Educational Galaxy

Organising — EG's own notes, in simple words

Book: Business Studies — Part I (CBSE, Class 12)  |  Chapter 5 (Book Chapter 5)  |  Medium: English

This page carries Educational Galaxy's own original notes — not textbook text. No official NCERT PDF is provided here.

Diagram (labels on the image): The organising process in order: divide work, group it into departments, assign duties, delegate authority, and fix who reports to whom.

A manager assigning tasks to department teams — work divided, grouped and delegated.

1. Meaning and steps

Organising is identifying and grouping activities, assigning duties, delegating authority and creating responsibility, and establishing relationships so that people can work together towards the objectives. It follows planning: the plan says what is to be done, and organising arranges who will do it and with what authority.

The organising process runs in steps: identification and division of work (breaking the total work into manageable jobs); departmentalisation (grouping similar jobs into departments); assignment of duties (giving each person a specific job); establishing reporting relationships (deciding who reports to whom, creating the chain of command).

2. Organisation structure and departmentalisation

Organisation structure is the framework of relationships: who reports to whom, and who has authority over whom. A functional structure groups jobs by function — production, marketing, finance, personnel — and suits firms with a single product. A divisional structure groups jobs by product or territory, with each division having its own functional departments, and suits firms with many products or wide markets.

Functional structure has the advantage of specialisation and economy, but it suffers from narrow functional thinking and difficulty in fixing responsibility for profit. Divisional structure fixes responsibility for each product's profit clearly, but it duplicates functional staff in every division and costs more.

3. Delegation and decentralisation

Delegation is the transfer of authority and responsibility from a superior to a subordinate, with accountability remaining with the superior. It has three elements: authority (the right to give orders), responsibility (the duty to perform the task), and accountability (answerability for the result). Authority can be delegated, responsibility can be delegated, but accountability can never be delegated — a manager remains answerable for work delegated to a subordinate.

Decentralisation is the systematic dispersal of decision-making authority to lower levels throughout the organisation. Delegation is between two people; decentralisation is a policy for the whole organisation. Decentralisation is needed because top management cannot take every decision, it develops managers, speeds up decisions, and improves control through responsibility centres.

Going further — full chapter coverage

Formal versus informal organisation — the full picture. A formal organisation is deliberately designed: defined roles, authority, rules and reporting lines, created to achieve goals. An informal organisation grows spontaneously from friendships, shared interests and social interaction — it has no written rules and no fixed hierarchy. Formal organisation gives order and accountability but can be rigid; informal organisation gives fast communication, social satisfaction and practical help, but it can spread rumours and resist change. The exam point students miss: informal organisation is not bad — wise managers use it (through the grapevine and social bonds) instead of fighting it.

Functional versus divisional structure, compared properly. In a functional structure work is grouped by function (production, marketing, finance, HR). Its strengths are specialisation, coordination within a function and efficient use of experts; its weaknesses are functional empires (each department pursues its own goals), poor coordination across functions and inflexibility when the firm diversifies. In a divisional structure work is grouped by product or region, each division acting almost like a separate company. Its strengths are clear accountability for each product, flexibility and development of general managers; its weaknesses are duplication of functions across divisions, conflict between divisions and higher costs. A question asking "which structure and why" should name the firm's situation (one product → functional; many products → divisional) and then give two strengths.

Delegation: three elements, one rule. Authority is the right to command and use resources; responsibility is the obligation to perform an assigned task; accountability is being answerable for the final result. Authority and responsibility can be delegated downward; accountability cannot — the manager who delegates remains answerable to his own superior. That is why, when a delegated report is wrong, the manager (not the assistant) answers for it. Delegation is always between two people (a superior and a subordinate) and is a must for every manager; decentralisation is the systematic dispersal of decision-making authority through the whole organisation — it is delegation extended into a policy, and it is optional.

Why decentralisation matters. It relieves the burden on top management, speeds up decisions (decisions are taken where the problem is), encourages initiative at lower levels, develops future managers, and makes control easier because each unit's performance can be judged separately. Centralisation (authority kept at the top) suits small firms and emergencies; decentralisation suits large, diversified firms. When a question gives a large firm with many products and asks whether to centralise or decentralise, the answer is decentralise — with two of the reasons above.

At a glance — chart / table

Basis	Functional structure	Divisional structure
Grouping	By function (production, marketing…)	By product or territory
Suits	Single-product firms	Multi-product or wide-market firms
Advantage	Specialisation and economy	Clear responsibility for each product's profit
Disadvantage	Narrow functional thinking	Duplication of staff; higher cost

Practice set — try it yourself

1. A manager gives an assistant authority to buy raw materials but remains answerable for the purchase. Which element stays with the manager? Hint: One of the three elements of delegation can never be transferred.
2. A firm makes five different products and groups work product-wise. Name the structure. Hint: Grouping by product is one structure; by function is the other.
3. State the four steps of the organising process in order. Hint: Divide, group, assign, relate.
4. Give two advantages of decentralisation. Hint: Think: faster decisions, development of managers.
5. Distinguish delegation from decentralisation. Hint: One is between two people; the other is a policy for the whole firm.

Questions with Answers

1. Define organising. Answer: Organising is the process of identifying and grouping activities, assigning duties, delegating authority and establishing relationships so that people work together to achieve the objectives.
2. What is departmentalisation, and why is it done? Answer: It is grouping similar jobs into departments. It is done so that work of the same kind is done together, specialisation is achieved, and coordination within each group is easier.
3. A manager delegates the task of preparing a report to an assistant, and the report is wrong. Who is accountable, and why? Answer: The manager is accountable, because accountability cannot be delegated. The assistant is responsible for the task, but the manager remains answerable for the result.
4. State two advantages of a functional structure. Answer: It promotes specialisation, since each department concentrates on one function, and it is economical, because functional staff are not duplicated across products.
5. State two disadvantages of a divisional structure. Answer: Each division duplicates functional staff, raising costs, and divisions may compete with each other instead of cooperating for the whole firm.

Extension Questions with Answers

Board-style extension practice, written by Educational Galaxy. These are practice questions, not real past-year questions.

1. A company has one product but its production and marketing departments blame each other for falling sales. Identify the structure, state its weakness shown here, and suggest one remedy. Answer: Functional structure. The weakness is poor coordination across functions — each department pursues its own targets (functional empires). Remedy: cross-functional coordination through committees, common targets, or a coordinating manager.
2. A manager delegates buying authority to an assistant but the purchase turns out defective. Who is accountable to top management, and why can accountability not be delegated? Answer: The manager is accountable. Accountability is answerability for the final result — the manager remains answerable to his own superior even though authority and responsibility were passed down. It cannot be delegated because it is the obligation that makes delegation safe.
3. State two advantages of a divisional structure and two disadvantages. When is it preferred over a functional structure? Answer: Advantages: clear accountability for each product's profit, and flexibility to respond to product-specific markets. Disadvantages: duplication of functions (each division has its own HR, finance) raising costs, and conflict between divisions. Preferred when a firm has many products or operates in many regions.
4. Workers in a factory have formed a cricket team and share news faster through it than through official notices. Name the organisation type and state one advantage and one disadvantage of it. Answer: Informal organisation. Advantage: fast communication and social satisfaction. Disadvantage: it can spread rumours and may resist official changes.
5. Distinguish delegation from decentralisation on the basis of scope and freedom of action. Answer: Delegation is narrow (between two people, one task) and the subordinate acts within limits set by the superior. Decentralisation is wide (a policy for the whole organisation) and gives lower levels real freedom to decide within their areas.

Board Exam Questions — board-pattern practice

These questions are written by Educational Galaxy in board-exam style for practice. They are not claimed to be real past-year questions.

1. Explain the steps in the process of organising. Answer: Identification and division of work: breaking total work into manageable jobs. Departmentalisation: grouping similar jobs into departments. Assignment of duties: giving each person a specific job matching their ability. Establishing reporting relationships: fixing who reports to whom, so that authority and responsibility are clear.
2. Distinguish functional structure from divisional structure on any four bases. Answer: Basis of grouping: function versus product or territory. Suitability: single product versus multiple products. Responsibility for profit: difficult to fix in functional, clear per division in divisional. Cost: functional is economical, divisional duplicates staff and costs more.
3. Explain the three elements of delegation and state which one cannot be delegated. Answer: Authority: the right to give orders and take decisions. Responsibility: the duty to perform the assigned task. Accountability: answerability for the result. Authority and responsibility can be delegated, but accountability cannot — the delegating manager remains answerable.
4. Decentralisation is an extension of delegation. Explain. Answer: Delegation transfers authority from one superior to one subordinate. Decentralisation spreads decision-making systematically to all levels, so that decisions are taken at the level nearest the work. Every decentralised organisation uses delegation, but delegation alone does not make an organisation decentralised.
5. A company with one product finds coordination between production and marketing difficult because each department pursues its own targets. Identify the structure and suggest how the problem can be reduced. Answer: It is a functional structure. The problem — functional thinking — can be reduced by coordination through committees, common objectives, and clear reporting relationships that make departments serve the organisation's goal rather than their own.