Chapter 4:

Organising
Meaning: “ organising is a function of management that is performed after planning and is
concerned with arranging all the resources such as men, material, machinery,
etc. , to carry out the plans"

Question 1 : Importance of Organising (AB CODE2)

1. Benefits of Specialisation: since organising divides a work into different units and
departments, they get the benefit of specialisation as each unit focuses on one
particular job. It also reduces duplication of work.

2. Clarity in working relationships: organising clearly defines superior subordinate

relationship, giving a clarity on the authority and accountability of each person in the
organisation.

3. Optimum utilisation of resources : since the work is divided, and there is no

duplication of work, the wastage of resources can be avoided, and there will be optimum
utilisation of resources.
4. Effective administration : in organising, there is a reduction in duplication of work as
well as because of delegation of authority. Managers are able to reduce their workload
and turn focus on company’s administration.
5. Adaptation to change : since organising divides organisational structure into different
departments, it becomes easier for an organisation to adapt to changes by adding an
additional department without disturbing the existing structure.

6. Development of personnel: as the managers delegate authority to the subordinate, it

provides the subordinates, a chance to develop various managerial skills and also
motivates them to take more difficult task and complete them.
7. Expansion and growth: organising helps in expansion and growth of the organisation
by allowing them to add more departments and job positions without changing the
existing structure.

Question 2 : Organising process (IDEA)

M
1. Identification and division of work : it is the first step in the process of organising
where the entire task is divided into various small task and a separated on the basis
of different activities to avoid duplication of work and burdening and employee with
the entire work.
2. Departmentalisation : activities that are similar in nature, a group together and
put under one department. This process is known as the process of
departmentalisation.
3. Assignment of duties : in this step, various job positions are created under each
department and the different duties and responsibilities of each job position is
allocated based on the skills and competencies of that particular department.

4. Establishing reporting relationship : under this step, a clarity of superiors,

subordinate relationship is developed so that there is no confusion between various
people working in multiple departments.
Question 3: Organisation Structure
It is a framework within which all the managerial and operational task are performed
An organisational structure can be divided into two types or categories :
1. Functional structure.
2. Divisional structure.

Question 4: Functional Structure

When departments in an organisation are

created on the basis of functions or various
task performed, it is known as functional
structure.
Question 5: Advantages of functional structure

1. Occupational specialisation : in a
functional structure since the
departments are based on various
functions performed, it leads to
specialisation as each department
focuses on one particular activity only.

2. Promotes control and coordination

within departments: as all the
employees working in a department
focus on similar activities, it is easier to
coordinate with each other since the
goal and the plans are the same.
3. Increases managerial and operational efficiency : it helps in increasing both managerial
and operational efficiency, thus increasing the overall profits of the organisation.
4. It leads to minimum duplication of efforts : as the work is divided into different
departments, there is minimum duplication of efforts and optimum utilisation of resources.
5. Ease and effective training: as all the employees are to be trained for one function,
only, it becomes easier to train them.
6. Due attention to different functions : at this stage, the managers focus on
implementing the plan and completing the necessary actions that are required for the
same.

Question 6: Disadvantages of functional structure

1. Places less important on overall objective of the organisation : a functional structure
focuses more on the objectives of the department rather than the overall objectives of the
organisation.
2. Problem of coordination : there is a problem of coordination between various
departments while exchanging information across different departments.
3. Inflexibility : there will be a problem of inflexibility as people are trained for one function
only and hence cannot be shifted to different departments as and when required.
4. Conflict of interest : there may be a conflict of interest between departments as every
department has different goals and are more focused on achieving their own goals..
5. Difficulty to fix accountability : in case of any failure, it is difficult to fix accountability
as every department keeps on passing the blame to other departments.

Question 7: Suitability of functional structure

Division of work as per functions
Specialisation in every function
Grouping of similar nature of jobs
Company producing single product or single line of product .
Question 8: Divisional structure
When departments in an organisation are created
on the basis of various products manufactured, it
is known as divisional structure.

Question 9: Divisional structure - Advantages

1. Product specialisation : as departments are
made on the basis of different products
manufactured and each division focuses on a
particular product. This helps to gain product
specialisation in the organisation.
2. Fast decision making : there is faster decision-
making as divisional hits can take the decision for
their product without consulting other
departments
3. Accountability : accountability cannot be passed and divisional heads are
accountable for their product and responsible for its performance.
4. Flexibility : there is flexibility in divisional structure as the employees are trained for
various functions.
5. Expansion and growth : individual structure, a new product or division can be added
without disturbing the existing structure and its operations, which makes expansion and
growth easier.

Question 10 : Divisional structure - Disadvantages

1. More resources required : each department will require various resources as they
will be working as an independent unit
2. Product focused department : divisional heads are more focused on their own
product and its success rather than the overall goals and objectives of the
organisation.
3. Conflict : there may be conflict between different divisions regarding the allocation
of funds and resources.
4. Increase in cost : it may need to increase in cost as it might be duplication of
activities requiring more resources.
Question 11 : Divisional structure - Suitability
Companies making multiple products or different product
Companies that require product specialisation
Companies that require each division to be independent .

Question 12 : Types of organisation :

An organisation can be divided into two
types that is formal and informal
organisation
Formal organisation refers to an
organisational structure that is developed by
the management to achieve the goals of the
organisation
Informal organisation gets created
automatically for the psychological
satisfaction of the employees
Question 13 : Features of formal organisation :
It is created intentionally by the management
Their purpose is to achieve the goals of the organisation
Every employee, an individual has a specific and assigned job and duty
There is fix authority at every position
It results in the creation of superiors, subordinate relationship and follows a scalar
chain of communication in the organisation .
Question 14 : Advantages and disadvantages formal organisation :
The advantages of formal organisation are as follows:

1. It focuses on achievement of organisational goals

2. Because there is division of work, there are less chances of overlapping or
duplication of work
3. It follows a scalar chain of command
4. The organisation places, more emphasis, or focus on work and related matters
5. Ensures there is systematic working in the organisation
6. It establishes coordination between different departments and helps to achieve the
goals of the organisation
The disadvantages of formal organisation are as follows:

1. There is delay in action as scaler chain of communication is followed

2. It only focuses on work and hence ignores the social needs and psychological
satisfaction of the employees
3. It emphasises on only work related matters and hence ignores the human relationships
in the organisation .
Question 15 : Features of informal organisation :
It gets created automatically
It is formed by the employees to get psychological satisfaction
Informal organisation does not have any fixed flow of authority
Source of information in informal structure cannot be traced
The existence of informal organisation completely depends on formula organisation
Question 16 : Advantages and disadvantages informal organisation :
The advantages of informal organisation are as follows:

1. There is faster communication has no scalar chain of communication is followed

2. It fulfils the social and psychological needs of the employees
3. It provides correct feedback and helps in achieving the organisational objectives

The disadvantages of informal organisation are as follows:

1. It results in spreading of rumours, as there is no possibility of finding the source of

information
2. It might lead to resistance to change from the employees
3. There might be pressure of group norms where the employs might focus on individual
interest rather than organisational interest .

Question 17 : Delegation :
Delegation in simple terms means transfer of authority from superior to subordinate.
It helps a managers on giving less important work to the subordinates and focus on
critical task and perform effectively .
Question 18 : Delegation - Elements ( ARA )

1. Authority : Authority means decision-

making, power and managers delegate
authority to the subordinates so that
they can complete the given task.
2. Responsibility : it is the duty of this
subordinate to complete the given task
that has been assigned to him or her by
the manager. This is known as
responsibility.
3. Accountability : It is also known as
answerability, where the subordinates are
answerable to the superiors for the non-completion
of the given task.

It is to be noted that only authority can be delegated, whereas responsibility and

accountability cannot be completely delegated, and in case of non-completion of the task,
the managers are themselves accountable.
Question 19 : Delegation - Importance:
1. Effective management : because of delegation, managers can focus on more critical
task and assign routine task to the subordinates, bringing effective management.
2. Employees development : it helps in the development of employees by assigning
them different task and helping them utilise their skills and abilities.
3. Employees motivation : delegation shows that employees are capable and their
superiors trust them. This leads to motivation of the employees.
4. Facilitating growth : it promotes a growth of the organisation by giving better
training to the subordinates and helping them to grow and expand.
5. Basis of management hierarchy : it establishes superior subordinate relationship and
hence to determine the various job positions in the organisation.
6. Better coordination : elements of delegation helps in clarifying the duties to be
performed, and thus avoid overlapping and duplication of work.
Question 20 : Centralisation and Decentralisation :
Centralisation refers to the concentration of decision-
making authority in the hands of few. The selected
people in the organisation that take all the important
decisions of the company and others are responsible
to carry out the plans and the decisions taken by
them.

Decentralisation means systematic distribution of

authority till the lowest level of management. It
distributes the decision making authority to all the
employees at all the levels based on their job position.

Question 21 : Importance of Decentralisation :

1. Develop initiative among subordinates : since the subordinates have to complete their
own task, it helps to develop initiative among subordinates and creates strong leaders
for future
2. Develops managerial talent for future : the subordinates are trained for managerial
talent as various work and task are assigned to them along with a chance to show
their abilities and skills.
3. Quick decision-making : since everyone has the authority to take decisions
regarding their work, there is quick decision making
4. Relives the top level management : as the subordinate have more freedom to make
their own decisions. It relieves the top level management as they do not have to
constantly supervise the work done by the subordinates
5. Facilitates growth : decentralisation gives more freedom to the lower level
management and helps them to work in the best way does helping in the growth of the
firm.
6. Better control : in decentralisation it is easier to check the performance of every
individual and department, and since accountability is within each individual and
department. It is easier to fix accountability.