Organising Class 12 Business Studies Chapter 5 Notes

Key Terms in Organising

Organising

The process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.

Organisational Structure

The framework within which managerial and operating tasks are performed. It specifies the relationships between people, work, and resources.

Span of Management

Refers to the number of subordinates that can be effectively managed by one superior. A narrow span creates a tall structure, while a wide span creates a flat structure.

Delegation

The downward transfer of authority from a superior to a subordinate. It is a tool for sharing tasks and getting work done efficiently.

Authority

The right of an individual to command his subordinates and to take action within the scope of his position.

Responsibility

The obligation of a subordinate to properly perform the assigned duty.

Accountability

The answerability for the outcome of the assigned task. It cannot be delegated.

Decentralisation

The systematic dispersal of authority to the lowest levels of the organisation. It is an optional policy decision of top management.

Functional Structure

An organisational design that groups similar or related jobs together. E.g., all marketing tasks are grouped under a marketing department.

Divisional Structure

An organisational design where the organisation is divided into separate business units or divisions, each with its own divisional manager responsible for performance.

The Process of Organising

1. Step 1: Identification and Division of Work —
2. Step 2: Departmentalisation —
3. Step 3: Assignment of Duties —
4. Step 4: Establishing Reporting Relationships —

Importance of Organising

Organising is not just an administrative formality; it's a vital function that brings structure and synergy to an enterprise. One of its primary benefits is fostering specialisation. By dividing work into smaller jobs and assigning them based on qualifications, organising leads to higher efficiency and productivity. It creates clarity in working relationships by defining who reports to whom, which removes ambiguity and confusion, ensuring smooth communication and coordination. Furthermore, organising facilitates the optimum utilisation of resources by avoiding duplication of work and overlapping of responsibilities, thus preventing wastage. A well-designed organisational structure is flexible and promotes adaptation to change, allowing the enterprise to adjust its operations in response to the dynamic business environment. It also leads to effective administration by clearly defining job roles and responsibilities. This clarity helps in the development of personnel through delegation, which allows subordinates to take on new challenges and develop their skills. Ultimately, a sound organising function is crucial for expansion and growth, as it provides the framework to scale up operations and take on new ventures.

Functional Structure vs. Divisional Structure

Delegation vs. Decentralisation: Must-Remember Points

• {"point":"Delegation is a process of sharing tasks and authority; Decentralisation is an outcome of a policy decision by top management."}
• {"point":"The purpose of delegation is to reduce the workload of a manager. The purpose of decentralisation is to increase the role of subordinates in decision-making."}
• {"point":"Delegation is compulsory for effective management. An individual cannot perform all tasks. Decentralisation is optional."}
• {"point":"The scope of delegation is narrow (between a superior and their immediate subordinate). The scope of decentralisation is wide, applying to the entire organisation."}
• {"point":"In delegation, control remains with the superior who delegates the authority."}
• {"point":"In decentralisation, overall control is retained by top management, but day-to-day operational control is delegated to lower levels."}
• {"point":"Delegation is a technique to get work done, while decentralisation is a philosophy that promotes autonomy and initiative at lower levels."}

The Three Elements of Delegation

Exam Traps and Scoring Tips

Examiners love testing the subtle differences between Delegation and Decentralisation. Case studies are the most common format. Look for keywords: if a single manager shares tasks with a specific subordinate, it's Delegation. If the case mentions a company-wide policy from top management to empower lower-level managers with decision-making power, it's Decentralisation. Another classic trap is the concept of Accountability. Remember this golden rule: Authority can be delegated, Responsibility is shared, but Accountability can NEVER be delegated. The ultimate accountability rests with the person who delegated the task. This is a frequent choice in MCQs and 1-mark questions.

Quick Revision Check

• What is the basis of departmentalisation in a functional structure? The basis is the various functions or jobs performed within the organisation, such as marketing, production, finance, and human resources.
• Can responsibility be fully delegated? No. While a manager delegates authority to a subordinate to carry out a task, the manager remains ultimately responsible for ensuring the task is completed.
• Name the concept that refers to the number of subordinates a superior can effectively manage. Span of Management or Span of Control.
• Why is a divisional structure considered expensive? Because it involves duplication of activities and resources. Each division has its own set of functions (like marketing, finance, HR), which increases overall costs.

Frequently Asked Questions on Organising

Frequently Asked Questions