(Subject Notes) Business Studies

- Organising -

Define “Organising” and enumerate 3 steps involved in the process of organising?

• Organising means identifying and grouping various activities into jobs and then sub grouping these jobs into sections and departments.

• It is bringing together financial, physical & human resources and establishing productive relations among them for achieving specific goals.

The organising process involves the following steps:

Division of work:

1st step – divide the work since one individual cannot do the entire work. If work is divided it leads to specialisation of work and skill.

Grouping Jobs and Departmentation:

• The 2nd step is to group similar jobs into departments, divisions or sections such as marketing, financing, manufacturing, etc.

• This brings about coordination and facilitates unity of effort.

• The departments so created are linked together on the basis of their interdependence.

Establishing authority relationships:

• 3rd step is to create an authority structure among various job holders

• This links the various job holders by authority-responsibility relationship.

Define Organising as a structure? Enumerate any three CONSIDERATIONS to be kept in mind while building an organisational structure. - 4 marks

Definition:

• An organisation structure define:

  • job positions,

  • the roles assigned to them ;and

  • the authority relationships among the various job positions.

• It facilitates work-flow in the organisation.

Considerations (any 3)

The following considerations should be kept in mind while building an organisation structure

Job design:

• Manager has to first design the jobs

• Then specify which task is to be included in each job

• Then decide which person will do which job

Departmentation:

Once the jobs are defined they must be grouped together to form a department as coordination becomes easier if similar jobs are under one department and one manager.

Span of Control:

After the departments are formed, how many people and jobs the manager will manage is the next decision. The manager is responsible for coordinating a particular number of jobs, which is called the span of control.

Delegation of Authority:

As jobs have been assigned, some degree of authority is required to get the job completed.

Explain how organising helps in “Specialization” and “Co-ordination”

Or

Describe IMPORTANCE OR OBJECTIVES of organising as a function of Mgt? 6 marks

Organising function is important because it leads to: (SCARS)

Specialisation:

• Activities should be grouped based on their similarity and convenience.

• This leads to efficiency, specialisation and speedy performance of task.

Clarifies authority and responsibility:

If each manager is aware of his respective powers and privileges, his area of activity, whom he can order and for which task, it helps to minimize conflicts and confusion.

Avoids duplication of work

Organising helps to avoid duplication of work and overlapping of responsibilities. This is because specific jobs are assigned to individuals and work groups.

Role clarity:

• The organising process clarifies what role a person doing a job is supposed to perform.

• It is quite often spelt out in a written document called job description.

• This helps to

  • Avoid duplication of work

  • Finding right person for the right job.

Source of support and security:

Organising is a source of support, security and satisfaction to managers and employees in performing the task assigned to them. Each member enjoys a definite status in the firm.

FUNCTIONAL AND DIVISIONAL STRUCTURE: (Important sub chapter)

Define functional organisation? – 1 mark (part of the question)

Grouping together the entire work into major functional departments and entrusting these departments to functional specialists is known as functional structure of the organisation.

In an electrical manufacturing company, there are four main activities – Production, Marketing, Finance and Personnel. The General Manager is planning to structure the organisation. Which type of organisation structure should be adopt and why? Give two reasons.

This company should adopt the functional structure because:

• Each major function is organised as a separate department viz. marketing, production, finance, personnel, etc.

• This promotes division of work which leads to specialisation

• Ensures effective utilisation of workforce

• Supervision and coordination becomes easy since each individual manager is specialised in his job.

State any 3 advantages of functional structure of organizing - 3 marks Marking Scheme

• Promotes division of work which leads to specialisation

• Ensures effective utilisation of workforce

• Supervision and coordination becomes easy since each individual manager is specialised in his job.

State any 3 limitations of functional structure of organising – 3 marks

• As each function is separate and each departmental head is concerned with the performance of his department, conflicts may arise and the overall objectives of the organisation suffer.

• In large functional organisations, taking quick decisions & coordination becomes difficult

• It becomes difficult to hold a particular department accountable if any problem arises.

For example, if a product fails the production, sales and research departments may point accusing fingers at each other.

XYZ Limited is manufacturing chemicals and textiles. What type of organization structure would suit the requirement of such an organisation? And why?

Divisional organisational structure would suit the requirements of XYZ Limited.

• In divisional organisational structure, activities and personnel are grouped on the basis of different products manufactured by the firm.

• This allows each division to specialise in its areas of operation

• Decision can be taken quickly and effectively

• Each division can concentrate on each product line. This will result in efficiency and economy in its operation

State any 3 advantages of DIVISIONAL STRUCTURE of organising – 3 marks

• Each division can specialise in its areas of operation.

• Decision can be taken quickly and effectively.

• Can concentrate on each product line, which leads to efficiency and economy in its operation.

State any 3 disadvantages of divisional structure of organising – 3 marks

• As each division has its own production, marketing and finance arrangements, it involves heavy expenditure on human and physical resources.

• Managers in each department focus only on their own product without thinking of the rest of the organisation.

• Full utilisation of equipments may not be there in different departments.

• It is not suitable for small and medium sized companies.

DELEGATION OF AUTHORITY: (Meaning, Importance & Elements) – Imp sub chapter

Define delegation of authority?

The manager cannot perform the entire work assigned to him alone. So while he himself does jobs that are unique to the position he holds, he shares routine work and authority with competent subordinates to operate within prescribed limits. The sharing of this routine authority and responsibility with the subordinates is delegation of authority.

Explain briefly the ELEMENTS/PROCESS OF DELEGATION OF AUTHORITY? Marking Scheme - 4 marks

Or

“Delegation of authority is a process involving authority, responsibility and accountability” Explain this statement in brief. – 4 marks Important

Delegation means entrusting responsibility and authority to another person and creating accountability. Thus the process of delegation of authority has the following three important elements:

Responsibility:

• Responsibility can be delegated. It is the first step in the delegation process.

• A manager assigns certain tasks to his subordinates because he alone cannot perform all those tasks.

• However he only assigns the task to his subordinate but not the responsibilities for their performance.

• The responsibility for proper performance of such task continues to rest with him.

Authority:

• Besides assignment of duties, the subordinates are also granted authority to perform those duties properly.

• Authority refers to the powers and rights to use financial, physical and human resources as well as the right to decide to act or not to act.

• Authority is needed perform a given responsibility because without authority it may be very difficult and even impossible to carry out the given task.

Accountability:

The process of delegation is complete when the subordinate to whom the duties are assigned and authority is delegated is made accountable for properly performing his duties and for properly exercising the authority delegated to him.

“Authority can be delegated but responsibility cannot”. Explain the statement in brief–

Or

“Responsibility can be delegated but accountability is absolute” Explain. – 6 marks

According to the principle of absolute responsibility, authority can be delegated but responsibility and accountability cannot be delegated by a manager. The manager is responsible or accountable to his own superior for both, the tasks that he has assigned his subordinates and the acts of his subordinates. In other words only authority can be delegated but responsibility and accountability is absolute.

Example: if a foreman fails to get 100 units produced by the workers on any day, he is responsible to his superior. He cannot escape by saying that the workers were at fault. Similarly, the factory manager remains responsible to his superior for the work he entrusted to this foreman. He cannot escape from the responsibility by passing on the blame to his foreman.

Why is it necessary to delegate authority? Give three reasons? (Importance/advantages of delegation of authority)

Or

Delegation of authority helps in reducing the workload of managers and in motivating the subordinates.” Explain this statement – 6 marks V. Important

It is necessary to delegate authority due to the following reasons:

• It reduces the workload of managers. By sharing some of his own work with the subordinates, the manager is able to concentrate on more important jobs. This way he increases his own effectiveness and that of his subordinates. When delegation of authority takes place at all levels of the organisation it leads to proper division of work and assignment to all managers in a systematic manner.

• It establishes a superior-subordinate relationship. The flow of authority from top to lower level of management is directed and controlled by the process of delegation. This gives meaning and content to the flow of authority and to managerial jobs.

• It increases morale of the subordinates: Delegation helps the subordinate to develop their capabilities to handle new and more challenging jobs. This gives him job satisfaction. it increases his morale, self confidence and efficiency to get promotion.

Explain the term “decentralization” in brief? – 3 marks

• Decentralisation means delegating authority at all management levels and all departments of the organisation to take decision and appropriate action on tasks assigned to them.

• In a decentralized organisation, while top management have authority to frame policies and take major decisions; middle and lower level managers have authority for taking decisions on tasks assigned to them.

• Example: In an organisation, major decisions on products, line of business, capital investment, etc are made by top management while marketing manager for example is authorised to decide on prices of products, distribution channels, methods of advertising the products and organising sales campaigns. Top management does not interfere with his authority. However, marketing manager is required to keep in view the overall policies of the organisation while making decisions concerning matters within his authority. This organisation may be regarded as a decentralized one.

“The concept of decentralisation is related to the concept of delegation.” Explain this statement in brief. – 4 marks

• Decentralization refers to the dispersal of authority to take decisions to the lower level of an organisation where the problem arises.

• Delegation means entrustment of responsibility and authority from one individual to another. The concept of decentralisation is wider in scope and coverage.

• Decentralisation is completed only when the fullest possible delegation is made to all or most of the people who are delegated a specific kind of work or responsibility.

Explain the concept of delegation and decentralisation bringing out its distinction

Or

Dist between: (All points are important as any 3 are specifically asked in the CBSE paper– 3 marks or 6 marks

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