We have given these Business Studies Class 12 Important Questions Chapter 5 Organising to solve different types of questions in the exam. Go through these Planning Class 12 Important Questions and Answers & Previous Year Questions to score good marks in the board examination.

Important Questions of Organising Class 12 Business Studies Chapter 5

Question 1.
Differentiate between ‘Authority’ and “Responsibility’ on the basis of ‘Flow’. (All India 2019)
Answer:
Difference between authority and responsibility is:

Basis Authority Responsibility
Flow It flows downward from superior to subordinate. It flows upward from subordinate to superior.

Question 2.
Distinguish between Responsibility’ and ‘Accountability’ on the basis of “Meaning.’ (All India 2019)
Answer:
Difference between responsibility and accountability is:

Basis Responsibility Accountability
Flow It means the obligation to perform the assigned task. It means being answerable for the final outcome.

Question 3.
Differentiate between ‘Formal and Informal Organisations’ on the basis of ‘Flow of communication’. (All India 2019,2017)
Answer:
Difference between formal and informal organisations is:

Basis Formal Organisation Informal Organisation
Flow of communication Scalar chain is followed. Communication is free and independent, therefore grapevine generally.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 4.
Differentiate between ‘Delegation’ and “Decentralisation’ on the basis of ‘freedom of action’. (All India 2019)
Answer:
Difference between delegation and decentralisation is:

Basis Delegation Decentralisation
Freedom of action Less freedom as there is supervision involved. High level of freedom and autonomous decision-making.

Question 5.
What is meant by ‘Functional Structure’ of an organisation? (India 20l9: Comportment 2018)
Answer:
An organisation structure in which departments are created on the basis of different functions performed in the organisation is called a functional structure.

Question 6.
What is meant by ‘Accountability’? (All India 2019)
Answer:
Accountability means being answerable for final outcome. It is the obligation to carry out responsibility and exercise authority.

Question 7.
Differentiate between ‘Authority’ and ‘Responsibility on the basis of ‘Origin’. (All India 2019)
Answer:
Difference between authority and responsibility is:

Basis Authority Responsibility
Origin It originates from job position in the scalar chain. It arises from delegated authority.

Question 8.
Distinguish between ‘Responsibility’ and ‘Accountability on the basis of ‘Delegation’. (All India 2019)
Answer:
Difference between formal and informal organisation is:

Basis Responsibility Accountability
Delegation It cannot be delegated entirely. It cannot be delegated at all.

Question 9.
Give the meaning of ‘decentralisation’. (All India 2018, 2016; Foreign 2016)
Answer:
Decentralisation refers to the systematic effort to delegate to the lowest level, all authority except which can be exercised at the central point.

Question 10.
Zamon Ltd. is manufacturer of electronics goods based in Pune. On one hand, it deals in items like books, music instrumets, videotapes etc. and on the other hand, it deals in laptops and mobile phones.

The company had a functional structure with separate heads for production, marketing and finance. All the functional heads were looking after the products, hut at times their activities overlapped. This led to problems related to coordination and inter departmental
conficts. To facilitate specialisation Ramit, the CEO of the company decided to group hooks, music instruments, videotapes etc. under “Media’ and laptops and mobile phones under ‘consumer electronics’. While doing so Ramit has performed a step in the process of one of the functions of management. Identify the step. (Compartment 2018)
Answer:
The step performed by the CEO is departmentalisation (second step of organising function of management.)

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 11.
Differentiate between ‘Formal’ and ‘Informal’ organisation on the basis of ‘Origin’. (Delhi 2017)
Answer:
‘Formal’ organisation arises as a result of company rules and policies and ‘informal’ organisation arises as a result of social interaction.

Question 12.
Enumerate any two basis of departmentation in an organisation. (All India 2016: Foreign 2016)
Answer:
Two basis of departmentation in an organisation are:
(i) Territories (north, south, east, west, etc)
(ii) Products (appliances, clothes, cosmetics, etc).

Question 13.
Name the type of ‘Organisational structure’ which promotes efficiency in utilisation of manpower. (Delhi 2016)
Answer:
‘Functional Organisational Structure’ promotes efficiency in utilisation of manpower.

Question 14.
Name the organisational structure which helps in increasing managerial and operational efficiency. (Foreign 2016)
Answer:
Functional organisational structure

Question 15.
Give the meaning of “Responsibility’ as an element of delegation. (Delhi 2016; All India 2014; Comportment 2013)
Answer:
It is the obligation of a subordinate to perform the assigned duties properly.

Question 16.
Give the meaning of authority as an element of delegation. (All India, Delhi, Foreign 2016; Comportment 2013)
Answer:
Authority refers to the right of an individual to command his subordinates and to take action within the scope of his position. As an element of delegation, it should be delegated in such a manner that a subordinate cannot escape from his/her accountability.

Question 17.
Give the meaning of accountability as an element of delegation. (Delhi 2016)
Answer:
Accountability means being answerable for the final outcome. It cannot be delegated and flows upwards, i.e. a subordinate will be accountable to his superior for the satifactory performance of job.

Question 18.
Alliance Ltd. is engaged in manufacturing plastic bukets. The objective of the company is to manufacture 100 buckets a day. To achieve this, the efforts of all department are coordinated and interlinked and authority-responsibility relationship is established among various job positions. There is clarity on who is to report to whom, identify the function of management discussed above. (Delhi 2015)
Or
To make the annual function of the school successful, the Principal of the school divided all the activities into task groups each dealing with a specific area like rehearsals, decoration, stage management, refreshments etc. Each group was placed under the overall supervision of a senior teacher. Identify the function of management Performed by the Principal in doing so. (Compartment 2015)
Answer:
Organising

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 19.
‘Himalaya Ltd’, is engaged in manufacturing of washing machines. The target of the organisation is to manufacture 500 washing machines a day. There is an occupational specialisation 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. All (India 2015)
Answer:
Functional organisational structure

Question 20.
What is meant by ‘divisional structure’ of an organisation? State its any two advantages. (Delhi 2015)
Answer:
Under the divisional structure, an organisation is divided into different divisions or units on the basis of products or geographical area.

Advantages of divisional structure are as follows:

  • Product specialisation helps in the development of varied skills.
  • It promotes flexibility and initiative.

Question 21.
State the limitation of informal organisation. (All India 2015)
Answer:
Informal organisation does not form any definite structure for smooth working of the organisation.

Question 22.
Define ‘Formal Organisation’. (Delhi 2015)
Or
What is meant by formal organisation? (Comportment 2014)
Answer:
Formal organisation refers to the organisational structure which is designed by the management to accomplish a particular task. It specifies the boundaries of authority and responsibility for the achievement of organisational goals.

Question 23.
Define ‘Organising’ as a function of management. (All India (C) 2014,2013)
Answer:
Organising is the function of management, which coordinates the physical, financial and human resources and establishes productive relations among them for achievement of specific goals.

Question 24.
Distinguish between functional structure and divisional structure on the basis of formation. (Comportment 2014)
Answer:
Functional structure is formed on the basis of functions, whereas divisional structure is formed on the basis of various product lines, which is further supported by functions.

Question 25.
Define organisation as a structure. (Foreign 2014)
Answer:
An 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.

Question 26.
State the suitability of functional structure of organising. (Comportment 2014)
Answer:
Functional structure is most suitable when the size of the organisation is large, has diversified activities and operations requires a high degree of specialisation.

Question 27.
State any one advantage of formal organisation. (Delhi 2014)
Answer:
Formal organisation results in systematic and smooth functioning of an organisation.

Question 28.
Identify the type of suitable organisation structure for a large scale organisation having diversified activities requiring high degree of specialisation in operations. (All India 2013)
Answer:
Functional organisational structure

Question 29.
State any one feature of informal organisation. (Comportment 2013)
Answer:
In this organisation, there are no written rules and procedures to govern inter-relationship. But there are group norms which have to be observed.

Question 30.
Distinguish between ‘Formal and Informal organisation’ on the basis of the following:
(a) Origin
(b) Authority
(c) Leadership (All India 2019)
Answer:
Differences between formal and informal organisation are:

Basis Formal Organisation Informal Organisation
Origin It originates as a result of company’s rules and policies. It originates as a result of interaction among people at work.
Authority It arises by virtue of position in management. It arises out of personal qualities of individuals.
Leadership Managers are leaders. Leaders are chosen by group.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 31.
Distinguish between ‘Functional and Divisional structure’ on the basis of the following points:
(a) Coordination
(b) Managerial development
(c) Cost (All Indin 2019)
Answer:
Differences between functional and divisional structures are:

Basis Functional Structure Divisional Structure
Coordination Difficult for a multiproduct company. Easy, because all functions related to a particular product are integrated in one department.
Managerial development It does not help in managerial development as functional manager lacks autonomy. It helps in managerial development, as they have autonomy and knowledge of varied aspects of a product.
Cost It is economical as there is no duplication. It is costlier, as there is duplication of resources.

Question 32.
Differentiate between ‘Formal and Informal organisation’ on the basis of:
(i) Origin
(ii) Authority
(iii) Flow of communication (CBSE 2018)
Answer:
Differences between formal and informal organisation are:

Basis Formal Organisation Informal Organisation
Origin It is deliberately designed by the top management. It originates from within the formal organisation due to interaction among employees.
Authority Authority flows through scalar chain from top to bottom. There are no standard lines/chain for flow of authority.
Flow of communication Communication takes Place throught the scalar chain. Communication is free and independent.

Question 33.
State any three limitations of ‘Divisional structure’ of an organisation. (Delhi 2015)
Ans.
The limitations of divisional structure of an organisation are as follows:

1. Such a structure involves heavy financial costs due to the duplication of supporting functional units for the divisions. It also requires adequate number of capable managers to take charge of their respective divisions.

2. All the divisions work as autonomous units. Divisional heads may gain power and ignore organisational interests.

3. Conflict may arise between different divisions on allocation of funds and other resources.

Question 34.
A company has been registered under the Companies Act with an authorised share capital of ₹20,000 crore. Its registered office is situated in Delhi and manufacturing unit in a backward district of Rajasthan. Its marketing department is situated in Bhopal. The company is manufacturing Fast Moving Consumer Goods (FMCG).
(i) Suggest with the help of a diagram a suitable organisation structure for the company.
(ii) State any three advantages of this organisation structure. (Comportment 2015; Delhi 2015)
Or
A company has been registered under the Companies Act with an authorised share capital of ₹400 crore. Its registered office is situated in Mumbai and manufacturing unit in a backward district of Karnataka. Its marketing department is situated in Hyderabad. The company is manufacturing consumer goods. (All India 2018)
(i) With the help of a diagram suggest a suitable organisation structure for the company.
(ii) State any three limitations of this organisation structure.
Answer:
(i) Functional structure is suitable for this company. The company’s organisation may be in the form as shown below.
Organising Class 12 Important Questions and Answers Business Studies Chapter 5 -1
(ii) The advantages of functional organisational structure are: (any three)

  • A functional structure provides occupational specialisation, since, emphasis is placed on specific functions.
  • It promotes control and coordination within a department because of similarity in the task being performed.
  • It increases managerial and operational , efficiency and this results in higher profit.
  • It makes training of employees easier as it focuses on a limited range of skills.
  • It ensures the performance of all activities necessary for achieving organisational objectives. Due attention can also be given to different functions.

The limitations of functional organisational structure are: (any three)
1. Specialists working in different departments may not be able to see the perspective of the organisation as a whole, e.g. the production department may get involved in producing a quality product without regard to the fact it might not sell at a high price. As a result, it becomes difficult to achieve the objectives of the organisation.

2. It becomes difficult to hold a particular department responsible for any problem, e.g. when sales are declining, who is responsible? It is difficult to determine whether the marketing department or the production department is responsible for not producing a quality product.

3. Functional heads do not obtain experience required for top management positions. Specialised skills and narrow perspective may lead to inflexibility.

4. Conflict often arises when the interests of two or more departments are not compatible.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 35.
What is meant by ‘Informal organisation’? State its any two advantages. (All India 2015)
Or
Give the meaning of ‘Informal organistion’. State its any three advantages. (Delhi 2019)
Answer:
Informal organisation is an aggregate of inter-personal relationships without any conscious purpose but which may contribute to joint results. It emerges on its own in a natural manner within the formal organisation.

Various advantages of informal organisation are: (any two)

  • It leads to faster spread of information as well as quick feedback.
  • It fulfills the social needs of the members.
  • It contributes towards fulfillment of organisational objectives by compensating for inadequacies in the formal organisation.

Question 36.
State any three limitations of informal organisation. (Compartment 2015)
Answer:
The limitations of informal organisation are as follows: (any three)

  • According to a survey, 70% of information spread through informal organisational structure are rumors and can mislead the employees.
  • It does not form any definite structure for smooth working of an organisation.
  • It opposes the policies and changes of management.
  • It gives importance to individual interest as compared to orgnisational interest.

Question 37.
What is meant by ‘Formal Organisation’? State its any two advantages. (All India 2015)
Or
Give the meaning of ‘formal organisation’ State it’s any three advantages.
Or
State any four advantages of formal organisation. (Delhi 2010)
Answer:
Formal organisation is a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability, that lays emphasis on work to be done rather than interpersonal relationships.

The advantages of formal organisation are as follows: (any two)

  1. It makes fixation of responsibility clear and easier. It clarifies who has to report to whom.
  2. There is no confusion regarding work to be done by each individual and reduces ambiguity in performance of tasks.
  3. It helps in avoiding duplication of effort.
  4. Unity of command is maintained through an established chain of command.
  5. It provides stability to the organisation.

Question 38.
State any three features of informal organisation. (All India 2015, 2013)
Or
State any four features of informal organisations. (Delhi 2013)
Answer:
Features of an informal organisation are as follows: (any three)
(i) Based on formal organisation This is based on formal organisation where people also have informal relations. It means first of all formal organisation is established and then informal organisation is created out of it.

(ii) No written rules and procedures In this organisation, there are no written rules and procedures to govern inter-relationship. But there are group norms which have to be observed.

(iii) Independent channels of communication In this organisation, relations among different people are not defined because a person at the lowest rank can have direct contact with the person at the highest level.

(iv) Not deliberately created It is not deliberately created. It emerges out of mutual relationship and tastes.

(v) No place on organisation chart It has no place on the properly prepared organisation chart. Moreover, there is no information about it even in the organisation manual.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 39.
Samir Gupta started a telecommunication company, “Domra Ltd’ to manufacture economical mobile phones for the Indian rural market with 15 employees. The company did very well in its initial years. As the product was good and marketed well, the demand of its products went up. To increase production, the company decided to recruit additional employees. Samir Gupta, who was earlier taking all decisions for the company had to selectively disperse the authority. He believed that subordinates are competent, capable and resourceful and can assume responsibility for effective implementation of their decisions.
This paid-off and the company was not only able to increase its production but also expanded its product range.
(i) Identify the concept used by Samir Gupta through which he was able to steer his company to greater heights.
(ii) Also explain any three points of importance of this concept. (Delhi 2015)
Answer:
(i) The concept used by Samir Gupta is Decentralisation, which refer to a systematic effort to delegate to the lowest level all authority, except which be exercised at the central point.

(ii) Decentralisation is important due to the following reasons: (any three)
1. Greater motivation: Decentralisation improves the morale and motivation of subordinates which is reflected in better work performance.

2. Develops initiative among subordinates: Decentralisation helps to promote self-reliance and confidence amongst the subordinates. This is because when lower managerial levels are given freedom to take their own decisions, they learn to depend on their own judgement. It helps to promote initiative and creativity among them.

3. Develops managerial talent for the future: As a result of decentralisation, employees get more opportunities to develop new skills. It makes them better future managers.

4. Quick decision-making: Decentralisation in an organisation, provides more freedom to lower level managers to take their own decisions. There is no need to get approval from higher level. It helps in quick and better decision-making.

5. Facilitates growth and expansion: Decentralisation facilitates organisational growth through expansion and diversification. Top executives are not burdened by the administrative problems and complexities. So, they are able to plan expansion and diversification.

Question 40.
It helps a manager to extend his area of operations as without it, his activities would be restricted to only what he himself can do. Identify the activity referred to, in the above statement and state its elements. (All India 2015)
Answer:
The activity referred here is delegation.
Elements of delegation are:

  • Authority
  • Responsibility
  • Accountability

Question 41.
State any five points which highlight the importance of delegation of authority. (Delhi 2018; All India 2015)
Or
Explain by giving any three reasons why delegation is important in an organisation. (Delhi 2010; All India 2010)
Answer:
The points highlighting the importance of delegation of authority are: (any five)
(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.

(ii) Employee development:
As a result of delegation, employees get more opportunities to utilise their talent. It also alows them to develop those skills which will enable them to perform complex tasks and assume those ‘ responsibilities which will improve their career prospects.

(iii) Facilitating growth: Delegation helps in the expansion of an organisation by providing a ready work force to take up leading positions in new ventures.

(iv) Basis of management hierarchy: Delegation of authority establishes healthy superior subordinate relationships, which are the basis of hierarchy of management. It is the degree and flow of authority which determines ‘who is to report to whom’.

(v) Reduces the burden of superior executive: The delegation of authority means sharing of work and authority with others. A manager can assign a part of his responsibility and grant authority to his subordinates. This reduces his work load and helps superiors in concentrating on the work which is more important.

(vi) Motivation: It gives job satisfaction to subordinates. It motivates them to render their willing cooperation for achieving the organisational goals. It leads them to higher performance and makes them more responsible.

Question 42.
Decentralisation is a key element in effective organising. Explain with the help of any four reasons. (All India 2014)
Or
Explain by giving any three reasons why decentralisation is important in an organisation. (All India 2010; Delhi 2010)
Answer:
Decentralisation refers to the systematic effort to delegate to the lowest level, all authority except which can be exercised at the central point.

Decentralisation is important due to the following reasons: (any three)
(a) Greater motivation: Decentralisation improves the morale and motivation of subordinates which is reflected in better work performance.

(b) Develops initiative among subordinates: Decentralisation helps to promote self-reliance and confidence amongst the subordinates. This is because when lower managerial levels are given freedom to take their own decisions, they learn to depend on their own judgement. It helps to promote initiative and creativity among them.

(c) Develops managerial talent for the future: As a result of decentralisation, employees get more opportunities to develop new skills. It makes them better future managers.

(d) Quick decision-making: Decentralisation in an organisation, provides more freedom to lower level managers to take their own decisions. There is no need to get approval from higher level. It helps in quick and better decision-making.

(e) Facilitates growth and expansion: Decentralisation facilitates organisational growth through expansion and diversification. Top executives are not burdened by the administrative problems and complexities. So, they are able to plan expansion and diversification.

Question 43.
What is meant by ‘Functional structure’? State its any two advantages? (All India 2013)
Answer:
Functional structure Under functional structure, an organisation is divided into different departments or units on the basis of major functions performed. All departments report to a coordinating head.

The advantages of functional organisational structure are: (any three)

  1. A functional structure provides occupational specialisation, since, emphasis is placed on specific functions.
  2. It promotes control and coordination within a department because of similarity in the task being performed.
  3. It increases managerial and operational , efficiency and this results in higher profit.
  4. It makes training of employees easier as it focuses on a limited range of skills.
  5. It ensures the performance of all activities necessary for achieving organisational objectives. Due attention can also be given to different functions.

Question 44.
Explain when and why the need is felt for having a framework, within which managerial and operating tasks are performed to accomplish desired goals. Name this framework also. (Delhi 2010; All India 2010)
Answer:
It is an organisational structure.
Need of organisational structure is felt in the following cases: (any two)

  • It is required when an organisation grows in size or leads to complexity.
  • It is required when an organisation is new and is required after planning but before staffing.
  • It is required as it leads to effective administration, expansion, growth and better utilisation of resources, etc.

Question 45.
Explain by giving any three reasons why organising is considered as an important function of management. (Delhi 2010)
Or
State any four points of importance of organising as a function of management. (Delhi 2019: All India 2012)
Or
‘Organisation is the harmonious adjustment of specialised parts for the accomplishment of some common purpose or purposes.’ In the fight of this statement, explain any four points of importance of organising. (All India 2011; Delhi 2011)
Or
With the help of any four points, explain the crucial role of ‘organising’ function in an enterprise. (All India 2014)
Answer:
The following points highlight the crucial role that organising plays in any business enterprise (any three):
(i) Clarity in working relationship: The establishment of working relationships clarifies the lines of communication and specifies, ‘who will report to whom’. This removes ambiguity in transfer of information and instructions.

(ii) Effective administration:
Organising provides a clear description of jobs and related duties. This helps to avoid confusion and duplication. Clarity in working relationships enables proper execution of work. Management of an enterprise thereby becomes easy and this brings effectiveness in administration.

(iii) Expansion and growth:
Organising helps in the growth and diversification of an enterprise by enabling it to deviate from existing norms and taking up new challenges and also by facilitating its efficient management.

(iv) Benefits of specialisation:
Organising leads to a systematic allocation of jobs amongst the work force. This reduces the work load as well as enhances productivity because of the specific workers performing a specific job on regular basis. By doing a job on regular basis, a worker gets experience in that area and leads to specialisation.

(v) Development of personnel:
Delegation of authority allows the managers to reduce their work load and to pay attention to more important and strategic issues and to develop new methods and ways of performing job where their potential can be exploited in more useful manner. Delegation develops in subordinates the ability to deal effectively with challenges and realise their full potential for more creative work.

(vi) Optimum utilisation of resources:
Organising leads to the proper usage of all material, financial and human resources. The proper assignment of jobs avoids overlapping of work and also makes possible the best use of resources. Avoidance of duplication of work helps in preventing confusion and minimising the wastage of resources and efforts.
Organising Class 12 Important Questions and Answers Business Studies Chapter 5 -2

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 46.
Voltage fluctuations have been common and quite high in India. They harm our electrical appliances like televisions, refrigerators and air conditioners, often leaving them in a permanently damaged condition. N-Guard Company decided to manufacture stabilisers for North India where the voltage fluctuation ranges from 220V to 230V. Once the demand for North India was taken care of, they decided to launch stabilisers of varying voltages from 90 V – 260 V for meeting the requirements of voltage fluctuations in other regions of India also. Three engineers were appointed for South, West and East regions of India, as the voltage was different in all the three regions. Though all the engineers were appointed to manufacture stabilisers but the product differed from region to region.
(a) Identify the organisational structure of N-Guard Company.
(b) State any two advantages and two limitations of the structure identified in the above para. (Delhi 2019)
Answer:
(a) Company has opted divisional structure.
(b) Advantages of Functional Structure:

  • It promotes control and coordination within a department.
  • It is the most logical, time proven form of organisation structure.
  • It leads to minimal duplication of effort, which results in economies of scale and this lowers cost.
  • It ensures that different functions get due attention.

Disadvantages of Functional Structure:

  • It becomes difficult to hold a particular department responsible for any problem.
  • It may lead to inflexibility as people with same skills and knowledge may develop a narrow perspective.
  • A functional structure places less emphasis on overall enterprise objectives than the objectives pursued by a functional head.

Divisional Structure:
Under the divisional structure, an organisation is divided into different divisions or units on the basis of products or geographical area.

Advantages of Divisional Structure:

  • Decisions are taken much faster in divisional structure.
  • It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.
  • It leads to spedalisation of physical facilities and human talent.

Disadvantages of Divisional Structure:

  • There is a duplication of physical facilities and functions.
  • It suffers from under utillisation of plant capacity
  • Conifict may arise between different divisions on allocation of funds and other resources.

Question 47.
Organising involves a series of steps that need to be taken in order to achieve the desired goal. Explain these steps. (Delhi 2019)
Or
Give the meaning of ‘organising’. State the steps in the process of organising. (All India 2015)
Or
State the steps in the organising process. (Delhi 2013)
Or
Describe briefly the steps in the process of organising. (All India 2012; Delhi 2012)
Or
‘Organising is the process of defining and grouping the activities of the enterprise and establishing the authority relationship among them.’ In the fight of this statement, explain the steps in the process of organising. (All India 2011)
Answer:
Organising is the function of management, which coordinates the physical, financial and human resources and establishes productive relations among them for achievement of specific goals. Various steps involved in the organising process may be described as follows:
Organising Class 12 Important Questions and Answers Business Studies Chapter 5 -1
(i) Identification and division of work:
The organising function begins with the division of total work into smaller units. Each unit of total work is called a job. The division of work into smaller jobs leads to specialisation because jobs are assigned to different individuals according to their qualifications and capabilities. The division of work and assignment of jobs leads to systematic working.

(ii) Grouping the jobs and departmentalisation: After division of work, related and similar jobs are grouped together and put under one department.

This can be done in the following two ways:
(a) Functional departmentation Under this method, jobs related to common functions are grouped under one department.
(b) Divisional departmentation Under this method, jobs related to one product are grouped under one department.

(iii) Assignment of duties:
After dividing the organisation into specialised departments, each individual working in different /departments is assigned a duty, matching to his skill and qualifications. We can say, the work is assigned to those who are best fitted to perform it well.

(iv) Establishing reporting relationship:
Merely allocating the work is not enough. Each individual should also know from whom he has to take orders and to whom he is accountable. The establishment of such clear relationships helps to create a hierarchical structure and helps in coordination amongst various departments.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 48.
What is meant by ‘Decentralisation’? State any three points that highlight the importance of decentralisation. (Delhi 2019)
Or
If we delegate the authority we multiply it by two. If we decentralise it, we multiply it by many. In the light of this statement explain any four points of importance of decentralisation. (Delhi 2011)
Answer:
Decentralisation is important due to the following reasons: (any three)
(a) Greater motivation: Decentralisation improves the morale and motivation of subordinates which is reflected in better work performance.

(b) Develops Initiative among subordinates: Decentralisation helps to promote self-reliance and confidence amongst the subordinates. This is because when lower managerial levels are given freedom to take their own decisions, they learn to depend on their own judgement. It helps to promote initiative and creativity among them.

(c) Develops managerial talent for the future: As a result of decentrailsation, employees get more opportunities to develop new skills. It makes them better future managers.

(d) Quick dedsion-making: Decentralisation in an organisation, provides more freedom to lower level managers to take their own decisions. There is no need to get approval from higher level. It helps in quick and better decision-making.

(e) Facilitates growth and expansion: Decentralisation facilitates organisational growth through expansion and diversification. Top executives are not burdened by the administrative problems and complexities. So, they are able to plan expansion and diversification.

Question 49.
Aradhana and Gandharv are heads of two different departments in ‘Yumco Ltd’. They are efficient managers and are able to motivate the employees of their respective departments to improve performance. However, their drive to excel in their own sphere of activity instead of giving emphasise on objectives of the enterprise has hindered the interaction between the departments that Aradhana and Gandharv are heading.

Often there are interdepartmental conflicts and they have become incompatible. This has proved to the harmful in the fulfilment of the organisational objectives. The situation has deteriorated to such an extent that the CEO of “Yumco Ltd.’ has hired a consultant, Rashmi, to resolve the problem after studying the situation closely, Rashmi found that the problem has arisen due to inflexibility and a narrow perspective on the part of both Aradhana and Gandharv. She is of the view that this situation is a result of the type of organisational structure “Yumco Ltd.’ has adopted.

From the above information, identify the organisational structure adopted by “Yumco Ltd.’ and state any three advantages of the structure so identified. (CBSE 2018)
Answer:
The organisational structure adopted by Yumco Ltd. is functional organisational structure.
Functional organisational structure has the following advantages:

  • It leads to occupational specialisation, since emphasise is placed on specific functions and repeated performance leading to efficient functioning.
  • It leads to minimal duplication of efforts, which results in economies of scale and lower costs.
  • It makes training of employees easier as the focus is only on a limited range of skills.

Question 50.
Distinguish between ‘Delegation’ and ‘Decentralisation’ on basis of
(i) Freedom of action
(ii) Status
(iii) Purpose. (Compartment 2018)
Or
Distinguish between ‘Delegation and Decentralisation’ on the basis of purpose, scope, status and nature. (Delhi 2013)
Answer:
Differences between delegation and decentralisation are as follows:

Basis Delegation Decentralisation
Purpose To lessen the burden of the manager. To increase the role of the subordinates in the organisation by giving them more autonomy.
Scope It has narrow scope as it is limited to superior and his immediate subordinate. It has wider 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 top management.
Nature Delegation is a compulsory act because no individual can perform all the tasks on his own. Decentralisation is an optional policy decision. It is done at the discretion of the top there is more freedom of action.
Freedom of action There is less freedom of action. Decentralisation

Question 51.
AVM Ltd. set-up its electric appliances manufacturing factory in a backward area of Himachal Pradesh where subsidies are provided by the government and labour is available at cheaper rates. AVM Ltd. was able to produce its products at low cost thereby generating enough profits in the first year itself. It was because of the fact that the limits of authority and responsibility of the employees were clearly defined and the activities of various departments were coordinated and integrated. The Production Manager of the company also came to know about the abailability of rawmaterials at cheaper rates from a vendor. For this, he wrote a letter to the Managing Director of the company for getting sanction. But, because of procedural delays in getting this sanction and procuring funds from the Finance Manager, the order could not be placed.
(a) Identify the type of organisation, that led to procedural delays and because of which the company could not get the advantage of procuring raw material at cheaper rates.
(b) State an advantage of the type of organisation identified in (a) above other than those discussed in the above case. (Comportment 2018 Modified)
Answer:
(a) It is the formal organisation that led to such procedural delays.
(b) Such type of organisations are generally stable and have less of duplication of work.

Question 52.
Give the meaning of ‘Divisional structure’ of organising. State its any four advantages. (All Indio 2015)
Or
What is meant by divisional structure of organisation? State its any three advantages. (Delhi 2012)
Or
What is meant by divisional structure of an organisation? For which type of business is this structure most suitable? State any four advantages of this form of organisational structure. (All India 2011)
Answer:
Divisional structure Under the divisional structure, an organisation is divided into different divisions or units on the basis of products or geographical area. Each division is a self-contained, semi-autonomous business unit. Each unit has a divisional manager responsible for performance and who has authority over the unit. There are certain matters, which are determined at the apex level only, viz goal determination and policy formation.

It is suitable for those enterprises where:

  • A large variety of products are manufactured.
  • An organisation grows and needs more employees and more departments.

Advantages of divisional structure are as follows: (any four)

  1. Product specialisation helps in the development of varied skills.
  2. It helps in the fixation of responsibility as divisional heads are accountable for profits, revenues and costs related to their departments.
  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 a new division can be added without interrupting the existing operations.
  5. All the activities related to one type of product are grouped under one division, which brings integration
    and coordination in the activities.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 53.
Distinguish between formal and informal organisation on the basis of meaning, origin, authority and flow of communication. (Delhi 2013)
Or
Differentiate between formal and informal organisation on the basis of the following.
(i) Meaning
(ii) Origin
(iii) Authority
(iv) Behaviour
(v) Flow of communication
(vi) Nature (All India 2014; Comportment 2014)
Answer:
Differences between formal and informal organisations are: (any four)

Basis Formal Organisation Informal Organisation
Meaning Structure of authority relationships created by the management. Network of social relationships arising out of interaction among employees.
Origin Arises as a result of company rules and policies. Arises as a result of social interaction.
Authority Arises by virtue of position in management. Arises out of personal qualities.
Flow of communication Communication takes place through scalar chain. Flow of communication has no pattern and can take place in any direction.
Behaviour It is directed by rules. There is no set behaviour pattern.
Nature Rigid Flexible

Question 54.
Authority and responsibility are two important elements in delegation of authority. Explain the two. (All India 2011)
Answer:
An organisational structure cannot be condeved without authority and responsibility. These are two important elements in delegation of authority: Authority It refers to the right of an individual to command his subordinates and to take action within the scope of his position. According to Henri Fayol, ‘Authority is the right to give orders and the power to exad obedience. Authority gives holder the power to enforce orders or dedsions. It can be delegated. It always flows downwards, i.e. vertically from superiors to subordinates’. Responsibility It is the obligation of a subordinate to properly perform the assigned duties. It arises from a superior-subordinate relationship. According to Davis Filley, ‘Responsibility is the obligation of the individual to perform assigned duties to the best of his abilities under the direction of his executive’.

Question 55.
Explain any two advantages and any two disadvantages of informal organisation. (All India 2011,2010; Delhi 2010)
Answer:
Informal organisation advantages of informal organisation are: (any two)

  • It leads to faster spread of information as well as quick feedback.
  • It fullills the social needs of the members.
  • It contributes towards fulfillment of organisational objectives by compensating for inadequacies in the formal organisation.

Disadvantages of informal organisation are as follows: (any three)

  • According to a survey, 70% of information spread through informal organisational structure are rumours and can mislead the employees.
  • It does not form any definite structure for smooth working of an organisation.
  • It opposes the policies and changes of management.
  • It gives importance to individual interest as compared to orgnisational interest.

Question 56.
Explain
(i) Benefits of specialisation and
(ii) Development of personnel as
importance of organising. (Foreign 2011)
Answer:
(i) Benefits of specialisation:
Organising leads to a systematic allocation of jobs amongst the work force. This reduces the work load as well as enhances productivity because of the specific workers performing a specific job on regular basis. By doing a job on regular basis, a worker gets experience in that area and leads to specialisation.

(ii) Development of personnel:
Delegation of authority allows the managers to reduce then- work load and to pay attention to more important and strategic issues and to develop new methods and ways of performing job, where their potential can be exploited in more useful manner. Delegation develops in subordinates the ability to deal effectively with challenges and realise their full potential for more creative work.

Question 57.
State any two advantages and two disadvantages of formal organisation. (Delhi 2010)
Answer:
Formal organisation is a system of well-defined jobs, each bearing a defmite measure of authority, responsibility and accountability, that lays emphasis on work to be done rather than interpersonal relationships.

The advantages of formal organisation are as follows: (any two)

  • It makes fixation of responsibility clear and easier. It darifies who has to report to whom.
  • There is no confusion regarding work to be done by each individual and reduces ambiguity in performance of tasks.
  • It helps in avoiding duplication of effort.
  • Unity of command is maintained through an established chain of command.
  • It provides stability to the organisation.

Disadvantages of formal organisation are:

  • While following formal chain of communication, actions get delayed in formal structure.
  • It does not give importance to psychological and social needs of employees.
  • It may create rigidity due to prescribed policies and rules.

Question 58.
Explain
(i) Adaptation to change and
(ii) Effective administration as importance of organising. (All India 2010; Delhi (C) 2010)
Answer:
(i) Adaptation to change:
The process of organising allows a business enterprise to accommodate changes in the business environment. It allows the organisation structure to be suitably modified and the inter-relationships amongst various managerial levels to pave the way for a smooth transition.

(ii) Effective administration:
Organising provides a dear description of jobs and related duties. This helps to avoid confusion and duplication. Clarity in working relationships enables proper execution of work. Management of an enterprise thereby becomes easy and this brings effectiveness in administration.

Question 59.
Explain
(i) Expansion and growth and
(ii) Optimum utilisation of resources as importance of organising. Delhi tci 2010
Answer:
(i) Expansion and growth:
Organising helps in the growth and diversification of an enterprise by enabling it to deviate from existing norms and taking up new challenges. In other words, sound organisation helps in taking the various activities under control and increases the capacity of the enterprise to undertake more activities.

(ii) Optimum utilisation of resources:
Organising leads to the proper usage of all material, financial and human resources. The proper assignment of jobs avoids overlapping of work and also makes possible the best use of resources. Avoidance of duplication of work helps in preventing confusion and minimising the wastage of resources and efforts.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 60.
A steel manufacturing company has the following main jobs
(i) Manufacturing
(ii) Finance
(iii) Marketing
(iv) Personnel
(v) Research and development
Which type of organisational structure will you choose for this type of a company and why? State any four advantages of this organisational structure. (Delhi (C) 2010)
Answer:
I would suggest the functional organisational structure as all these major functions could be performed well under separate departments.

The advantages of functional organisational structure are:
1. A functional structure provides occupational specialisation, since, empha sis is placed on specific functions.
2. It promotes control and coordination within a department because of similarity in the task being performed.
3. it increases managerial and operational efficiency and this results in higher profit.
4. It makes training of employees easier as it focuses on a limited range of skills.
5. It ensures the performance of all activities necessary for achieving organisational objectives. Due attention can also be given to different functions.

Question 61.
‘E-Solutions Ltd.’ started its operations in the year 2000. At the time of its inception, the company had only ten employees with two departments, a Production department and an Administration department. The products supplied and the services provided by the company started gaining popularity over the years. The management had faith in the abilities of the employees and thus they allowed them freedom of action. The management recognised that the decision-makers at different levels of the organisation need to be given more autonomy. They took a policy decision that there will be less control of superiors over subordinates. This increased the role of the subordinates in the organisation and now they were in a position to take numerous as well as important decisions. As a result, its business has diversified into many areas. Presently, it has its operations throughout the country with seven branches overseas. Its organisation structure has now changed into divisional structure and ten 10,000 people are working with the company.
(a) Identify the concept of management which helped the company to diversity into many areas and branches abroad.
(b) Explain five points of importance of the concept identified in (a) above. (All Indio 2019)
Answer:
(a) Concept of management which helped the company to diversify into many areas and branches abroad is ‘Decentralisation’.
(b) Decentralisation is important due to the following reasons:

(a) Greater motivation:
Decentralisation improves the morale and motivation of subordinates which is reflected in better work performance.

(b) Develops Initiative among subordinates:
Decentralisation helps to promote self-reliance and confidence amongest the subordinates. This is because when lower managerial levels are given freedom to take their own decisions, they learn to depend on their own judgement. It helps to promote initiative and creativity among them.

(c) Develops managerial talent for the future: As a result of decentrailsation, employees get more opportunities to develop new skills. It makes them better future managers.

(d) Quick dedsion-making: Decentralisation in an organisation, provides more freedom to lower level managers to take their own decisions. There is no need to get approval from higher level. It helps in quick and better decision-making.

(e) Facilitates growth and expansion: Decentralisation facilitates organisational growth through expansion and diversification. Top executives are not burdened by the administrative problems and complexities. So, they are able to plan expansion and diversification.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 62.
Explain the steps in the process of organising. (Compartment 2014)
Or
‘Organising involves a series of steps in order to achieve the desired goals’. Explain these steps? (Delhi 2014)
Or
Give the meaning of ‘organising’ as a function of management. Explain the steps in the process of organising. (Compartment 2013)
Answer:
‘Organising is a 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’.

Organising can be defined as a process that initiates implementation of plans by assigning jobs and working relationships and effectively deploying the resources for the attainment of identified and desired results or goals.

Steps in the process of organising:
Organising is the function of management, which coordinates the physical, financial and human resources and establishes productive relations among them for achievement of specific goals. Various steps involved in the organising process may be described as follows:
Organising Class 12 Important Questions and Answers Business Studies Chapter 5 -2
(i) Identification and division of work:
The organising function begins with the division of total work into smaller units. Each unit of total work is called a job. The division of work into smaller jobs leads to specialisation because jobs are assigned to different individuals according to their qualifications and capabilities. The division of work and assignment of jobs leads to systematic working.

(ii) Grouping the jobs and departmentalisation: After division of work, related and similar jobs are grouped together and put under one department.

This can be done in the following two ways:
(a) Functional departmentation Under this method, jobs related to common functions are grouped under one department.
(b) Divisional departmentation Under this method, jobs related to one product are grouped under one department.

(iii) Assignment of duties:
After dividing the organisation into specialised departments, each individual working in different /departments is assigned a duty, matching to his skill and qualifications. We can say, the work is assigned to those who are best fitted to perform it well.

(iv) Establishing reporting relationship:
Merely allocating the work is not enough. Each individual should also know from whom he has to take orders and to whom he is accountable. The establishment of such clear relationships helps to create a hierarchical structure and helps in coordination amongst various departments.

Question 63.
With the help of any four points explain the importance of ‘Decentralisation’ in an organisation. (Delhi 2014)
Or
‘Decentralisation is an important philosphy that implies selective dispersal of authority’. In the light of this statement explain any four points of importance of decentralisation, (Comportment 2014)
Or
What is meant by decentralisation? State any five points of importance of decentralisation. (Delhi 2012)
Ans.
Decentralisation means distribution of decision-making authority at various levels in the organisation. According to Louis A Allen,
‘Decentralisation refers to the systematic effort to delegate to the lowest level, all authority except that which can be exercised at the central point’.

Decentralisation is important due to the following reasons:
(a) Greater motivation: Decentralisation improves the morale and motivation of subordinates which is reflected in better work performance.

(b) Develops Initiative among subordinates: Decentralisation helps to promote self-reliance and confidence amongst the subordinates. This is because when lower managerial levels are given freedom to take their own decisions, they learn to depend on their own judgement. It helps to promote initiative and creativity among them.

(c) Develops managerial talent for the future: As a result of decentrailsation, employees get more opportunities to develop new skills. It makes them better future managers.

(d) Quick dedsion-making: Decentralisation in an organisation, provides more freedom to lower level managers to take their own decisions. There is no need to get approval from higher level. It helps in quick and better decision-making.

(e) Facilitates growth and expansion: Decentralisation facilitates organisational growth through expansion and diversification. Top executives are not burdened by the administrative problems and complexities. So, they are able to plan expansion and diversification.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 64.
Besides effective management and employee development delegation helps the organisation in different ways. Explain any four such ways. (Compartment 2014)
Or
What is meant by delegation of authority? Explain any four points of importance of delegation of authority. (Delhi; All India 2014)
Or
‘Delegation is a key element in effective organising’. Explain with the help of four reasons. (All India 2011)
Or
‘Effective Delegation leads to certain benefits in an organisation.’ Explain any three such benefits. (Compartment 2012)
Or
With the help of any four points, explain the importance of ‘delegation’ in an organisation. (Delhi 2014)
Or
Delegation is a key element in effective organising. How? State by giving any six reasons. (All India 2010)
Answer:
Delegation is a key element in effective organising. The delegation of authority is essential for the existence of an organisation. It helps in the efficient functioning of the organisation.

According to Theo Haimann, “Delegation of authority merely means the granting of authority to subordinates to operate within the prescribed limits”. Delegation ensures that the subordinates perform tasks on behalf of manager thereby, reducing his workload.

Benefits of effective delegation:1
The points highlighting the importance of delegation of authoriLy are: (any five)
(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.

(ii) Employee development As a result of delegation, employees get more opportunities to utiiise their talent. It also alows them to develop those skills which will enable them to perform complex tasks and assume those ‘responsibilities which will improve their career prospects.

(iii) Facilitating growth Delegation helps in the expansion of an organisation by providing a ready work force to take up leading positions in new ventures.

(iv) Basis of management hierarchy Delegation of authority establishes healthy superior subordinate relationships, which are the basis of hierarchy of management. It is the degree and flow of authority which determines ‘who is to report to whom’.

Question 65.
Give the meaning of ‘informal organisation’ and state any five features of it. (All India 2013; Delhi 2012)
Answer:
Informal organisation is an aggregate of inter-personal relationships without any conscious purpose but which may contribute to joint results. It emerges on its own in a natural manner within the formal organisation.

Features of informal organisation:
(i) Based on formal organisation This is based on formal organisation where people also have informal relations. It means first of all formal organisation is established and then informal organisation is created out of it.

(ii) No written rules and procedures In this organisation, there are no written rutes and procedures to govern inter-relationship. But there are group norms which have to be observed.

(iii) Independent channels of communication In this organisation, relations among different people are not defined because a person at the lowest rank can have direct contact with the person at the highest level.

(iv) Not deliberately created It is not deliberately created. It emerges out of mutual relationship and tastes.

(v) No place on organisation chart k has no place on the properly prepared organisation chart. Moreover, there is no information about it even in the organisation manual.

Question 66.
Differentiate between functional and divisional structure of organising on the basis of the following?
(i) Meaning
(ii) Formation
(iii) Specialisation
(iv) Responsibility
(v) Managerial development
(vi) Cost involved (Foreign 2014)
Or
Differentiate between functional and divisional structure of organising on any six bases. (Compartment 2013)
Answer:
Differences between functional and divisional structure are:

Basis Functional Structure Divisional Structure
Meaning Grouping of jobs of similar nature under functions and organising these functions as department creates functional structure. Organisations with diversified activities organise their structure with separate business units or divisions, which is known as divisional structure.
Formation It is formed on the basis of functions performed in the organisation. It is formed on the basis of product lines, supported by functions.
Specialisation It leads to functional specialisation. It leads to product specialisation.
Responsibility It is difficult to fix responsibility on a department. It is easy to fix responsibility for performance.
Managerial Less scope of managerial development as High degree of managerial development with
development specialised functions are performed. ease, due to autonomy and performance of multiple functions.
Cost involved It is economical as there is no duplication. It is costly as there is duplication of work and resources.

Question 67.
Give the meaning of essential elements of ‘Delegation’. (All Indio 2013)
Or
‘Delegation is the entrustment of responsibility and authority to another and the creation of accountability for performance’. In the light of this statement, identify and explain the essential elements of delegation. (All India 2012; Delhi 2010)
Answer:
Delegation means granting of authority to subordinates to operate within the prescribed limits.
Elements of delegation are:
(i) Authority: It refers to the right of an individual to command his subordinates and to take action within the scope of his position.
(a) Authority is needed to discharge a given responsibility to the subordinates.
(b) It flows from top to bottom of the scalar chain.
(c) The superior has authority over the subordinates. It is highest at the top management. However, it reduces as we move downward in the corporate hierarchy.

(ii) Responsibility: It is the obligation of a subordinate to properly perform the assigned duties.
(a) Responsibility arises from a superior-subordinate relationship because the subordinate is bound to perform the duty assigned to him by his superior.
(b) Responsibility flows upwards, i.e. from bottom to top. A subordinate will always be responsible to his superior.

(iii) Accountability:
(a) Accountability implies ‘being answerable for the fined outcome of the assigned task’.
(b) Accountability flows upwards, i.e. a subordinate will be accountable to his superior for satisfactory performance of the assigned work.

Question 68.
What is meant by formal organisation? Explain any five features of formal organisation. (All India 2012; Delhi 2010)
Answer:
Formal organisation is an official setup. It clearly spells out what exactly is the role of each job and position in an organisation.
Features of formal organisation are as follows:
(i) Defined inter-relationship: It is a sort of arrangement which clearly defines mutual relationship. Everybody knows their authority and responsibilities. This clearly shows who will be reporting to whom.

(ii) Based on rules and procedures: It is important to observe all the pre-determined rules and procedures in the formal organisation. The objectives laid down under planning are thus achieved.

(iii) Based on division of work: The chief basis of formal organisation is the division of work. It is thus that connects the efforts of different departments with each other.

(iv) Deliberately created: It is deliberately created in order to achieve the objectives of the organisation in an easy manner.

(v) It is more stable: Changes cannot be introduced because of the needs of individuals and their wishes. Therefore, it is more stable.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 69.
What is meant by informal organisation? State any three advantages and any two disadvantages of this form of organisation. (All India 2012; 2011)
Answer:
Informal organisation is an aggregate of inter-personal relationships without any conscious purpose but which may contribute to joint results. According to Keith Davis, ‘Informal organisation is the network of personal and social relationships not established or required by formal organisation but arising spontaneously as people associate with one another.

(ii) Three advantages of informal organisation:
Informal organisation is an aggregate of inter-personal relationships without any conscious purpose but which may contribute to joint results. It emerges on its own in a natural manner within the formal organisanon.
Various advantages of informal organisation are:

  • It leads to faster spread of information as well as quick feedback.
  • It fulfills the social needs of the members.
  • It contributes towards fulfillment of organisational objectives by compensating for Inadequacies in the formal organisation.

(iii) Two disadvantages of informal organisation:
The limitations of informal organisation are as follows: (any three)

  • According to a survey, 70% of information spread through informal organisa tional structure are rumours and can mislead the employees.
  • It does not form any definite structure for smooth working of an organisation.
  • It opposes the policies and changes of management.
  • It gives importance to individual interest as compared to orgnisational interest.

Question 70.
What is meant by divisional structure of an organisation? For which type of business enterprises is this structure most suitable? State any four advantages of this form of organisational structure. (All India 2011)
Answer:
For details of divisional structure of an organisation,
Divisional structure Under the divisional structure, an organisation is divided into different divisions or units on the basis of products or geographical area. Each division is a self-contained, semi-autonomous business unit. Each unit has a divisional manager responsible for performance and who has authority over the unit. There are certain matters, which are determined at the apex level only, viz goal determination and policy formation.

It is suitable for those enterprises where:

  • A large variety of products are manufactured.
  • An organisation grows and needs more employees and more departments.

Advantages of divisional structure are as follows: (any four)

  • Product specialisation helps in the development of varied skills.
  • It helps in the fixation of responsibility as divisional heads are accountable for profits, revenues and costs related to their departments.
  • It promotes flexibility and initiative because each division functions as an autonomous unit which leads to faster decision-making.
  • It facilitates expansion and growth as a new division can be added without interrupting the existing operations.
  • All the activities related to one type of product are grouped under one division, which brings integration and coordination in the activities.

Question 71.
What is meant by functional structure of organising? Explain its any two advantages and any two limitations. (Delhi (C) 2011)
Answer:
Functional structure of organisation (Meaning and advantages)
Functional structure Under functional structure, an organisation is divided different departments or units on the basis of major functions performed. All departments report to a coordinating head.

Advantages of functional structure:
The advantages of functional organisational structure are: (any three)

  1. A functional structure provides occupational spedalisation, since, emphasis is placed on specific functions.
  2. It promotes control and coordination within a department because of similarity in the task being performed.
  3. It increases managerial and operational efficiency and this results in higher profit.
  4. It makes training of employees easier as it focuses on a limited range of skills.
  5. It ensures the performance of ail activities necessary for achieving organisatlonal objectives. Due attention can also be given to different functions.

Limitations of functional structure:
The limitations of functional organisational structure are:
(î) Specialists working in different departments may not be able to see the perspective of the organisation as a whole, e.g. the production department may get involved in producing a quality product without regard to the fact it might not sell at a high price. As a result, it becomes difficult to achieve the objectives of the organisation.

(ii) It becomes difficult to hold a particular department responsible for any problem, e.g. when sales are declining, who is responsible? It is difficult to determine whether the marketing department or the production department is responsible for not producing a quality product.

(iii) Functional heads do not obtain experience required for top management positions. Spedalised skills and narrow perspective may lead to inflexibility.

(iv) Conflict often arises when the interests of two or more departments are not compatible.

Question 72.
What is meant by divisional structure of organising? Explain its any two advantages and any two limitations. (Delhi (C) 2011)
Answer:
Divisional structure of organisation (Meaning and advantages):
Divisional structure Under the divisional structure, an organisation is divided into different divisions or units on the basis of products or geographical area. Each division is a self-contained, semi-autonomous business unit. Each unit has a divisional manager responsible for performance and who has authority over the unit. There are certain matters, which are determined at the apex level only, viz goal determination and policy formation.

It is suitable for those enterprises where:

  • A large variety of products are manufactured.
  • An organisation grows and needs more employees and more departments.

Advantages of divisional structure are as follows:

  • Product specialisation helps in the development of varied skills.
  • It helps in the fixation of responsibility as divisional heads are accountable for profits, revenues and costs related to their departments.
  • It promotes flexibility and initiative because each division functions as an autonomous unit which leads to faster decision-making.
  • It facilitates expansion and growth as a new division can be added without interrupting the existing operations.
  • All the activities related to one type of product are grouped under one division, which brings integration and coordination in the activities.

The limitations of divisional structure of an organisation are as follows

  • Such a structure involves heavy financial costs due to the duplication of supporting functional units for the divisions, It also requires adequate number of capable managers to take charge of their respective divisions.
  • All the divisions work as autonomous units. Divisional heads may gain power and ignore organisational interests.
  • Conflict may arise between different divisions on allocation of funds and other resources.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 73.
Shreyskar runs a locks manufacturing factory. He wants to expand his business. For expansion, he contemplates to enter into the manufacturing of locks for cars as an ancillary company. By doing this, his company will be able to provide many products to car manufacturers. Which type of organisational structure will he choose for his factory and why? State any five advantages of this organisational structure. (All india 2010)
Answer:
Divisional structure will be chosen for this factory because factory is producing more than one type of products.

Advantages of divisional structure are as follows:

  • Product specialisation helps in the development of varied skills.
  • It helps in the fixation of responsibility as divisional heads are accountable for profits, revenues and costs related to their departments.
  • It promotes flexibility and initiative because each division functions as an autonomous unit which leads to faster decision-making.
  • It facilitates expansion and growth as a new division can be added without interrupting the existing operations.
  • All the activities related to one type of product are grouped under one division, which brings integration and coordination in the activities.

Multiple Choice Questions

Question 1.
Organising is a …………… of management.
(a) rule
(b) task
(c) function
(d) policy
Answer:
(c) function

Question 2.
What is dividing the whole concern into independent units and departments called?
(a) Decentralisation
(b) Departmentation
(c) Division
(d) Functionalisation
Answer:
(b) Departmentation

Hint:
Departmentation is the foundation of organisation structure. Departmentation means division of work into smaller units and their re-grouping into bigger units (departments) on the basis of similarity of features.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 3.
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the manager should …………… authority.
(a) leave
(b) delegate
(c) decentralise
(d) rise
Answer:
(b) delegate

Hint:
Delegation of authority means division of authority and powers downwards to the subordinate. Delegation is about entrusting someone else to do part of your job.

Question 4.
According to Allen, ‘Centralisation’ is the systematic and consistent reservation of …………… at central points in the organisation.
(a) purpose
(b) responsibility
(c) aims
(d) authority
Answer:
(d) authority

Question 5.
Meeting in a cafeteria and drama group in an company are example of …………… organisation.
(a) formal
(b) informal
(c) divisional
(d) matrix
Answer:
(b) informal

Hint:
Under informal organisation, through frequent interaction and communication, people tend to form? social friendly groups to satisfy their social needs. Examples-meeting in a cafeteria, drama group and cricket teams of organisational personnel.

Question 6.
In an organisation, the Functional head and Marketing Director directs the subordinates throughout the organisation in his particular area. This means that subordinates receive orders from several specialists or managers working above them. This style of working is followed in which organisation?
(a) Divisional organisation
(b) Functional organisation
(c) Staff organisation
(d) Matrix organisation
Answer:
(b) Functional organisation

Hint:
Functional organisation has been divided to put the specialists in the top position throughout the enterprise.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 7.
Delegation of authority in a way gives enough room and space to the subordinates to flourish their abilities and skill. How?
(a) Subordinates get a feeling of importance
(b) Subordinates get motivated to work
(c) Breaks the monotony of the subordinates
(d) All of the above
Answer:
(d) All of the above

Hint:
Delegation is the assignment of any responsibility or authority to another person (normally from a manager to a subordinate) to carry out specific activities, such as starting on proper tires during a wet race. It is one of the core concepts of management leadership.

Question 8.
“Organisation is the harmonious adjustment of specialised parts of the accomplishment of some common purpose or purposes.” What does this statement imply?
(a) It implies the features of organisation
(b) It implies the importance of organisation like specialisation, adaptation to change etc.
(c) It refers to the process of organisation which includes assignment of duties
(d) None of the above
Answer:
(b) It implies the importance of organisation like specialisation, adaptation to change etc.

Hint:
Organising is the process of defining and grouping activities and establishing authority relationships among them. The above statement gives us the importance of organisation which states clarity in relationships, specialisation and such others.

Question 9.
There is a board meeting going on for the Perfect Solutions Ltd. Two of the top level managers, Mr. Kunal and Mr. Rahul are of a different view when it comes to the kind of working structure of the organisation. Mr. Kunal says that the organisation deals in variety of products, the growth prospects of the organisation are high and that it wants to expand to different territories. Which structure is he fighting for?
(a) Divisional structure
(b) Functional structure
(c) Matrix structure
(d) Line structure
Answer:
(a) Divisional structure

Hint:
The divisional structure or product structure consists of self-contained divisions. A division is a collection of functions which produce a product. It also utilises a plan to compete and operate as a separate business or profit centre.

Organising Class 12 Important Questions and Answers Business Studies Chapter 5

Question 10.
Which of the following is an ideal situation?
(a) Authority < Responsibility
(b) Authority > Responsibility
(c) Authority = Responsibility
(d) None of the above
Answer:
(c) Authority = Responsibility

Hint:
The authority can be delegated to a subordinate for the purpose of ease in doing work. The authority is granted to the juniors in a prescribed limit. Even though the task is being handled by the lower level, the ultimate accountability remains of the superior who has delegated the authority. Thus, responsibility is also vested in him.

Question 11.
What is the optimum ratio for an organisation to work effectively and efficiently?
(a) Complete centralisation
(b) Mix of centralisation and decentralisation
(c) Complete decentralisation
(d) Both independent in the same organisation
Answer:
(b) Mix of centralisation and decentralisation

Hint:
Every organisation must have a blend of centralisation and decentralisation. As an organisation grows, there is a tendency to move towards decentralisation. At the same time, decisions need to be centralised in priority and key result areas.

Question 12.
Which of the following is not an advantage of a functional organisation?
(a) Accountability
(b) Clarity
(c) Flexibility
(d) Specialisation
Answer:
(c) Flexibility

Question 13.
In centralised organisations, the decision-making authority is retained by the ……………
(a) top level management
(b) middle level management
(c) lower level management
(d) external stakeholders
Answer:
(a) top level management

Question 14.
…………… is the obligation to perform the assigned task.
(a) Authority
(b) Responsibility
(c) Accountability
(d) Permissibility
Answer:
(b) Responsibility