CLASS - 12

BUSINESS STUDIES
ORGANISING
In simple words, organising refers to the arrangement of everything in an orderly
form and making most efficient use of resources. In other words, organising can be
defined as 'identifying and grouping different activities in the organisation and
bringing together the physical, financial and human resources to establish more
effective relations between them which is essential for the achievement of
organisational goals
Organising process
1.Identification and division of work
The first and formost step of organising process is the division of total work into
smaller lots (which is termed to be as a job). This division of works helps in achieving
specialisation and it enables smooth functioning of the organisational work.
2. Grouping the jobs and departmentalisation
After dividing the work into smaller lots, the next step is to put similar and related
jobs into one department. The distribution of jobs into department can be done by
using any of the following methods
functional departmentalisation - Departments related to the type of work.Under this
system, jobs related to some common function are grouped under one department.
Such as, All the jobs related to sales department are put under one head and so on.
Divisional departmentalisation - (Product departments) When the organisation
becomes huge and starts producing variety of products, then all the jobs related to a
specific products are put under one department.
Example - All the jobs (sales, production, finance, marketing, advertising etc) related
to the Cosmetics are put under one department.
3.Assignment of duties
When an organisation selects a type of department, the individuals working in the
departments will be given a duty according to his qualifications, skill and abilities. A
document named JOB DESCRIPTION is handed over to them which specifies their
jobs and working conditions.
4. Establishing reporting relationship
In order to perform an assigned job, every individual needs a sense of authority. So
the next step of organising process is to establish reporting relationship among
individuals. Reporting relationship simply refers to the clarity in the mind of
employees regarding whom they have to report and from whom they receives orders.

Importance of Organising

• Helps in adoption to Change

Change is the key factor in today's dynamic environment and due to proper
departmentalisation, it becomes more easy for an organisation to adapt the changing
environment and act according to the requirements. Under the organising function,
departments are distributed which helps the organisation to make changes in
individual departments only.

• Helps in specialisation
As the total workload of an organisation is distributed between different jobs where
the employees are employed according to their skills and qualifications. This
distribution helps them to perform the job more effectively and efficiently which
ultimately leads to specialization in the organisation.

• Clarity in working relationship

Under, organising, it is clearly defined that what and how much authority and
responsibility is assigned to different individuals in the organisation. This helps them
to solve the problem of who will report to whom and hence brings clarity to working
conditions in the organisation.

• Helps in proper administration

As under organising similar and related jobs are put under one department which
ultimately helps in administration and proper management of activities which are
interlinked in between different departments.

• Optimum utilization of resources

The basic agenda of organising is to eliminate the overlapping and wastage of
resources.Due to job description and distribution of department it becomes very easy
for every individual to perform his/her task with minimum wastage and overlapping of
work and hence results in optimum utilization of resources.
• Helps in development of personnel / Creates healthy and encouraging environment
Under efficient organising, the routine or the general work of the managers are evenly
distributed among the lower level managers, which boost their morale and develops
the managerial efficiency of the lower level managers

Organisational structure
It refers to the structure of an organisation which clearly defines the job positions,
authority and responsibilities under different levels In simple words, It refers to the
framework under which all the managerial and operational tasks are performed.
Here Span of Management plays an important role in determining the length of the
organisation structure. That is, if the span of management is to short or narrow then
the structure would be tall and vice versa.

Types of Organisational structure

Basically, there exist plenty of structures which can be formed but we have to study
only 2 of them which are as follows
1.Functional Structure 2.Divisional structure
Functional Structure
Under this type of structure all the jobs related to some common function are put
under one department. i.e. departments are made keeping in mind the functions which
they have to perform
Example - All the jobs related to sales are grouped under one single department with
the name of Sales department.
Advantages of this type of departmentalisation
Easy supervision - due to similar job
Specialisation - due to repetitions
Increase managerial efficiency
Effective training

Disadvantages of this type of departmentalisation

Lack of flexibility
Department goal becomes superior than organisational goal
Lack of accountability - difficulty in finding which department is incurring losses due
to interdependency
Divisional structure
As no specific structure is termed to be an ideal structure, the above functional
structure also started to give negative results when the size of the organisation started
to expand.When the organisation starts producing products of different variety and
fields then all the activities related to a specific product are grouped under one
department.

Example - X ltd is a wood table manufacturing company due to increase in sales by

500% in 1 year, the company had decided to enter a totally different zone that is
cooler manufacturing. Under this type of organisation, all the activities related to
cooler manufacturing are put under one department, similarly all the activities
related to wood table manufacturing will be put under another department.

Advantages of this type of departmentalisation

• Fast decision making - Due to no interdependence
• Accountability can be easily traced
• Expansion and Growth

Disadvantages of this type of departmentalisation

• More resources are required
• Individual product focus
• Conflict in allocation of resources

Formal and Informal organisations

Formal organisation
when the managers are caring on organising process then as a result of Organising
process an organisational structure is created to achieve systematic working and
efficient utilization of resources. This type of structure is known as formal
organisational structure.
It spells out the authority & responsibility of every Individual
It is created initially by the manager to achieve organisational goal.
It creates the scalar chain of communication.
It spells out the restrictions & powers of every individual.

Advantages of Formal organisation

1. Systematic working
2. Achievement of organisational objectives - As it is to created by the managers for
achieving the goal only.
3. No overlapping of work = Due to systematic working environment
4. More and effective co-ordination.
5. Creation of chain of command = As it signifies the superior subordinate
relationship ie. who will reports to whom
6. More emphasis/comer concentration on work
Disadvantages of Formal organisation
1. Delay in Action = Due to scalar chain and chain of command.
2. Ignore social needs of employees = it leads to dissatisfaction and demotivation of
employees
3. Emphasis on work only

Informal organisation
while working in formal structure, the individual interact. with each other and creates
a friendly belonging in the organisation. This network of social & friendly groups
creates another structure ie... informal.
It creates automatically.
It gives psychological satisfaction to individuals.
Informal depends on formal.
If no formal then no informal.
It does not follow any fixed path of authority or communication

Advantages of informal organisation

1. fast communication- municatio As it does not follow scalar chain
2. fulfill social needs
3. correct feed back - Through informal the top level managers. can know the real
feed back of employees on various policies & plans.

Disadvantages of Informal organisation

1. Spread rumours - According survey 70% of information spread through informal
structure which may mislead the employees.
2. No systematic working.
3. May bring negative result - If informal structure opposes the policies & changes of
management it will bring negative result.
4. Gives more emphasis to individual interest

Strategic use of informal gives by benifits to formal

Informal group knowledge can be used to support the employees
Information can be transmitted quickly.
Manager can skill fully take the advantage of both formal and informal Organisation.

Delegation of authority
Delegation of authority refers to distribution of power in few hands to make smooth
working in the organisation. When manager get overburdened with work, he transfers
some of his routine work to lower level managers/ employees.
Along with the responsibility, he also transfers matching authorities to the
employees and in order to make them attentive he also makes them accountable for
non completion of work.

Basically the concept of delegation comes with 3 different elements

Responsibility Authority Accountability

1. Responsibility
It means the total [physical and mental] work assigned to an individual the delegation
begins when manager passes on some of his responsibilities to his subordinates
• It is the obligation of a subordinate to properly perform the assigned duty.
• It arises from superior subordinated relationship.
• Responsibility flows upward ie .... from subordinate to superior.

2. Authority
• It means power to take decision.
To carry on responsibility one needs some authority also so manager also pass/give
some authority to subordinates

• Authority = Responsibility
• 2nd step of delegation process
• Restricted by law & rules & regulation
• Flow upward [as we goes for higher in management chain authority increase, as
Authority - Responsibility]

3. Accountability
• It means sub ordinates will be answerable in case of non-completion of the task
• 3rd and final step of delegation process.
• It is shared ie.. manages is also accountable /answerable
• It can't be delegated or passed representative
• It flows upward.
• It is imposed

Importance of delegation
1.Effective management - As in this process manger pass on the routine work to the
subordinates. So, he/she can concentrate on other important matters
2.Employee's development - due to delegation, employees gets more opportunities to
utilize their talents It helps them to think in a different way and to complete the
complex tax
3.Creates future managers
4.Facilitates organisational growth - As responsibility authority is given keeping in
mind the capability and qualification of individual. This leads to division of work and
specialisation.
5. Better coordination - As systematic responsibility & authority in is divided and
employees are made and to answerable for non- completion of work. This leads
clarity in work hence co-ordination increase
6.Reduce work load of managers.
7.Improve super-subordinate relationships

Centralization and decentralisation

centralisation - It refers to the concentration of power in a few hands ie- top-level
management only.
Decentralisation - It can be defined as the even and systematic distribution of
authority at every level of management]
ie... each individual has some share in authority
Most samalla policy ie both centralisation & uses mixed Decentralisation
They keep the important & matters such as financial decisions, structural decisions so
with top-level management only and share the common
decision with the people working at different levels
This organisation can never be centralised or decentralised

Importance of decentralisation
1. Develop initiative among subordinates As every individual gets some power in the
hand which motivates the employees and it creates a good condition for an
organisation.
2. Develop future manager opportunities to Decentralisation gives the employees to
show their talents which may help to organisation to getnew talents in future.
3. Quick decision As every one has some power of decision-making so one can take
decision under his limit.
4. Relief to top level managemet.
5.Facilitates growth Decentralisation grants more freedom to lower level They work
in the best manner which is suited for their department hence revenue of
organisation is maximised.
6. Better control
7. Improved team work