Chapter 5 Organising NCERT Solutions Class 12

NCERT Solution for Class 12 Business Studies Chapter 5 Organising is another significant step in the ladder that needs to be studied thoroughly to score well in the upcoming 12th board examinations. The chapter showcases different methods of organizing, their importance in an organization, and how the workload is significantly reduced with effective implementation of the same.

SimplyAcad has crafted the best NCERT Solution for Class 12 Business Studies Chapter 5 Organising for students to solve the exercises of the chapter. It will ensure that students gain in-depth knowledge of the various concepts discussed in the chapter.

NCERT Solution for Class 12 Business Studies Chapter 5 Organising

Very Short Answer Questions:

1. Identify the network of social relationships which arises spontaneously due to interaction at work.

Informal organization is referred to as the social relationship network that arises naturally as a result of interaction at work. The emergence of an informal organization is a from social interaction and free flow of communication between the employees of the organisation.

2. What does the term ‘span of management’ refer to?

The term span of management refers to the number of subordinates a manager can handle efficiently. It determines the nature and structure of an organization. There are two types of span of management: 1) Narrow and 2) Wide

The span of management is dependent on various factors such as leadership, control, decentralization extent in the organization, nature of work, and the working ability of the subordinates.

3. State any two circumstances under which the functional structure will prove to be an appropriate choice.

The functional structure requires grouping and organizing similar activities. Under a functional organization, each group functions separately and specializes in its work. a financial structure is suitable for organizations that are large and which have various functions.

Here are two circumstances that under functional structure is appropriate. They are

1. Large-sized organizations need to have a functional structure to operate smoothly. There will be many departments within the organization, and making differentiation based on departments is very much helpful for an organization. It helps in improving the efficiency of the managers so that the work progresses smoothly.

2. A high degree of coordination is required for managing various functions. It is done to improve efficiency. If an organization has a clear division of work, a functional structure helps promote coordination between the various departments and thereby ensures all functions go on smoothly.

4. Draw a diagram depicting a functional structure.

 

5. A company has its registered office in Delhi, a manufacturing unit in Gurgaon, and a marketing and sales department in Faridabad. The company manufactures consumer products. Which type of organizational structure should it adopt to achieve its target?

For this company, the type of organizational structure that needs to be followed is functional organization. This can be justified using the following points:

1. Being a large organization, requires proper departmentalisation. It helps in increasing the efficiency of the managers and also provides a great degree of control over the activities of the organization.

2. An organization like this is managing multiple functions simultaneously where coordination of a high degree is required. It can be achieved smoothly by arranging a proper division of activities among various departments under a functional structure.

3. Specialisation will be promoted under functional structure, and it will help in performing all the diverse functions effortlessly.

Short Answer Questions:

1. What are the steps in the process of organizing?

The following steps are involved in the process of organizing:

1. The first step that is involved in organizing is identifying the number of activities and accordingly dividing them as per the plan. Actions are taken as per the defined objectives. Having a clear division of work keeps duplicity at bay.

2. Actions that were fixed earlier are now arranged in groups based on similarity. This ensures that the department specializing in the work has access to it.

3. The next step in organizing is assigning the roles and responsibilities to the person best suited for the job. Work is allocated as per the skills of the members.

4. The next part of organizing is the presence of a hierarchy in an organization. It is very helpful when a person is aware of his immediate superior. A defined organizational structure helps in ensuring the successful functioning of the activities of the organization.

2. Discuss the elements of delegation.

Delegation is the process of transferring authority and responsibility to subordinates in an organization. The following are the elements of an organization:

1. Delegation provides an individual with the power to direct or command a subordinate. This enables them to make decisions regarding what needs to be done and who will be doing that. The chain of command starts from the top level of management and ends at the lower level of management. As authority is delegated, it helps in maintaining discipline and obedience.

2. Responsibility is the part where the subordinate has to adhere to the given task. The duty provided should be performed by the subordinate properly. The responsibility of a subordinate is towards their superior.

3. The superior must be accountable for the outcome of the work that has been assigned by them to their subordinate. The superior should keep track of the work done by the subordinate and must see that it is done satisfactorily.

3. How does an informal organization support a formal organization?

The network of relations that is created from the social interactions taking place outside of the office is called an informal organization. It traces its origin to formal organizations and is not created at will by management. These relationships are built on friendship that develops between co-workers. It supports formal organizations in the following ways:

1. A free flow of communication is established in an informal organization which leads to communication channels outside the organization. In this way, communication spreads easily and assists the formal organization.

2. In informal organizations, people develop good bonds among themselves and thus towards the organization. It helps in increasing coordination among the members and also promotes mutual trust and respect. The result of such bonding is it lowers the level of conflict.

3. Informal organizations help in fulfilling organizational objectives. Managers can get to know about the workers’ issues and ask for suggestions on improving the work conditions. Happy workers will contribute more contributing towards an organization.

4. It helps in building a harmonious work environment by encouraging cooperation among workers and managers. A peaceful work environment is more productive.

5. An informal organization helps in increasing efficiency among the workers. The workers understand their importance and actively contribute towards organizational growth.

4. Can a large-sized organization be centralized or decentralized? Give your opinion.

Any organization, regardless of its size, will find it difficult to function properly, either as centralized or decentralized, because there needs to be a balance between the two systems to make the best possible utilization.

In centralization, the decision-making capacity or authority is restricted to the people sitting at the top level of management. All the decisions regarding the organization are taken by the top-level management. In stark contrast to this system, decentralization works by delegating the decision-making capacity to the managers at a lower level. There is a distribution of decision-making capabilities that is spread evenly.

For an organization to perform at its best, it has to follow a mix of centralization and decentralization. A growing organization cannot rely on centralization to manage all the functions. It would slow down the decision-making process for the organization. Hence, a decentralized system helps ease the load on decision-making. Also, an organization cannot let all the decisions be made by the lower level management, as it will be a risk to the integrity of the organization.

Therefore, there should be a balance between centralization and decentralization in an organization.

5. Decentralisation is extending delegation to the lowest level. Comment.

Decentralization and delegation are similar. Both are about transferring responsibility and authority. In the case of delegation, authority is shared among two individuals, i.e., superior delegating authority to subordinate, whereas in decentralization, the authority is shared at multiple levels. Therefore, it can be said that the act of delegating authority at each level of management promotes decentralization, while the act of decentralization helps promote delegation at the lowest level.

6. Neha runs a factory wherein she manufactures shoes. The business has been doing well, and she intends to expand by diversifying into leather bags as well as western formal wear, thereby making her company a complete provider of corporate wear. This will enable her to market her business unit as the one-stop for working women. Which type of structure would you recommend for her expanded organization and why?

The organizational structure that Neha can follow is the divisional organization structure. Under this system, there will be separate departments which will take care of different products. There will be separate personnel for managing the departments.

The divisional structure is recommended for the following reasons:

1. Each department will have a head, who will be accountable for the overall performance of the department. The performance of individual departments can be determined easily; the best and worst performers can be identified, and necessary steps can be taken.

2. Decision-making will be quick as each department has a specialist to manage it.

3. Having a divisional structure allows for adding more divisions without impacting the functions of the organization.

7. The production manager asked the foreman to achieve a target production of 200 units per day, but he didn’t give him the authority to requisition tools and materials from the store’s department. Can the production manager blame the foreman if he is not able to achieve the desired target? Give reasons.

No, in this case, the production manager cannot blame the foreman as he was provided with responsibility, but he was not given authority. With responsibility, there should be an authority also, which is essential for a task to be completed.

Long Answer Questions:

1. Why delegation is considered essential for effective organizing?

Delegation is the transfer of authority from a superior to a subordinate. It helps in reducing the workload on the manager so that the manager can focus on areas that need more attention. It also allows subordinates to become more responsible and makes way for more growth opportunities.

The following points show the importance of delegation, which is effective in organizing:

1. By delegating work to the subordinate, the managers can focus on other areas, which improves the efficiency of managers.

2. Employees also get the chance to perform well and improve their skills. It helps in developing the skillset of the employees.

3. The act of delegation gives employees responsibility, and it also motivates the employees, as they feel that they belong to the organization and their contributions are recognized.

4. Delegation helps in the career development of many managers as they take up more roles in the organization. It also helps workers to gain more experience, which helps in career growth.

5. It helps in forming an organized structure in the organization. The lines of the hierarchy are well-defined, which makes processes smooth.

6. It increases coordination among managers and workers. There is a well-defined working relationship, which makes things more organized in the company.

2. What is a divisional structure? Discuss its advantages and limitations.

Divisional structure is a system where work is divided into different departments. There is a separate head for each department, and there is no overlapping of responsibilities in such a structure. The field of work is clearly defined.

Here are some of the advantages of a divisional structure.

1. Managers and workers get ample opportunity to grow in their departments and become specialists in the product. It helps increase the efficiency of the workforce.

2. Each division or department can be tracked individually for their performance. It leads to the identification of the best and worst-performing divisions.

3. The divisions are independent to make their own decisions, which makes the decision-making process quick. Rapid decision-making enables faster implementation, which is beneficial for the organization.

4. Having a divisional structure allows for adding more divisions without impacting the functions of the organization.

The disadvantages can be highlighted as

1. There can be conflicts among departments about the allocation of funds and resources.

2. There can be a rise in cost due to duplication of work among departments. There might be some activities that are common across all departments, and employing separate personnel for each department for these activities can drive the cost higher.

3. There can be a chance that due to more focus on improving the individual departments, the growth of the organization as a whole can get hampered.

3. Decentralisation is an optional policy. Explain why an organization would choose to be decentralized.

Decentralisation is the delegation of authority among various levels in an organization ranging from the top level to the lower level. An organization doesn’t need to follow decentralization, but it is beneficial in the long run. Here are a few points that will support the statement of why an organization wants to be decentralized.

1. Decentralisation allows lower-level managers to be independent in making their decisions. It gives more confidence and a feeling of responsibility to the managers.

2. Decentralisation provides the managers with an opportunity to grow and be a part of the growth of the organization. It helps in skill development and the ability to tackle new challenges. It also provides a platform to showcase their talent and get noticed for more responsible positions.

3. Decentralisation helps analyze the performance of every department and also determine how each one of them is helping the organization in fulfilling its objectives.

4. Decision-making is faster in a decentralized organization. There is no need to get approval from the top level to perform basic-level functions, it helps to avoid delays in decision-making.

5. The decentralization system offers growth opportunities for managers at lower levels. There is a tendency to outperform each other, which results in more productivity and indirectly leads to the growth of the individuals.

6. Decentralisation makes the load of top-level management less. They can concentrate more on policy-making for organizational growth.

4. Distinguish between centralization and decentralization.

The points of difference between centralization and decentralization are as follows:

Basis of Comparison Centralisation Decentralisation

Authority rests with the top management. Authority delegated across multiple levels,

Flow of Information Open and free. It’s vertical.

Work Load Top-level managers have a higher workload. The workload is less as work is divided between levels.

Scope of Delegation Limited scope of delegation. Wide scope of delegation.

Subordinate Initiative Initiatives by subordinates have a limited scope, as they need to follow a pre-decided path as laid out by superiors. Subordinates are encouraged to be more proactive and take the initiative. It allows more freedom to express ideas for improving the organization.

Decision Making Decision-making is slow and leads to inefficiency Quick decision-making as decision-making authority is delegated across levels.

5. How is a functional structure different from a divisional structure?

The points of difference between functional structure and divisional structure are as follows:

Basis of Comparison Functional structure Divisional structure

Creation Functional structures are created based on functions in an organization. Divisional structures are created based on products as well as functions.

Costs By minimizing duplication of work, it becomes economical. Duplication of work is more as the same work is done between various departments.

Decision Making Centralised decision-making, as decisions are made by the heads of respective departments. Decentralized decision-making, as there is a separate decision-making authority for each product.

Overlapping of work Minimised as separate functional departments are there. Increased, as each department has the same levels of work.

Suitability Companies focusing on operational specialization will find this structure more feasible. Suitable for companies focusing on creating differentiated products.

Functional Hierarchy Arranging departments based on important operations leads to the formation of a horizontal functional hierarchy. When departments are arranged based on product lines, it results in the formation of a vertical functional hierarchy.

6. A company, that manufactures a popular brand of toys, has been enjoying a good market reputation. It has a functional organizational structure with separate departments for Production, Marketing, Finance, Human Resources, and Research and Development.

Lately, to use its brand name and also to cash on new business opportunities, it is thinking of diversifying into the manufacture of a new range of electronic toys for which a new market is emerging. Which organizational structure should be adopted in this situation? Give concrete reasons about benefits the company will derive from the steps it should take.

The company should adopt a divisional organizational structure, as it is the ideal structure for this organization.

Following are the benefits that can be obtained by following this structure:

1. Each department will have a head who will be accountable for the overall performance of the department. The performance of individual departments can be determined easily; the best and worst performers can be identified, and necessary steps can be taken.

2. Decision-making will be quick, as each department has a specialist to manage it.

3. Having a divisional structure allows for adding more divisions without impacting the functions of the organization.

7. A company manufacturing sewing machines set up in 1945 by the British promoters follows formal organization culture in totality. It is facing a lot of problems with delays in decision-making. As a result, it is not able to adapt to changing business environment. The workforce is also not motivated since they cannot vent their grievances except through formal channels, which involve red tape. Employee turnover is high. Its market share is also declining due to changed circumstances and the business environment. You are to advise the company about changes it should bring about in its organizational structure to overcome the problems faced by it. Give reasons in terms of benefits it will derive from the changes suggested by you.

The change that can be suggested in this situation is adopting some space for informal structure by making changes in its current formal organization structure.

An informal structure would offer the following benefits:

1. Information will move faster, as there is no definite channel of communication that needs to be followed.

2. It will offer a sense of belongingness to the employees as the rules of communication are beyond official roles. Employees feel more secure in the organization and work towards the betterment of the organization.

3. It supports the working of a formal organization, as it helps in fulfilling the organizational objectives in a manner beneficial for the organization.

4. The company can also diversify its product range by venturing into sewing products, such as producing machinery with embroidery features.

8. Company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, a new liberalized environment has seen the entry of many MNCs in the sector. As A result, the market share of X Limited has declined. The company had followed a very centralized business model with Directors and divisional heads making even minor decisions. Before 1991, this business model had served the company very well, as consumers had no choice. But now the company is under pressure to reform.

Questions

What organizational structure changes should the company bring about to retain its market share?

How will the changes suggested by you help the firm? Keep in mind that the sector in which the company is FMCG.

The major change that needs to be adopted by the organization is a move toward decentralization. The organization is growing and centralization will not be sufficient for the organization. The employees must be provided with more responsibility and authority, which ensures the proper functioning of the organization.

Decentralization also enables faster decision-making within the organization.

The benefits of decentralization will benefit the organization in the following ways:

1. Lower-level managers will have the freedom to make their own decisions, which improves the efficiency of the work done.

2. It helps in developing the skills of the managers and also results in providing more growth opportunities for the managers.

3. Decisions taken by management are quick and timely. It helps in finding the solutions to problems easily.

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