BUSINESS STUDIES

CLASS XII

Chapter: Organising - Summarised Elaboration

I. Meaning and Importance of Organising:
• Meaning: 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 enabling people to work most effectively together in accomplishing objectives.
It bridges the gap between planning and actual performance.
• Steps in the Process of Organising:
1. Identification and Division of Work: The total work is divided into specific
activities that can be performed by individuals.
2. Departmentalisation: Grouping similar or related jobs into larger units called
departments (e.g., production, marketing, finance, HR).
3. Assignment of Duties: Allocating duties to individuals according to their skills and
qualifications.
4. Establishing Reporting Relationships: Defining who reports to whom, creating a
hierarchy and clear lines of communication.
• Importance of Organising:
• Benefits of Specialisation: Leads to systematic allocation of jobs, reduces
workload, and increases efficiency.
• Clarity in Working Relationships: Establishes clear lines of authority and
responsibility, reducing ambiguity.
• Optimum Utilisation of Resources: Avoids overlapping of work and ensures
efficient use of all resources.
• Effective Administration: Provides a clear structure, enabling better control and
coordination.
• Adaptation to Change: The organisational structure can be modified to adapt to
changes in the business environment.
• Development of Personnel: Delegation of authority provides opportunities for
subordinates to develop their skills and capabilities.
• Expansion and Growth: A well-designed organisational structure facilitates
expansion and diversification of business activities.
II. Organisational Structure:
• Meaning: The framework within which managerial and operating tasks are performed. It
specifies the relationships between people, work, and resources.
• Types of Organisational Structure:
• Functional Structure:
• Meaning: Groups jobs of similar nature under functional departments (e.g.,
production, marketing, finance, HR).
• Suitability: Large organisations with a single product line or a narrow range
of products, requiring high degree of specialisation.
• Advantages: Specialisation, efficient resource utilisation, better control, easy
training.
• Disadvantages: Functional empires, difficulty in inter-departmental
coordination, inflexibility, conflict of interests.
• Divisional Structure:
 • Meaning: Groups activities on the basis of different products or different
geographical areas. Each division is a self-contained unit with its own
functional departments.
• Suitability: Multi-product companies or large organisations operating in
diverse markets.
• Advantages: Product specialisation, accountability for performance,
flexibility and initiative, facilitates expansion and growth.
• Disadvantages: Conflict between divisions, duplication of resources,
increased costs, focus on divisional objectives rather than overall
organisational goals.
III. Delegation of Authority:
• Meaning: The process of entrusting responsibility and authority to a subordinate and
creating accountability for performance. It is a prerequisite for the efficient functioning of
an organisation.
• Elements of Delegation:
1. Responsibility: The obligation of an individual to properly perform an assigned
task. (Cannot be fully delegated)
2. Authority: The right of an individual to command his subordinates and to take
action within the scope of his position. (Can be fully delegated)
3. Accountability: The answerability for the outcome of the assigned task. (Cannot be
delegated at all; ultimate accountability remains with the superior).
• Importance of Delegation:
• Effective Management: Allows managers to focus on important tasks, leading to
better decision-making.
• Employee Development: Provides opportunities for subordinates to learn and
grow, enhancing their skills and confidence.
• Motivation of Employees: Empowers employees, making them feel valued and
responsible.
• Facilitates Growth: Allows for easier expansion as new positions can be created
and authority delegated.
• Basis of Management Hierarchy: Establishes a chain of command, defining
reporting relationships.
• Better Coordination: Clear definition of duties and authority leads to smoother
functioning.
IV. Decentralisation:
• Meaning: Systematic delegation of authority throughout all levels of management and in
all departments. It is an extension of delegation. While delegation is about sharing
authority between two individuals, decentralisation is about systematically distributing
authority to the lowest levels possible.
• Decentralisation vs. Centralisation:
• Centralisation: Retention of decision-making authority by top management.
• Decentralisation: Systematic dispersal of decision-making authority to lower
levels.
• It's a matter of degree; no organisation is fully centralised or fully decentralised.
• Importance of Decentralisation:
• Develops Initiative Among Subordinates: Encourages self-reliance and creativity.
• Develops Managerial Talent for the Future: Provides training ground for future
managers.
• Quick Decision-Making: Decisions are made closer to the point of action.
• Relieves Top Management Burden: Frees up top management for more strategic
tasks.
 • Facilitates Growth: Promotes flexibility and responsiveness to local conditions.
• Better Control: Performance can be evaluated at each level, enabling timely
corrective actions.

- MS PAYEL GHOSH..
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