Chapter 5

ORGANISING

Meaning
• Organising essentially implies a process which coordinates human efforts, assembles
resources and integrates both into a unified whole to be utilised for achieving specified
objectives.
• Organising can be defined as a process that initiates implementation of plans by clarifying
jobs and working relationships and effectively deploying resources for attainment of
identified and desired results (goals).

Definition of Organising
• Organising is the process of defining and grouping the activities of the enterprise and
establishing authority relationships among them. Theo Haimman

Process of Organising
Organising involves a series of steps that need to be taken in order to achieve the desired goal.
The following steps emerge in the process of organising:

(i) Identification and division of work:

• The first step in the process of organising involves identifying and dividing the work (that
has to be done in accordance with previously determined plans.)
• The work is divided into manageable activities.
• The purpose is to avoid duplication of work and to share the burden of work among the
employees.

(ii) Departmentalisation:
• Similar activities are grouped together.
• This grouping process is called departmentalisation.
• This facilitates specialisation.
• Departments can be created on several basis, e.g.:
✓ Territory (north, south, west etc.)
✓ Products (appliances, clothes, cosmetics etc).
✓ Functions (purchase, marketing, finance, etc.)

(iii) Assignment of duties:

• It is necessary to define the work of different job positions and accordingly allocate work to
various employees.
• Each department is placed under the charge of an individual after departmentalisation.
• Jobs are allocated to the members of each department according to their skills and
competencies. It is essential for effective performance.
• The work must be assigned to those who are best fitted to perform it well.

(iv) Establishing reporting relationships:

• Each individual should know from whom to take orders and to whom he is accountable.
• Such clear relationships help to create a hierarchal structure and in coordination amongst
various departments.

Oranising Page 1 of 14
 B.St. Notes - XII Organising

Importance of Organising
(i) Benefits of specialisation:
• Organising leads to a systematic allocation of jobs amongst the work force.
• Specific workers perform a specific job on a regular basis.
• This reduces the workload and enhances productivity.
• Repetitive performance of a particular task leads to specialisation.

(ii) Clarity in working relationships:

• The establishment of working relationships clarifies lines of communication and specifies
who is to report to whom.
• This removes ambiguity in transfer of information and instructions.
• It helps in creating a hierarchy (thereby enabling the fixation of responsibility and
specification of the extent of authority to be exercised by an individual).

(iii) Optimum utilization of resources:

• Organising leads to the proper usage of all material, financial and human resources.
• The proper assignment of jobs avoids overlapping of work.
• Duplication of work is avoided which prevents confusion and minimises wastage of
resources and efforts.

(iv) Adaptation to change:

• Organising helps the organisation to adapt changes in the business environment.
• It helps to suitably modify the organisation structure and the revision of inter-relationships
amongst managerial levels.
• It provides stability to the enterprise to survive and grow inspite of changes.

(v) Effective administration:

• Organising provides a clear description of jobs and related duties.
• Clarity in working relationships avoids confusion and duplication.
• Proper execution of work is also ensured.
• Thus, management becomes easy and administration effective.

(vi) Development of personnel:

• Organising stimulates creativity amongst the managers.
• Effective delegation of routine jobs to the subordinates reduces the workload of managers.
• Managers can:
✓ develop new methods and ways of performing tasks
✓ explore areas for growth and
✓ get the opportunity to innovate.
• Subordinates develop the ability to deal effectively with challenges and realise their full
potential.
(vii) Expansion and growth:
• Organising helps in the growth and diversification of an enterprise by taking up new
challenges.
• It allows a business enterprise to add:
✓ more job positions, departments and even diversify their product lines.
✓ new geographical territories to current areas of operation
• This increases the customer base, sales and profit.
Organising Page 2 of 14
 B.St. Notes - XII Organising

Organisation Structure
❖Organisation structure is the outcome of the organising process.
❖Peter Drucker emphasises on the importance of having an appropriate organisation structure
when he says, “organisation structure is an indispensable means; and the wrong structure will
seriously impair business performance and even destroy it.”

❖The organisation structure can be defined as the framework within which managerial
and operating tasks are performed.
❖It specifies the relationships between people, work and resources.
❖It allows correlation and coordination among human, physical and financial resources and this
enables a business enterprise to accomplish desired goals.

❖Span of management refers to the number of subordinates that can be effectively

managed by a superior.

Types of Organisation Structures

Functional structure
➢ Grouping similar nature jobs under major
separate functional departments headed by a
coordinating head is called a functional structure.
➢ e.g., in a manufacturing concern division of work
into functions will include production, purchase, marketing, accounts and personnel.
➢ These departments may be sub-divided into sections.
➢ Thus, a functional structure is an organisational design that groups similar or related jobs
together.
Advantages:
(i) A functional structure leads to occupational specialisation because employees perform
similar tasks within a department and improve performance.
(ii) Promotes control and coordination within a department because of similarity in the tasks.
(iii) Increases managerial and operational efficiency thus profits are increased.
(iv) Minimal duplication of effort results in economies of scale and lowers cost.
(v) Makes training of employees easier as the focus is only on a limited range of skills.
(vi) It ensures proper attention to different functions.
Disadvantages:
(i) Less emphasis on overall enterprise objectives than the functional objectives;
✓ this may lead to functional empires.
✓ It can hinder the interaction between two or more departments.
(ii) It may lead to problems in coordination as information is exchanged across different
departments.
(iii) A conflict of interests may arise when the interests of two or more departments are not
compatible.
✓ e.g., the sales department insisting on a customer friendly design may cause
difficulties in production.
✓ such disagreement is not in the favour of organisational interest.
✓ inter-departmental conflicts can arise due to unclear separation of responsibility.
(iv) It may lead to inflexibility as people with same skills and knowledge have difficulty in
appreciating each other’s point of view.

Organising Page 3 of 14
 B.St. Notes - XII Organising

✓ Functional heads do not get training for top management positions because they are unable
to gather experience in diverse areas.

Suitability:
It is most suitable when the
✓ size of the organisation is large,
✓ has a diversified activities and
✓ operations require a high degree of specialisation.

Divisional Structure
➢ This organisation structure comprises of separate business units or divisions.
➢ Each unit has a divisional manager who has authority over his unit and responsible for its
performance.
Organisation Chart
➢ Generally, manpower is grouped on the Showing Divisional
basis of different products manufactured. and
Functional Structure
➢ Each division is multifunctional because
within each division functions like
production, marketing, finance, purchase
etc, are performed together.
➢ Each division develops expertise in all
functions related to a product line.
➢ In order words, within each division, the functional structure is adopted.
➢ Each divisional head is responsible for the profit or loss of his division (each division works as
a profit center).
➢ e.g., a large company may have divisions like cosmetics, clothing etc.

Advantages:
(i) Divisional head gains experience in all functions related to a particular product so varied
skills are developed in him and this prepares him for higher positions.
(ii) Divisional heads are accountable for profits, as revenues and costs related to different
departments can be easily assigned to them. This provides basis for performance
measurement.
It also helps in fixation of responsibility in cases of poor performance of the division and
appropriate remedial action can be taken.
(iii) It promotes flexibility and initiative because each division functions as an autonomous unit
which leads to faster decision making.
(iv) It facilitates expansion and growth as new divisions can be added by adding another
divisional head and staff for the new product line.

Disadvantages:
(i) Conflict may arise among different divisions for allocation of funds.
A particular division may try to maximise its profits at the cost of other divisions.
(ii) The cost is increased due to duplication of activities across products. Each division has
separate set of similar functions which increases the expenditure.
(iii) It provides managers with the authority to supervise all activities related to a particular
division. Such a manager may gain power and may ignore organisational interests to show
his independence.

Organising Page 4 of 14
 B.St. Notes - XII Organising

Suitability:
Divisional structure is suitable:
✓ Where a large variety of products are manufactured using different productive resources.
✓ When an organisation grows and needs to add more employees, create more departments and introduce new
levels of management.

Comparative view: Functional and Divisional Structure

Sr. No. Basis Functional Structure Divisional Structure
1 Formation Formation is based on Formation is based on product
functions. lines and is supported by functions.
2 Specialisation Functional specialisation. Product specialisation.
3 Responsibility Difficult to fix on a Easy to fix responsibility for
department. performance.
4 Managerial Difficult, as each Easier, autonomy as well as the
Development functional manager has chance to perform multiple
to report to the top functions helps in managerial
management. development.
5 Cost Functions are not Duplication of resources in various
duplicated hence departments, hence costly.
economical
6 Coordination Difficult for a multiproduct Easy, because all functions related
company. to a particular product are
integrated in one department.

FORMAL ORGANISATION
❖ Formal organisation refers to the organisation structure which is designed by the
management to accomplish a particular task.
❖ The structure in a formal organisation can be functional or divisional.

Definition of Formal Organisation

The formal organisation is a system of well-defined jobs, each bearing a definite measure of
authority, responsibility and accountability. Louis Allen
Formal organisation is a system of consciously coordinated activities of two or more persons
toward a common objective. Chester Barnand

Features of Formal Organisation

(i) It specifies the relationships among various job positions and the nature of their
interrelationship. This clarifies who has to report to whom.
(ii) It lays down rules and procedures to achieve the objectives specified in the plans.
(iii) It coordinates, interlinks and integrates the efforts of various departments.
(iv) It is deliberately designed by the top management to facilitate the smooth functioning of the
organisation.
(v) It places more emphasis on work to be performed than interpersonal relationships among
the employees.

Advantages:
(i) Easier to fix responsibility due to clearly defined mutual relationships.
(ii) No ambiguity in the role of each member as duties are specified. This also helps in avoiding
duplication of effort.

Organising Page 5 of 14
 B.St. Notes - XII Organising

(iii) Unity of command is maintained through chain of command.

(iv) Leads to effective accomplishment of goals by providing a framework for the operations.
(v) Provides stability to the organisation because behaviour of employees can be predicted
since there are specific rules to guide them.

Limitations:
(i) It leads to procedural delays as the established chain of command has to be followed which
increases the time taken for decision making.
(ii) No adequate recognition to creative talent since it does not allow any deviations from rigidly
laid down polices.
(iii) It is difficult to understand all human relationships in an enterprise as it places more
emphasis on structure and work. Hence, the formal organisation does not provide a
complete picture of how an organisation works.

INFORMAL ORGANISATION
❖ Interaction among people at work gives rise to a ‘network of social relationships among
employees’ called the informal organisation.
❖ Informal organisation emerges from within the formal organisation when people interact
beyond their officially defined roles.
❖ e.g. people who play cricket matches on Sundays, meet in the cafeteria for coffee, are
interested in dramatics etc.
❖ Informal organisation has no written rules, is fluid in form and scope and does not have
fixed lines of communication.

Definition of Informal Organisation

❖ An informal organisation is an aggregate of interpersonal relationships without any
conscious purpose but which may contribute to joint results. Chester Barnand

❖ 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. Keith Davis

Features of Informal Organisation

(i) It originates from within the formal organisation as a result of personal interaction among
employees.
(ii) The standards of behaviour develop from group norms and not from officially laid down
rules.
(iii) Independent channels of communication are developed without specified direction of flow of
information.
(iv) It emerges spontaneously and is not deliberately created by the management.
(v) It has no definite structure or form because it is a complex network of social relationships
among members.

Advantages:
(i) Prescribed lines of communication are not followed. Thus, the informal organisation leads
to faster spread of information as well as quick feedback.
(ii) It helps to fulfil the social needs of the members and allows them to find likeminded people.
Job satisfaction is enhanced due to sense of belongingness in the organisation.

Organising Page 6 of 14
 B.St. Notes - XII Organising

(iii) It contributes towards fulfilment of organisational objectives by compensating shortfalls in

the formal organisation.
e.g., employees’ reactions towards plans and policies can be tested through the informal
network.

Disadvantages:
(i) It may spread rumours which may be against the interest of the formal organisation.
(ii) The management may not be able bring changes if the informal organisation opposes
them. Such resistance/opposition to change may limit/restrict growth.
(iii) It pressurises members to conform to group expectations. This can be harmful to the

Basis Formal organisation Informal organisation

1.Meaning Structure of authority relationships Network of social relationships arising out of
created by the management interaction among employees
2.Origin Arises as a result of company rules Arises as a result of social interaction
and policies
3.Authority Arises by virtue of position in Arises out of personal qualities
management
4.Behavior It is directed by rules There is no set behaviour pattern
5.Flow of Communication takes place through Flow of communication is not through a
Communication the scalar chain planned route. It can take place in any
direction
6.Nature Rigid Flexible
7.Leadership Managers are leaders. Leaders may or may not be managers. They
are chosen by the group.
organisation if the norms set by the group are against organisational interests.

Informal organisation cannot be altogether eliminated. The knowledge of such groups can be used to
gather their support and consequently lead to improved organisational performance. Instead of confronting
them, the management should skilfully take advantage of both the formal and informal organisation so that
work continues smoothly.

Delegation
• Delegation refers to the downward transfer of authority from a superior to a
subordinate.

• It is a pre-requisite to the efficient functioning of an organisation because it enables a

manager to use his time on high priority activities.

• It also satisfies the subordinate’s need for recognition and provides them with opportunities
to develop and exercise initiative.

❖ Delegation does not mean abdication.

❖ The manager shall still be accountable for the performance of the assigned tasks.

❖ Moreover, the authority granted to a subordinate can be taken back and redelegated to
another person.

Organising Page 7 of 14
 B.St. Notes - XII Organising

Definition of Delegation

Delegation of authority merely means the granting of authority to

subordinates to operate within prescribed limits. Theo Haimman

Delegation is the process a manager follows in dividing the work assigned to him so that he
performs that part which only he because of his unique organisational placement, can perform
effectively and so that he can get others to help with what remains. Louis Allen

Elements of Delegation

According to Louis Allen, delegation is the

entrustment of responsibility and authority to
another and the creation of accountability for
performance. A detailed analysis of Louis Allen’s
definition brings to light the following essential
elements of delegation:

(i) Authority:
No delegation leads to delays in decision-making
✓ Right of an individual to command his
subordinates and to take action within the scope of his position is called authority.
✓ The concept of authority arises from scalar chain.
✓ Authority is the right to tell people what to do and expect them to do it.
✓ In the formal organisation authority originates by virtue of an individual’s position.
✓ The extent of authority is highest at the top management levels and reduces at lower levels.
✓ Authority flows from top to bottom, (i.e., the superior has authority over the subordinate).
✓ Authority relationships help to maintain order in the organisation by giving the managers the
right to exact obedience and give directions to the workforce under them.
✓ It must be noted that authority is restricted by laws and the rules and regulation of the
organisation, which limit its scope.

(ii) Responsibility:
✓ It is the obligation of a subordinate to properly perform the assigned duty.
✓ It arises from a superior–subordinate relationship because the subordinate is bound to
perform the duty assigned to him by his superior.
✓ Responsibility flows upwards (i.e., a subordinate will always be responsible to his superior).
✓ For effective delegation the authority granted must be equal (corresponding to size or
degree) to the assigned responsibility.
✓ Excess authority granted than responsibility may lead to its misuse.
✓ Excess responsibility assigned than authority may make a
person ineffective.

(iii) Accountability:
✓ Delegation of authority allows an employee to act for his
superior but the superior would still be accountable for the
outcome.
✓ It means being answerable for the final outcome.
✓ Once authority has been delegated and responsibility
accepted, one cannot deny accountability.
Organising Page 8 of 14
 B.St. Notes - XII Organising

✓ It cannot be delegated and flows upwards (i.e., a subordinate will be accountable to a

superior for satisfactory performance of work).
✓ It is generally enforced through regular feedback on the extent of work accomplished.
✓ The subordinate will be expected to explain the
Creation of accountability for
consequences of his actions or omissions. performance
In conclusion, it can be stated that while authority is delegated,
responsibility is assumed, accountability is imposed. Responsibility is derived from authority and
accountability is derived from responsibility.
Overview of the elements of delegation
Basis Authority Responsibility Accountability
1.Meaning Right to command. Obligation to perform Answerability for outcome of
an assigned task. the assigned task.
2.Delegation Can be delegated. Cannot be entirely Cannot be delegated at all.
delegated.
3.Origin Arises from formal Arises from delegated Arises from responsibility.
position. authority.
4.Flow Flows downward from Flows upward from Flows upward from
superior to subordinate. subordinate to superior. subordinate to superior with
the assigned responsibility.

Importance of Delegation

(i) Effective management:

• By empowering the employees, the managers are able to function more efficiently as they
get more time to concentrate on important matters.
• Freedom from doing routine work provides them chance to do well in new areas.

(ii) Employee development:

• Delegation empowers the employees by giving them chance to use their skills, gain
experience and develop for higher positions.
• Employees develop skills to perform complex tasks and take responsibilities to improve
their career prospects.
• It makes them better leaders and decision makers.
• Thus, delegation helps by preparing better future managers.
• Employees get more opportunities to utilise their talent and this gives rise to their
latent/hidden abilities.

(iii) Motivation of employees:

• Delegation also has psychological benefits.
• It is not only the sharing of work but involves trust on the superior’s part and commitment on
the subordinate’s part.
• Responsibility for work improves his confidence. He feels encouraged and tries to improve
his performance more.

(iv) Facilitation of growth:

• Delegation helps in the expansion of an organisation by providing a ready workforce to take
up leading positions in new ventures.

Organising Page 9 of 14
 B.St. Notes - XII Organising

• Trained and experienced employees are able to play important roles in the launch of new
projects by applying the work culture learnt from existing units to new branches.

(v) Basis of management hierarchy:

• Delegation of authority establishes superior-subordinate relationships, which are the basis
of hierarchy of management.
• It is the degree and flow of authority which determines who has to report to whom.
• The extent of delegated authority also decides the power for each job position.

(vi) Better coordination:

• The elements of delegation (namely authority, responsibility and accountability) help to
define the powers, duties and answerability related to the various positions in an
organisation.
• This helps to avoid overlapping of duties and duplication of effort as it gives clarity of the
work done at various levels.
• Such clarity in reporting relationships help in developing and maintaining effective
coordination amongst the departments, levels and functions of management.

DECENTRALISATION
❖ Those organisations in which decision-making authority lies with the top management are
termed as centralised organisations.
❖ Those in which such authority is shared with lower levels are decentralised organisations.
❖ Decentralisation explains the manner in which decision-making responsibilities are divided
among hierarchical levels.
❖ Decentralisation refers to delegation of authority throughout all the levels of the
organisation.
❖ Decision making authority is shared with lower levels and is consequently placed nearest to
the points of action.
❖ Decision making authority is pushed down the chain of command.
❖ It is a philosophy that implies selective dispersal of authority because it believes that
people are competent, capable and resourceful.

Definition

Decentralisation refers to systematic effort to delegate to the lowest level all authority except that
which can be exercised at central points. Louis Allen

Everything which goes to increase the importance of a subordinate’s role is decentralisation,

everything that goes to reduce it is centralisation. Henri Fayol

Centralisation and Decentralisation

▪ Centralisation and decentralisation are relative terms.
▪ An organisation is centralised when decision-making authority is retained by higher
management levels whereas it is decentralised when such authority is delegated.
▪ Complete centralisation means concentration of all decision-making functions at the
top/apex of the management hierarchy. This case would obviate/hinder the need for a
management hierarchy.
Organising Page 10 of 14
 B.St. Notes - XII Organising

▪ Complete decentralisation means the delegation of all decision-making functions to the

lower level of the hierarchy. This would obviate/hinder the need for higher managerial
positions.
▪ Both the scenarios are unrealistic.
▪ An organisation can never be completely centralised or decentralised.
▪ As it grows in size and complexity, there is need of decentralisation.
▪ Because in large organisations those employees who are directly involved in certain
operations, have more knowledge than the top management (which may only be indirectly
associated with individual operations.)
▪ Hence, there is a need for a balance between these co-existing forces.
▪ Thus, it can be said that every organisation will be characterised by both centralisation and
decentralisation.

Importance of Decentralisation

(i) Develops initiative among subordinates:

• Decentralisation promotes confidence amongst the subordinates.
• They learn to depend on their own judgment when lower managerial levels are given
freedom to take their own decisions.
• It keeps them in a situation where they face challenges and have to develop solutions for
them.
• A decentralisation policy helps to identify those executives who have the potential to
become dynamic leaders.

(ii) Develops managerial talent for the future:

• Subordinates get skills by formal training and experience gained by handling assignments
independently to rise in the organisation.
• Decentralisation gives them a chance to prove their abilities.
• It creates a reservoir/pool of qualified manpower that can fill up more challenging positions
through promotions.
• It also helps to identify those who may not take greater responsibility.
• Thus, it is a means of management education as well as an opportunity for trained
manpower to use its talent in real life situations.

(iii) Quick decision making:

• The management hierarchy can be seen as a chain of communication.
• Every decision is taken by the top management in centralised organisation so the flow of
information is slow (as it has to traverse (pass) many levels).
• Response also takes time.
• This reduces the speed of decision making and makes it difficult to adapt to dynamic
operating conditions.
• In a decentralised organisation decisions are taken at levels nearest to the points of action,
so there is no requirement for approval from many levels, thus process is much faster
unlike centralisation.
• There are also less chances of information getting distorted because it doesn’t have to go
through long channels.

Organising Page 11 of 14
 B.St. Notes - XII Organising

(iv) Relief to top management:

• Decentralisation reduces the need of direct supervision by a superior over the activities of a
subordinate because they are given the freedom to act within the limits set by the superior.
• Also, personal supervision is generally replaced by other forms of control such as return on
investment etc.
• Decentralisation provides more time to top management for important policy decisions
rather than being involved in both policy and operational decisions.
• Decentralisation is greatest if checking required is least on decisions taken by lower levels.

(v) Facilitates growth:

• Decentralisation gives greater autonomy/independence to the lower levels of management
and departmental heads.
• This allows them to function in a best suited manner and promotes a sense of competition
amongst the departments.
• Each department does its best to outdo the other thus, the productivity levels and profits
increase which can be used for further expansion.

(vi) Better control:

• Decentralisation helps to evaluate performance at each level, so the departments can be
held accountable for their results.
• The extent of achievement of organisational objectives and the contribution of each
department in their achievement can be determined.
• Feedback from all levels helps to analyse discrepancies and improve operations.
• Better control systems like the balance score card and management information system are
developed to meet the challenge of accountability of performance.
• Decentralisation compels the management to innovative performance measurement
systems.
Decentralisation should be applied with caution as it can lead to organisational disintegration if the
departments start to operate on their own guidelines which may be contrary to the interest of the
organisation.
Delegation and Decentralisation: A Comparative view
Basis Delegation Decentralisation
1. Nature Delegation is a compulsory act Decentralisation is an optional policy
because no individual can perform decision. It is done at the discretion of the
all tasks on his own. top management.
2. Freedom of More control by superiors hence Less control over executives hence greater
action less freedom to take own freedom of action.
decisions.
3. Status It is a process followed to share It is the result of the policy decision of the
tasks. top management.
4. Scope It has narrow scope as it is limited It has wide scope as it implies extension of
to superior and his immediate delegation to the lowest level of
subordinate. management.
5. Purpose To lessen the burden of the To increase the role of the subordinates in
manager. the organisation by giving them more
autonomy.

Organising Page 12 of 14
B.St. Notes - XII Organising

TEST YOURSELF
1. Identify the importance of organizing highlighted in the given statements:
i. Organising helps the company to incorporate changes of the business environment in the
company by suitably modifying the organization structure.
ii. Organising helps the managers to divide total work into parts and allocate work to
employees according to their ability, knowledge and skill.
iii. This removes ambiguity in transfer of information and instructions.
iv. Organising leads to the proper usage of all resources.
v. Organising helps in avoiding confusion and duplication and enables proper execution of
work.
vi. Organising stimulates creativity amongst the managers.
vii. Organising enables a business enterprise to add more job more job positions, departments
and even diversify their product lines.
2. 'Royal Look' is a well-known colour producing company. The company deals in making different
types of colours used in painting. The company has always been systematic in its approach and due
to good organizing has seen a continuous increase in its revenue. The workers are given their
respective jobs clearly which leads to gaining of experience since they do their respective jobs on a
regular basis leading to high productivity. The company has many challenges and it wants to
improve. There is no doubt in the lines of communication and everyone knows who has to report to
whom. With passage of time there is more need to connect with the employees. They are the most
important asset of the company. When managers delegate work to their subordinates they set
themselves free from routine jobs and this leads to great amount of learning for the subordinate they
set themselves free from routine jobs and this leads to great amount of learning for the subordinates
in real-life situations.
Identify and explain the three importance of organizing highlig hted above by quoting the lines.
3. Identify the step of organising process highlighted in the given statements:
i. This steps refers to combine/club or group similar or related jobs into larger units called
departments.
ii. In this step the work is allocated to the employees according to their experience, skills and
competencies.
iii. This step is concerned with from whom an employee has to receive orders or instructions and to
whom he is accountable.
iv. In this step the entire work is divided into manageable activities.
4. Shenoy has been appointed as a manager in 'Take a Ride Ltd.' a company giving cars on rent. But
he does not know who he does not know who he has to take orders from and to whom he is
accountable. The reporting relationship has not been established in the company.
a. Identify the step of the process of a function of management highlighted above.
b. State the two steps followed by the above step highlighted in (a) above which are performed
before this step.
5. Ramdas, aged 49 is working in an aviation company. He is the senior most employees in his
division. He is even senior to the division manager, Kanaputti. Ramdas is considered one of the
most committed, capable and hard-working employees. As a result of his abilities and seniority, he
generally received the work assignments of his choice. Although there was no formal designation of
various 'special' projects assigned to Ramdas, he handled them as a matter of routine. A problem
developed when an able and intelligent person Nagarjuna, aged 33, was appointed by Kanaputti.
Nagarjun's previous three years' experience in the closely related work, made it possible for him to
catch on to the routine work of his new job more rapidly than was customary for a new employee.
On several occasions, Kanaputti noticed the tension developing between the two employees.
However, he didn't want to get involved in their personal issues as long as the work was completed
effectively and efficiently by them. One day, the tension between them reached the boiling point and
Ramdas complained to Kanaputti stating that his duties were being largely taken over by Nagarjun.
Kanaputti issued te order stating that clear allocation of the jobs and related duties between the two.
Organising Page 13 of 14
B.St. Notes - XII Organising

He further clarified the working relationship between them by specifying who was to report to whom.
This helped in reducing the workload, enhancing productivity and removing ambiguity.
a) Identify and state the step of organising process which has not been carried out properly and
contributed to this problem.
b) State the two steps of the organising process which have been taken by Kanaputti to respond
to the complaint of Ramdas.
c) Also state two points of importance of organising as reflected in the above case.
6. Identify the functional and divisional structure in the following statements:
i. All similar activities are grouped in one department.
ii. All job related to marketing are grouped in marketing department.
iii. It is difficult to hold a particular department accountable for non-accomplishment of
organisational objectives.
iv. It makes training of employees easier as the focus is only on a limited range of skills.
v. It leads to minimum duplication of effort which results in lower costs.
vi. It brings product specialization.
vii. A separate department is created for each major product.
viii. Inter-departmental conflicts is one of the disadvantages of this structure.
7. Shenoy Ltd. Was manufacturing a single product (footwear) for last twenty years. Recently they
acquired three new manufacturing units and have started selling multiple products (garments,
handbags and perfumes) in the market. They decided that an individual who has the capability and
competence to handle responsibilities would head each unit. They put up notices on the employee's
notice boards and invited interested candidates to apply for the positions. For fresh employment,
they decided to reserve 25% positions for women and under-privileged people respectively.
a) Name the type of organisational structure Shenoy Ltd. Must have followed as a single
product company.
b) Suggest which type of organisational structure Shenoy Ltd. Must adopt now. Also, state its
any two advantages.
c) State any two values Shenoy Ltd. has considered while expanding business.
8. Comfort Ltd. is shoe manufacturing company and have three separate departments (Production,
Marketing and Finance) and department heads to look after these functions. Recently the company
reported a loss of 15 lakhs in first quarter and Deepak, who is CEO of the company called all the
departmental heads to discuss this matter. Departmental heads were blaming each other for this
loss and it become very difficult for Deepak to fix the responsibility.
a) The above case highlighted the problems associated with a particular type of organization
structure. Identify and state that organization structure.
b) State its any two other disadvantages.
9. 'Himalaya Ltd.', is engaged in manufacturing of washing machines. The target of the organisation is
to manufacturing 500 washing machines a day. There is an occupational specialization in the
organisation which promotes efficiency of employees. There is no duplication of efforts in such type
of organisation structure.
Identify the type of organisation structure described above.
10. Out of formal and informal organisation, which one is discussed in following statements:
i. It originates to satisfy social needs.
ii. Official relationship exists among members.
iii. Employees have formed a volleyball club.
iv. The principle of scalar chain is followed.
v. It is based on personal likes and dislikes.
vi. It leads to faster spread of information as well as quick feedback.
vii. Employees of a company enjoying a picnic in a park.
viii. Thirty workers and three managers of Hindustan Unilever Limited forming a "Dramatics
Club".

Organising Page 14 of 14