To make sure that his subordinates perform all works effectively and efficiently the manager creates accountability. Accountability means subordinates will be answerable for the non-completion of the task. It is the third and final step of delegation process.

Difference Between Authority and Responsibility

Q.13. State five advantages of Delegation of Authority. (Importance of Delegation of authority or Necessity of Delegation in every Business organisation)                2009, 2012, 2014, 2016, 2020

Ans. Delegation of authority is necessary in all types of organizations. Reasons can be seen through the importance. The importance of delegation of authority may be outlined as follows:

a)      Reduced workload of managers: Delegation of authority permits a manager to share his workload with his subordinates. By passing on the routine work to the subordinates, the manager is able to concentrate on policy matters and decision-making. This would increase his effectiveness.

b)      Effective management: The manager who delegates’ authority can perform much more than the one who does not. This is because the manager can get some work done by his subordinates and is able to concentrate on policy matters and decision-making. This would increase his effectiveness.

c)       Motivation of employees: Delegation implies grant of authority to the subordinates along with responsibility for work. As a result, subordinates have a sense of recognition. They are motivated to work for higher performance.

d)      Employee development: As a result of delegation, employees get more opportunities to utilize their talent. It allows developing those skills which will improve their career prospects.

e)      Reduce the work load of managers: Managers can reduce their workload by sharing their responsibilities and work with the subordinates.

Q.14. What is centralisation? How centralisation differs from decentralisation?                              2015

Ans: Centralisation refers to concentration of power or authority in few hands i.e., top level. An organisation is centralised when the decision-making authority is in the hands of top level management only.

Difference between cetralisation and decentralisation:

Q.15. What is Decentralisation? Mention its Importance.                            2010

Ans: Decentralisation is defined as systematic distribution of authority at every level of management. Under decentralisation every employee working at different levels gets some share in the authority.

Importance of Decentralisation:

a)      Develop trust and faith among subordinates which motivates them.

b)      Develop managerial talent for future.

c)       Quick decision-making is possible because employees are allowed to take decisions also.

d)      Relief to top management as they systematically pass the authority and responsibility at different levels.

e)      It develops team spirit among the employees.

Q.16. Distinguish between Delegation of Authority and Decentralisation 2008, 2011, 2013, 2018, 2019  

Q.17. What are the barriers to effective delegation of authority? How these can be improved?                     2007, 2009, 2011

Ans: Barriers in delegation of authority

a)      Reluctance to delegate: - In many cases managers will not be interested to delegate to authority. They will not be willing to give authority to subordinates. They will not make any plan to delegate authority.

b)      Fear of subordinates: - Managers in many cases fear from subordinates because they think that when there is delegated authority their performance will be superior to the performance of manager and subordinate may pose challenge to the manager.

c)       Lack of trust: - Managers may lack confident or trust on subordinates. They do not think or believe that after delegating authority, subordinates will do better or their performance will improve.

d)      Incompetence of subordinates: - Subordinates must be competent enough for effective delegation of authority. Subordinate must be willing and competent to accept delegated authority. In many organizations due to the incompetency of subordinates delegation of authority is affected.

e)      Lack of control: - When employees are delegated authority, they will be free to work. They will work autonomously; managers cannot exercise effective control over them. Delegation is affected.

Principles of Effective Delegation of Authority or How barriers can be removed or Elements of delegation:

a)      Knowledge of Objectives: Before delegating authority, the subordinates should be made to understand their duties and responsibilities. In addition, knowledge of objectives and policies of the enterprise should be provided to them.

b)      Parity of Authority and Responsibility: This principle of delegation suggests that when authority is delegated, it should be commensurate with the responsibility of the subordinate.

c)       Unity of Command: This principle of delegation suggests that everyone should have only one boss. A subordinate should get orders and instructions from one superior and should be made accountable to one superior only.

d)      The Scalar Principle: The scalar principle of delegation maintains that there should be clear and direct lines of authority in the Organisation, running from the top to the bottom. The subordinate should know who delegates authority to him and to whom he should contact for matters beyond his authority.

e)      Clarity of Delegation: The principle of clarity of delegation suggests that while delegating authority to subordinates, they should be made to understand the limits of authority so that they know the area of their operation and the extent of freedom of action available to them. Such clarity guides subordinates while performing their jobs.

Q.18. “Authority can be delegated but responsibility cannot.” Explain.                 2008, 2010, 2013

Ans: Yes, it is right to say that authority or decision-making power can be delegated but the accountability can never be delegated according to the principle of absolute responsibility or principle of abdication. The accountability remains with the manager even after delegating the work. For example, the directors of a computer manufacturing company have asked their production manager to achieve a target production of 150 computers per day. The production manager has asked five foremen to achieve this target. Two of them could not achieve the target. In this case production manager is responsible and accountable for non-completion of target because by passing authority and work to foremen, manager cannot get rid of his responsibility and accountability.

Q.19. Distinguish between functional structure and divisional structure.             2020

Ans: Difference between Functional Structure and Divisional Structure