XII. Business Studies Unit 5 Organising (word)

Unit 5: Organising: Concept, Process and Importance

Organising as a Process

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

The ‘organising’ function is a means for translating plans into action. It involves organising resources needed, optimum utilisation of resources, translation of work into attainable tasks, empowering the workforce to accomplish these tasks, etc.
The management function of organising ensures that efforts are directed towards the attainment of goals laid down in the planning function in such a manner that resources are used optimally and people are able to work collectively and effectively for a common purpose.
Organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of accomplishing objectives.
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).
Organising is a process by which the manager brings order out of chaos, removes conflict among people over work or responsibility sharing and creates an environment suitable for teamwork.

Steps in the Process of Organising

IDAE

1. Identification and division of work:

Identifying and dividing the work into manageable activities so that duplication can be avoided.

2. Departmentalisation:

Activities of a similar nature are grouped together. It facilitates specialisation. (Departments can be created on the basis of territory (north, south, etc.) and products (garments, footwear etc.)

3. Assignment of duties to job positions:

Jobs are allocated to the members of each department according to their skills and competencies for effective performance.

4. Establishing reporting relationships:

Authority responsibility relationships are clearly established so that each individual knows who he has to take orders from and to whom he is accountable. This helps in coordination amongst various departments.

Importance of Organising

SAD-C-GOA

1. Specialisation:

A systematic allocation of jobs enhances productivity and leads to specialisation because of the repetitive performance of a particular task.

2. Clarity in working relationships:

Authority responsibility relationships are clearly established so that each individual knows who he has to take orders from and to whom he is accountable.

3. Effective administration:

Clarity in working relationships enables proper execution of work. Management of an enterprise becomes easy and this brings effectiveness in administration.

4. Optimum utilisation of resources by avoiding duplication of work and minimising wastage of resources and efforts.

5. Growth and expansion by allowing a business enterprise to add more job positions, departments and product lines.

6. Adaptation to change by allowing the organisation structure to be suitably modified according to the changes in business environment.

7. Development of personnel by effective delegation of work to subordinates.

Organisation Structure: Functional and Divisional

Organising as a Structure

Organisation structure is the outcome of the organising process. The organisation structure of a firm is shown in an organisation chart. The span of management gives shape to the organisational structure. Span of management refers to the number of subordinates that can be effectively managed by a superior. This determines the levels of management in the organisation structure. Organisation structure refers to the framework within which managerial and operating tasks are performed.

 It specifies the relationship between people, work and resources.

 It allows coordination among human, physical and financial resources.

 A proper organisation structure is essential to ensure a smooth flow of communication, better control over business operations and achievement of organisational goals.

The need for an adequate organisation structure is felt when an enterprise grows in size or complexity because coordination then, becomes difficult due to new functions or increase in number of products.

Functional Structure

Functional structure is an organisational structure formed by grouping of jobs of similar nature according to functions and organising these major functions as separate departments. For example, a company manufacturing garments may have separate departments for

Production, Marketing, Finance, etc.

Functional structure is suitable for those enterprises which have only one category of products to offer. However, the size of the organisation is large, it has diversified activities and operations require a high degree of specialisation.

Advantages

1. It leads to occupational specialisation since emphasis is placed on specific functions. (This promotes efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve performance.)

2. It promotes control and coordination within a department because of similarity in the tasks being performed.

3. It increases managerial and operational efficiency.

4. It lowers cost as it reduces duplication of effort.

5. It makes training of employees easier as it focuses on a limited range of skills.

6. It ensures that different functions get due attention.

Disadvantages

1. It may lead to functional empires, i.e. pursuing own departmental interests at the cost of organisational interests.

2. Inter-departmental conflicts: A conflict of interests may arise when the interests of two or more departments are not compatible. (For example, the sales department insisting on a customer friendly design may cause difficulties in production.)

3. It may lead to problems in coordination as information has to be exchanged across functionally differentiated departments.

4. It may lead to inflexibility as people with same skills and knowledge base may develop a narrow perspective and may not appreciate others’ point of view.

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

Divisional Structure

Divisional structure is an organisation structure comprising of separate business units or divisions created on the basis of different products, geographical area, and customer groups etc.

For example, a large company may have two divisions, say Footwear and Garments. Each division works as a profit center where the divisional head is responsible for the profit or loss of his division. Each division is multi-functional because within each division functions like production, marketing, finance, etc. are performed together to achieve a common goal

Divisional structure is suitable for those business enterprises 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, it will decide to adopt a divisional structure.

Advantages

1. Product Specialisation helps in the development of varied skills in a divisional head and this prepares him for higher positions.

2. Divisional heads are accountable for profits, as revenues and costs related to different departments can be easily identified and assigned to them.

3. It promotes flexibility and initiative because each division functions as an autonomous unit which leads to faster decision making.

4. It facilitates expansion and growth as new divisions can be added without interrupting existing operations by merely adding another divisional head and staff for the new product line.

Limitations

1. Conflict may arise among different divisions with reference to allocation of funds.

2. It may lead to increase in costs since there may be a duplication of activities across products.

3. Divisional interests may supersede organisational interests.

Basis Functional Structure V/s Divisional Structure S

	Functional Structure	Divisional Structure
Formation	Formation is based on functions	Formation is based on product lines and is supported by functions
Specialisation	Functional specialisation	Product specialisation
Cost	Functions are not duplicated, hence economical	Duplication of resources in various departments; hence costly
Coordination	Difficult for a multi-product company	Easy; because all functions related to a particular product are integrated in one division
Responsibility	Difficult to fix responsibility on a particular department	Easy to fix responsibility for performance
Managerial Development	Difficult; as each functional manager has to report to the top management.	Easier; autonomy as well as chance to perform multiple functions help in managerial development

RCC F

Formal and Informal Organisation
Formal Organisation

Formal organisation refers to the organisation structure which is designed by the management to accomplish its objectives. The structure in a formal organisation can be functional or divisional.

The formal organisation is a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability.
Formal organisation is a system of consciously coordinated activities of two or more person towards a common objective.

Features

1. It is deliberately designed by the top management to facilitate smooth functioning of the organisation.

2. It specifies the relationships among various job positions. This clarifies who has to report to whom.

3. It places more emphasis on work rather than interpersonal relationships.

4. a means to achieve the objectives as it lays down rules and procedures for their achievement.

5. It coordinates the efforts of various departments.

Advantages

1. It is easier to fix responsibility since mutual relationships are clearly defined.

2. It avoids duplication of effort since there is no ambiguity in the role that each member has to play.

3. It maintains unity of command through an established chain of command

4. It leads to accomplishment of goals by providing a framework for the operations to be performed.

5. It provides stability to the organisation because there are specific rules to guide behaviour of employees.

Limitations

1. Procedural delays—delay in decision-making because communication flows through scalar chain.

2. Fails to recognise creative talent of employees since it does not allow any deviations from rigidly laid down policies.

3. Non-fulfilment of social needs of employees because it places more emphasis on structure and work.

Informal Organisation

Informal organisation is a network of personal and social relations within the formal organisation arising spontaneously as people associate with one another, e.g., managers and subordinates taking part in cricket matches.

Informal organisation is a network of personal and social relations not established by the formal organisation but arising spontaneously as people associate with one another.
An informal organisation is an aggregate of inter-personal relationships without any conscious purpose by which may contribute to joint results.

Features

1. It originates from within the formal organisation (as a result of personal interaction among employees.)

2. It emerges spontaneously and is not deliberately created by the management.

3. The standards of behaviour evolve from group norms.

4. Independent channels of communication are developed by group members. (It does not have fixed lines of communication. It has no written rules, is fluid in form and scope.)

5. It has no definite structure or form (because it is a complex network of social relationships among members.)

Advantages

1. It leads to faster spread of information as well a quick feedback (since fixed lines of communication are not followed.)

2. It fulfills the social needs of the members. (This enhances their job satisfaction since it gives them a sense of belongingness in the organisation.)

3. It contributes towards fulfillment of organisational objectives by compensating for inadequacies in the formal organisation. (For example, employees’ reactions towards plans and policies can be tested through the informal network.)

Limitations

It may spread rumours which may work against the interest of the formal organization. (Thus, it becomes a destructive force.)
It may lead to resistance to change which may delay or restrict growth.
It pressurizes members to conform to group norms or expectations which may be against organisational interest.

Informal organisation cannot be altogether eliminated.

It would be in the best interest of the organisation if the existence of such groups is recognised and the roles that their members play are identified.
The knowledge of such groups can be used to gather their support and consequently lead to improved organisational performance.
Such groups can also provide useful communication channels (i.e. grapevine). Instead of confronting them, the management should skillfully take advantage of both the formal and informal organisation so that work continues smoothly.

Difference between Formal Organisation and Informal Organisation

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

Delegation and Decentralisation

Delegation is the transfer of authority from superior to subordinate, entrustment of responsibility and creation of accountability for performance which helps a manager to extend his area of operations.

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

Elements of Delegation

1. Authority: Meaning– It refers to the right of an individual to command his subordinates and to take action within the scope of his position. Origin–It arises from formal position. Flow–Authority flows from top to bottom, i.e. the superior has authority over the subordinate. Delegation– Can be delegated.

2. Responsibility: Meaning–It is the obligation of a subordinate to perform the assigned duty. Origin–It arises from delegated authority. Flow–It flows upwards, i.e. a subordinate will always be responsible to his superior. Delegation– Cannot be entirely delegated.

3. Accountability: Meaning–It implies being answerable for the final outcome. It cannot be delegated. Origin–It arises from responsibility. Flow–It flows upwards, i.e. a subordinate will be accountable to a superior for satisfactory performance of work.

Delegation– Cannot be delegated at all.

Delegation does not mean abdication

Delegation helps a manager to extend his area of operation as without it his activities would be restricted to only what he himself can do. However, delegation does not mean abdication; the manger shall still be accountable for the assigned task. Accountability cannot be delegated at all. Moreover, the authority granted to a subordinate can be taken back and re-delegated to another person.

Example: Suppose the directors of a company manufacturing computers have asked their marketing manager to achieve a target sale of 100 computers per day. The marketing manager has delegated the task to his deputy sales managers working under him. The deputy sales managers could not achieve the target. In this case, the marketing manager shall still be accountable to the directors. The process of delegation does not relieve the marketing manager of his own accountability. Accountability cannot be delegated at all.

Concept of Decentralisation

Decentralisation refers to systematic delegation of authority through all the levels of management and in all the departments except that which can be exercised only at central points.

Decentralisation implies selective dispersal of authority and believes that people are competent, capable and resourceful. It recongnises the decision-maker’s need for autonomy. The management, however, needs to carefully select those decisions which will be pushed down to lower levels (operational decisions) and those that will be retained for higher levels (major policy decisions). 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.

Decentralisation has wide scope. “When we delegate authority, we multiply it by two. When we decentralize authority, we multiply it by many.” For example, consider an organisation where all leave applications are processed by the General Manager. He feels over-burdened and transfers this authority of leave processing to the Production Manager. This is an example of Delegation of Authority. If the Production Manager also feels over-burdened and requests the General Manager to give him some relief, he may disperse this authority to various heads throughout the organisation and instruct them to process the leave applications of their respective departments. This is how delegated authority may be extended to decentralised authority.

Centralisation and Decentralisation: The concentration of decision-making authority by the top management is called centralisation whereas its dispersal among more than one person is known as decentralisation. Complete centralisation and complete decentralisation–both the scenarios are unrealistic. An organisation can never be completely centralised or decentralised. As it grows in size and complexity, there is a tendency to move towards decentralised decision-making. This is because in large organisations those employees who are directly and closely involved with certain operations tend to have more knowledge about them than the top management which may only be indirectly associated with individual operations.

Difference between Centralisation and Decentralisation

SN	Basis	Centralisation	Decentralisation
1	Nature	Delegation is a compulsory act because no individual can perform all tasks.		Decentralisation is an optional policy decision. It is done at the discretion of the top management.
2	Purpose	To lessen the burden of the manager.		To increase the role of the subordinates in the organisation by giving them more autonomy.
3	Freedom of action	More control by superiors, hence less freedom to take own decisions.		Less control over executives, hence greater freedom of action.
4	Scope	It has narrow scope as it is limited to a superior and his immediate subordinate.		It has wide scope as it implies extension of delegation to the lowest level of management.
	Status	It is a process followed to share tasks.		It is the result of the policy decision of the top management.

Importance of Delegation GEM – EMC

Delegation is a pre-requisite to the efficient functioning of an organisation because of the following reasons:

Effective management: It helps in effective management as the managers get more time to concentrate on important matters.
Employee development: It helps in development of employees as the employees get more opportunities to utilize their talent.
Motivation of employees: It helps to motivate employees as the employees feel encouraged and try to improve their performance further. (Delegation involves entrustment of responsibility. It is not merely the sharing of task but involves trust on the superior’s part and commitment on the part of the subordinate. Responsibility for work builds his self-esteem and improves his confidence.)
Facilitation of growth: It facilitates growth by providing a ready workforce to take up leading positions in new ventures.
Basis of management hierarchy: It establishes a management hierarchy through clear superior subordinate relationships.
Better coordination: It helps in better coordination by avoiding overlapping of duties.

Importance of Decentralisation TC–RIGD

It gives relief to the top management who can now concentrate on important policy decisions, e.g. develop new strategies, coordination and control, etc.
It develops initiative amongst subordinates by promoting self-reliance and confidence in them. This is because when lower managerial levels are given freedom to take their own decisions, they learn to depend on their own judgement.
It develops managerial talent for the future by creating a reservoir of qualified manpower to fill up challenging positions in future.
It facilitates growth by fostering competition amongst the departments leading to increase in productivity. Consequently, the organisation is able to generate more profits which can be used for growth and expansion purposes.
It helps in quick decision-making has there is no requirement for approval from many levels. There are also less chances of information getting distorted because it does not have to go through long channels.
It leads to better control by evaluating performance at each level of management. The departments/divisions can be individually held accountable for their results.

Objective type questions

Multiple choice questions:

Delegation of authority merely means the granting of authority to subordinates to operate: (understanding)

(a) Within prescribed limits (b) Beyond prescribed limits

Span of management refers to: (remembering)

(a) Number of managers in an organisation (b) Length of term for which a manager is recruited

Ans: c

Grouping of activities on the basis of functions is a part of: ((remembering)

(a) Decentralisation (b) Divisional Organisation

Ans: c

Grouping of activities on the basis of product lines is a part of (remembering)

(a) Delegated Organisation (b) Centralised Organisation

Ans.: c

The advantage of formal organization is: ((remembering)

(a) Clarity of responsibility (b) Fast communication

Ans: a

The organisation structure can be defined as a framework within which (understanding)

(a) Sequence of job positions given (b) Managerial and operational tasks are performed

Ans: b

Organising provides clear description of jobs and related duties which helps in: (understanding)

(a) Avoiding confusions and duplications (b) Better placement of employees

Ans: a

One of the importance of organizing is: (remembering)

(a) Improves creativity (b) Optimum utilisation of resources

Ans: b

Ram was given a task by his superior to prepare a plan in 15 days. He asked two of his subordinates to work upon two aspects of his task. One of the subordinate met with an accident and could not complete his work. Who is answerable for this task? (applied)

(a) Ram is accountable. (b) Ram’s subordinate is responsible. .

Ans: a

Decentralisation is (remembering)

(a) Selected dispersal of authority.

(b) Authority to be retained by top level.

(d) Dispersal of authority to the subordinates within prescribed limits.

Ans.: a

Name the type of organisation which is deliberately design by top management to achieve a common organisational objective R

a. Informal organisation b. Corporate organisation

c. Formal organisation d. Non corporate organisation

Ans.: Formal organisation

Which of the following is not an element of delegation?

1. Accountability U 2. Authority

3. Responsibility 4. Informal organisation

Ans: Informal organisation

A network of social relationships that arises spontaneously due to interaction at work is called R/U

1. Formal organisation 2. Delegation

3. Decentralisation 4. Informal organisation

Ans: Informal organisation

The form of organisation known for giving rise to rumours is called R

1. Centralised organisation 2. Decentralised organisation

3. Formal organisation 4. Informal organisation

Ans: Informal organisation

The type of organisation which maintains the unity of command through when established chain of command. U

1. Formal organisation 2. Informal organisation

3. Centralised organisation 4. Decentralised organisation

Ans.: Formal Organisation

Which of the following does not follow the principle of scalar chain R

1. Formal organization 2. Informal organisation

3. Functional structure 4. Divisional structure

Ans.: Informal organisation

Delegation of authority merely means the granting of authority to subordinates to operate R

1. Within the prescribed limits 2. Without any prescribed limits

3. To any extent 4. As per post approval of managers

Ans.: within the prescribed limits.

Authority refers to the right of an individual to command his subordinates and take action R

1. Within the scope of his position 2. Out of the scope of his position

3. Commensurate with his manager 4. To any extent

Ans. Within the scope of his position.

Grouping of activities on the basis of function is a part of R/U

1. Decentralised organisation 2. Divisional organisation

3. Functional organisation 4. Centralised organisation

Ans: Functional structure

Centralisation refers to U

1. Retention of decision making authority 2. Opening new branches

3. Separation of divisions or levels 4. Dispersal of decision making authority

Ans: Retention of decision making authority

Establishing reporting system leads to (r)

a. Specialization b. Improved productivity.

c. Clarity in working relationship. d. Adaption to change. Ans-c

Organising doesn’t include (r)

a. what will be done. b. By whom will be done.

c. when will be done. d. how will be done. Ans-d

Which of the following is not a part of organising process (R)

a. Division of work b. assigning of responsibility.

c. Specialisation. d. Establishing reporting relationship ans-c

Dividing work into smaller and manageable task as a part of (R)

a. Departmentalisation. b. Identification and division of work.

c. Assigning duties. d. Not assigning duties. Ans-b

Grouping of activities in accordance to their nature.(R)

a. division of work b. departmentalization

c. Specialization d. Decentralisation ans. -b

Span of management is defined as (R)

a. number of employees a superior can manage b. number of employee in a division

c. Level of management d. number of employee in a department. Ans.-a

It is a limitation of functional structure (R)

a. Functional empire b. Decentralization

c. Functional specialisation. d. create chaos. Ans.-a

Which of the following is not element of delegation (R)

a. accountability b. Authority

c. Responsibility d. Informal organisation.

A tall structure as a (R)

a. narrow span of management b. wide span of management

c. no span of management d. less span of management. Ans.-a

Last step of organizing process (R)

a. identification and division of work b. departmentalization

c. Assignment of duties. d. establishing reporting system. Ans-a

Which of the following is not an element of delegation (R)

a. accountability b. authority

c. responsibility d. informal organization. Ans-d

For delegation to be effective it is essential that responsibility be accompanied with necessary(R)

a. authority b. Incentives

c. manpower d. Promotions

ans-a

It is a limitation of functional structure (R)

a. Functional empires b. Product specialization

c. Functional specialization d. Lack of coordination. Ans- a

Grouping of activities as the basis of functions is a part of (R)

a. decentralised organisation b. Functional organisation

c. Centralized organisation. Ans- c

Organising doesn’t include (R)

a. division of work b. what will be done

c. by whom will be done. d. where will be done ans-b

First step of organising process (R)

a. division of work b. comparing results

c. departmentalization d. recruitment ans-a

Decentralisation is the extension of (R)

a. responsibility b. authority

c. delegation d. planning ans-c

Type of organization structure framed as per the product line(R)

a. divisional structure b. b. functional structure

c. formal structure d. Informal structure

A tall structure has a (R)

a. narrow span of management b. no span

c. informal organisation d. Centralisation ans-a

40. Establishing reporting system leads to (R)

a. specialisation b. improved productivity

c. clarity of relationship d. rumours. ans-c

1. Match the following on the basis of meaning of the content (remembering)

(i) Divisional structure	(a) product specialisation
(ii)Functional Structure	(b) formation is based on product lines
	(c) formation is based on functions

Ans: (i)- ,(ii)-(a)

2. Match the following on the basis of demerits of the content: (remembering)

(i) Divisional structure	(a) Difficult for a multiproduct company
(ii)Functional Structure	(b) Difficult to fix responsibility
	(c) Non economical

Ans: (i)-(c), (ii)-(a)

3. Match the following on the basis of features: (remembering)

(i) Divisional structure	(a) Occupational Specialisation
(ii) Functional Structure	(b) Perfect control
	(c) Fixation of responsibility

Ans: (i)-(b),(ii)-(a)

4. Match the following on the basis of demerits of the content (understanding)

(i) Divisional structure	(a) Places less emphasis on overall objective
(ii)Functional Structure	(b) Increases cost
	(c) conflict of Interest

Ans: (i)-(b),(ii)-(a)

5. Match the following: (understanding)

(i) Organisational structure	(a) number of subordinates that can be managed by superiors
(ii) Span of management	(b) Give shape to organizational structure
	(c) framework within which tasks are performed

Ans: (i)-(b),(ii)-(a)

6. Match the advantages with type of organisation: U

a. Fulfils the social needs	a. Formal organisation
b. Fixation of responsibility	b. Informal organization
	c. Divisional structure

7. Match the disadvantages with the type of organisation U

a. Leads rumors	a. Formal organisation
b. Lack of adequate recognition to creative talent	b. Informal organisation
	c. Functional Structure

8. Match the following Origin of organisation with the type of organisation. R

a. Deliberately created	a. Informal organisation
b. Result of Social interaction among employees	b. Formal organisation
	c. Functional Structure

9. Match the advantages of principles of management with the type of organisation. U

a. Benefits of Scalar chain	a. Informal organisation
b. Benefits of Gang plank	b. Informal communication
	c. Formal communication
	d. formal organisation

10. Match the type of communication with the type of organisation. R

a. Written channels of communication	a. formal organisation
b. oral communication	b. Informal organisation
	c. Non-verbal communication

11. Match the type of organisation with behavior of Members R

a. Formal organisation	a. No set behavior
b. Informal organisation	b. Standards of behavior directed by rules
	c. Rigid Behavior
	d. Flexible Behavior

12. Match the authority originated with the type of organisation R

a. Arises by virtue of position in Management	a. Formal organisation
b. Arises out of personal qualities	b. Functional Structure
	c. Informal organisation

13. Match the type of Nature with the type of organisation U

a. Rigid	a. Formal organisation
b. Flexible	b. Informal organisation
	c. Non-profit organisation
	d. corporate organisation

14. Match the type of organization with the type of needs U

a. Formal organisation	a. Social needs
b. Informal organisation	b. Personal needs
	c. Organisational objectives

15. Match the speed of communication with the type of organisation U

a. Faster communication	a. Non-corporate organisation
b. Delay communication	b. Corporate organisation
	c. Informal organisation
	d. Formal organisation

TYPOLOGY FOR ANALYSIS AND EVALUATING

a. Departmentalisation.	1. The activities which are of similar nature.
b. Assignment of duties.	2. Allocation of responsibility
	3. Separation of products.

Ans – a 1, b-2

a. Identification and division of work.	1. Work must be divided into smaller part.
b. Establishing relationship.	2. from whom they take order.
	3. Relation among the employees.

Ans-a-1 b-2

a. Organising.	1. Designing specific roles to eliminate ambiguity.
b. Specialisation.	2. Assigning each task to employees on the basis of skills.
	3. Special person in organisation.

Ans- a-1 b-2

19.

a. Importance of organising.	1. Benefits of specialisation.
	2. It create chaos.
	3. No assignment of duties.

Ans- a-1

a. Formal organization	1. Result of social interaction.
b. Informal organization	2. Creates formal structure.
	3. Answerability.

Ans-a-2 b-1

a. Authority	1. Arises from formal position
b. Accountability	2. Arises from responsibility.
	3. Arises from the authority delegated.

Ans-a-1 b-3

22.

a. Functional structure	1. Based on product.
b. Divisional structure.	2. based on functions
	3. Based on number of persons.

Ans- a-2,b-1

a. Delegation	1. Lesser freedom to take own decision
b. Decentralisation	2. Greater freedom to take decision
	3. No freedom

Ans-a-1,b-2

a. Importance of delegation.	1.Effective management
b. Delegation.	2.distribution of authority
	3.Create hierarchy

Ans-a-1,b-2

a. Centralisation	1. Decision all taken at the apex of management hierarchy.
b. Decentralisation	2. Decision making among all level of management.
	3. No decision power is given

Ans-b-2,A-1

a. Delegation is	1. Function of management
b. Decentralisation is	2. Principle of management
	3. Granting of authority to subordinate
	4. Granting of authority to the lowest level.

Ans- a-3,b-4

27.

a. Delegation ensures	1. Gossiping
	2. Informal relationship
	3. Peace.
	4. Ease in burden of managers

Ans 4

28.

a. Importance of delegation includes	1. Employee development
b. Decentralisation is	2. Higher absenteeism
	3. conflicts
	4. optional

Ans-a-1,b-4

a. Authority is related to	1. Power distribution
b. Accountability cannot be	2. Abdication
	3. Delegated
	4. Gang plank

Ans-a-1,b-3

30.

a. Centralisation is	1. Barrier to progress
b. an element of delegation	2. Retention of decision making authority
	3. Accountability

Ans-a-2, b-3

31.

a. Functional structure determines	1. Product specialisation
b. Divisional structure determines	2. Department coordination
	3. Relief to top management

Ans-a-2,b-1

32.

a. Formal Organisation originates from	1. right of employees
b. Informal organisation originates from	2. top management
	3. Result of social interaction among employee

Ans-a-2,b-3

a. Responsibility means	1. Abdication
b. Accountability means	2. Obligation
	3. Power
	4. Rights

Ans-a-2,b-1

34.

a. informal organisation originates due to	1. social interaction
	2.Obligation of employee
	3. Pressure of labour union

Ans-a-1

a. Decentralization is	1. Compulsory
b. Delegation is	2. Imposed
	3. Optional
	4. Regulatory

Ans a-3,b-1

1. Under what function of management the relationship between different posts (positions) is explained?

(a) Planning (b) Communication

2. Where lies the need of organisation?

(a) In business organisation (b) In non-business organisation

3. Which organisation structure is consciously or deliberately established?

(a) Formal (b) Informal

4. Which organisation structure is based on rules and procedures?

(a) Informal (b) Formal

5. Which structure of organisation is helpful in locating the inefficient employees?

(a) Formal (b) Informal

6. Which organisation structure does not have duplication of work?

(a) Formal (b) Informal

7. Which of the following is not the disadvantage of formal organisation?

(a) Lack of initiative (b) Delay in work

8. In which organisation structure do we find “group norms”?

(a) Formal (b) Informal

9. Which of the following is written in the organisation manual?

(a) Goods purchased (b) Goods sold

10. Which of the following organisations lasts longer?

(a) Formal (b) Divisional

11. ________ is more stable organisation.

(a) Formal (b) Informal

12. Which one is not correct in respect of formal organisation:

(a) Definite responsibility (b) Definite authority

13. Which one of the following is not a part of process of organisation?

(a) Grouping of activities (b) Doing complete centralisation

14. Which is not a feature of formal organisation:

(a) It is personal (b) It is more stable

15. How many standardised forms of organisation structure are there?

(a) Two (b) Three

16. Which of the following are parts of formal organisation?

(a) Functional organisation (b) Line organisation

17. Which organisation resists changes?

(a) Formal (b) Informal

18. What do we call the division of organisation structure on the basis of products?

(a) Functional organisation (b) Divisional organisation

19. If a company deals in metal products and plastic products, what type of organisation will be useful for it?

(a) Informal (b) Functional

20. Which organisation structure is compulsory?

(a) Formal (b) Informal

21. Departments are established on the basis of ________ in functional organisation.

(a) Activities (b) Products

22. In which situation the divisional structure happens to be appropriate?

(a) Where the number of major products is more than one

(b) Where the size of the organisation is quite large

(d) Where primarily only one product is sold

23. Number of sub-ordinates under a superior is called:

(a) Office environment (b) Strict control

24. In which type of organisation, the principle of scalar chain is fully followed:

(a) Divisional organisation (b) Formal organisation

25. What is the key to managerial post?

(a) Responsibility (b) Authority

26. How is accountability created?

(a) By assigning responsibility (b) By assigning authority

27. What is the basis of delegation of authority?

(a) Centralisation (b) Decentralisation

28. “Every step that increases the importance of the subordinates is called decentralisation and any step that decreases it is called centralisation”. What is it about?

(a) Formal organisation (b) Informal organisation

29. What is decentralisation?

(a) Short form of delegation (b) Extended form of delegation

30. Which of the following increases the importance of the subordinates?

(a) Centralisation (b) Decentralisation

31. Which of the following has a wider scope?

(a) Management (b) Centralisation

32. ‘More delegation of authority helps managerial development’ out of the following with which this statement is related to?

(a) Delegation (b) Decentralisation

33. On which of the following does decentralisation depend?

(a) Centralisation (b) Specialisation

34. Which one is not correct in respect of delegation of authority?

(a) Increase in administrative work

(b) Development of sub-ordinates

(d) Quick and better decision possible

35. Extended form of delegation of authority is called:

(a) Specialisation (b) Centralisation

36. (I) Delegation of authority is inevitable and decentralisation is voluntary.

(II) Scope of delegation of authority is limited and the scope of decentralisation is broad.

Above both statement are:

(a) True (b) False

(d) Statement (I) is False and Statement (II) is True

Answers: 1. (c), 2. (c), 3. (a), 4. (b), 5 (a), 6. (a), 7. (c), 8. (b), 9. (d), 10. (c), 11. (a), 12. (d), 13. (b), 14. (a), 15. (d), 16. (d), 17. (b), 18. (b), 19. (d), 20. (a), 21. (a), 22. (c), 23. (c), 24. (b), 25. (b), 26. (b), 27. (d), 28. (d), 29. (b), 30. (b), 31. (a), 32. (b), 33. (d), 34. (a), 35. (c), 36. (a).

Multiple Choice Questions

1. Which of the following is not an element of delegation?

(a) Accountability (b) Authority

2. A network of social relationship that arises spontaneously due to interaction at work is called:

(a) Formal organisation (b) Informal organisation

3. Which of the following does not follow the scalar chain?

(a) Functional structure (b) Divisional structure

4. A tall structure has a

(a) Narrow span of management (b) Wide span of management

5. Centralisation refers to

(a) Retention of decision making authority

(b) Dispersal of decision making authority

(d) Opening new centers or branches

6. For delegation to be effective it is essential that responsibility be accompanied with necessary

(a) Authority (b) Manpower

7. Span of management refers to

(a) Number of managers

(b) Length of term for which a manager is appointed

(d) Number of members in top management

8. The form of organisation known for giving rise to rumors is called

(a) Centralised organisation (b) Decentralised organisation

9. Grouping of activities on the basis of product lines is a part of

(a) Delegated organisation (b) Divisional organisation

10. Grouping of activities on the basis of functions is a part of

(a) Decentralised organisation (b) Divisional organisation

Answers: 1. (d), 2. (b), 3. (d), 4. (a), 5 (a), 6. (a), 7. (c), 8. (b), 9. (b), 10. (c). 28

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