Chapter5

ORGANISING
Organising is the process that
coordinates group efforts, asscmbles
hoth into a unified whole to be resources and integrates
utilized for achicving
specificd objectives.
Definition: According to Thco Haimman, "Organising is the
process of defining and
grouping the activities of the enterprise and establishing
authority relationships among them."
ORGANISING PROCESS OR STEPS IN
ORGANISING
Organising involves
series of steps that need to be
a
taken in order to achieve the desired
goals. Following are the steps in the process of
ldentification and Division
organising.
.

of work
2. Departmentalisation
3. Assignment of Duties
4. Establishment of
reporting relationships
1. Identification and Division of work: The
process of
identification and division of work. The whole work is to organising
starts with the
be divided into number of
activities such as financing, purchasing, production, marketing etc.,
2. Departmentalisation: Under this step, the activities of similar nature are
grouped
together. This grouping process is called departmentalization. E.g. Finance
for financial activities, purchase department
department for purchase activities etc.
Departmentalisation can also be on the basis of products manufactured. E.g. Textile
division, Food products etc. or on the basis of territory E.g. North, South, East and West.
3. Assignment of Duties: Under this step, after defining the work of different job positions,
duties are assigned to the members of each
department in accordance with their
specialisation, skill, experience and ability.
4. Establishment of reporting relationships: The last step in the process of organising is
the establishment of reporting relationship. Each individual should know from whom he
has to take orders and to whom he is accountable.

IMPORTANCE OF ORGANISING

By organising, plans can be successfully implemented. It is a means for translating plans into
action. Following points show the importance of organising
1. Benefits of specialization: The total work of an organisation is divided into different
departments, activities and functions, and the right person is placed in the right job. This
leads to specialization and increases the efficiency and
productivity of employees.
2. Clarity in working relationship: Organising helps in establishing working relationship
and clearly defines the authority and responsibility of each individual. Every individual
has clarity as to whom he can give orders and from whom he has to receive orders.

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 3. Optimum utilization of resources; Organising leads to proper use of material,
financial
and human resources. Proper allocation of jobs helps in avoiding duplication of
helps in minimising the wastage of resources.
work and
4. Adaptation to Change: Organising helps business enterprises
adjust or adapt to the
to
changes in the business environment. This adaptability brings stability to the growth of the
organisation.
5. Effective administration:
Organising provides clear description of jobs and related duties.
This helps to avoid confusion and duplication. Clarity in the working relationship enables
proper execution of work. Thus, administration becomes casy and effective.
6. Development of personnel: Organising ensures that every individual is placed on the job
for which he is best suited. Such matching of jobs and delegation by superiors help in
better use of human talent and
encourages their initiative and creativity. Thus it helps
managers and subordinates to grow and develop to their full potential.
7. Expansion and growth: Organising promotes growth diversification of an enterprise.
and
It enables theenterprise to take up new challenges like new product lines, new
departments and geographical territories for increasing sales and profit.
Thus, organising brings order, removes confusions over work or responsibility and creates
an environment suitable for teamwork.

ORGANISATION STRUCTURE
Organisation structure is the framework within which managerial and operating tasks are
performed in an enterprise. This framework enables the enterprise to work as an integrated
unit. A proper organisational structure is essential to ensure smooth flow of communication
and better control.
Span of Management: Span of management refers to the number of subordinates that can be
effectively managed by a superior. It gives shape to the organisational structure and
determines the levels of management in the structure.

Types of Organisational Structure

Different organisations have adopted different organisational structure based on its size,
nature and type of activities. It can be classified as follows:

1. Functional Structure: In this kind of organisational structure, the activities or jobs of

similar nature are grouped together based on the functions which are to be performed by the
individuals. E.g., in a manufacturing concern, there may be Purchase department, production
department, marketing department and finance department.
Suitability: It is most suitable when the size of the organisation is large, has diversified
activities and operations require high degree of specialisation.
Chart showing Functional Structure
MANAGING DIRECTOR

Production Marketing Purchase Finance

department department department department

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 PRE UNIVERSITY COLLEGE
Cnapre OrgunST8

Advantages of Functional Structure: The functional structure has many advantages to

offer. Important among them follows:

are as

(a) Occupational specialisation: A functional structure leads to occupational specialisation.

This promotes cfficiency in utilisation of manpower.
within a
(b) Promotes control and coordination: It promotes control and coordination
department because of similarity in the tasks being performed.
and this
(c) Increased profit: 1t helps in increasing managerial and operational efficiency
results in increased profit.
d)Lowers cost: It leads to minimal duplication ofefforts which results in reduced cost.
limited
(c)Easier training: It makes training of employees easier as the focus is only on a

range of skills.
( Attention to all functions: It ensures that different functions get due attention.

Disadvantages of Functional Structure:

(a) Less emphasis on enterprise objectives: A functional structure places less
overall
emphasis on overall enterprise objectives than the objectives of a functional head.
has
b) Problems in coordination: It may lead to problems in coordination as information
to be exchanged across different departments.
(c)Conflict of interests: Conflict of interests may arise when the interests of two or more

departments are not compatible. For example, the sales department insisting on a

customer friendly design may cause difficulties in production. Inter-departmental

conflicts can also arise in the absence of clear separation of responsibility.
(d) Inflexibility: It may lead to inflexibility as people ith same skills and knowledge base
may develop a narrow perspective.

2. Divisional Structure
Grouping of activities on the basis of product is known as divisional structure organisation.
The large organisations which produce more than one product have this kind of
organisational structure.
The activities related to one product are grouped under one division. The structure consists of

separate divisions, each such division has its own manager. Within each division, functions
like production, marketing, finance etc., are performed.
Chart showing Divisional Structure

MANAGING DIRECTOR

FOOTWEAR
GARMENTS COSMETICS

Human resource Research and development Purchasing

Marketing

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 Suitability: the different
line of products.
which is involved in production of
1. An organisation
needs product specialisation.
2. Organisation future.
more than one product in
3. Organisation plans to produce benefits.
structure offers many
Divisional Structure: The divisional
Advantages of
follows:
Prominent among these are as of varied
Product specialisation helps in the development
skills:
(a) Development of varied
him for higher positions.
skills in a divisional head and this prepares accountable for profits, as
Fixation of responsibility: Divisional heads are
(b) Helps in identified. This provides
revenues and costs related to
different departments can be easily
in fixation of responsibility in
a proper basis for performance measurement and helps
cases of p0or performance.
(C)It promotes flexibility: It promotes flexibility and
initiative because each division
functions as an autonomous unit which leads to faster decision making.
(d) It facilitates expansion and growth: It facilitates expansion
and growth as new

divisions can be added without interrupting the existing operations.

Disadvantages of Divisional Structure: The divisional structure has certain disadvantages.
They are:
(a) Conflicts among divisions: conflicts may arise among different divisions with reference
to allocation of funds.
(b) Increase in costs: It may lead to increase in costs since there may be a duplication of
activities across products.
()1gnorance of organisational interests: Independence and authority on a particular
division may make the managers to ignore organisational interests.

Comparative view of Functional and Divisional Structure

Functional structure Divisional structure

1. Formation is based on functions 1. Formation is based on product lines
2. Functional specialisation. 2. Product specialisation.
3. Difficult to fix responsibility 3.
on a Easy to fix responsibility for
department. performance.
4. Functions are not duplicated hence 4. Duplication of resources in various
economical.
departments, hence costly.

FORMAL ORGANISATION
Meaning: A formal
organisation refers to the organisation which is
management accomplish a particular task. It
to designed by the
specifies
responsibility and there is a systenmatic coordinationclearly the
and the boundaries of authority
achieve organisational goals. among various activities to

Definition: According to Louis

defined jobs each Allen, "Formal organisation refers to structure of well-
bearing definite measure of
a
authority, responsibility and accountability."
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 Features of Formal Organisation:
a)Clarity in working relationship: It
specifies the
positions and the nature of their relationships among various job
whom. interrelationship. This clarifies who has to report to

(b) Means to achieve the objectives: It is a means to

achieve the objectives specified in the
plans, as it
lays down rules and procedures essential
for their achievement.
c) Co-ordination of Efforts: Efforts of various
and integrated through the formal departments are coordinated, interlinked
organisation.
(d) Designcd by the top management: Formal
organisation is deliberately designed by the
management
top to facilitate the smooth
functioning of the organisation.
(c) Emphasis on work: Formal
organisation places more emphasis on work to be performed
than interpersonal relationships among the employees.
Advantages of Formal Organisation:
(a) Easier to fix responsibility: It is easier to fix
clearly defined.
responsibility since mutual relationships are
(b) No ambiguity
in the role of each
person: There is no ambiguity in the role that each
member has to play as duties are
specified. This also helps in avoiding duplication of
effort.

(c) Unity of command is maintained: Unity of command is maintained through an

established chain of command.
(d) Effective accomplishment of goals: It leads to effective
providing a framework for the operations to be performed and ensuring that each
accomplishment of goals by
employee knows the role he has to play.
(e) Provides stability: It provides stability to the organisation. This is because behaviour of
employees can be fairly predicted since there are specific rules to guide them.
Limitations of Formal Organisation:
(a) Delay in decision making: The formal communication may lead to procedural delays as
the established chain of command has to be followed which increases the time taken for
decision making.
(6) Rigidity: Poor organisation practices may not provide adequate recognition to creative
talent, as workers have to follow rigidly laid down polices.
) More emphasis on structure and work: No importance is given to human relationship
as it places more emphasis on structure and work.

INFORMAL ORGANISATION

Meaning: A 'network of social relationships among employees' that arise spontaneously due
O
interactions among people at work is called Informal organisation.

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PRE UNIVERSITY COLLEGE

is a network of personal.
Definition: According to Keith Davis, "Infomal organisation and
formal organisation but arisin
social relations not established
or required by
the
rising
another".
spontaneously as people associate with one

Features of Informal organisation

from within
An informal organisation originates
(a) Originates from formal organisation:
as a result of personal interaction among
employees.
the formal organisation
evolve from group norms
(b) Group norms are the standards: The standards of behaviour
rather than officially laid down rules and regulations.
channels of communication
(c) specific channel of communication: Independent
No
members.
without specified direction of flow of information are developed by group
created by the
(d) Spontaneous formation: It emerges spontaneously and is not deliberately
management.
(e) No definite structure: It has no definite structure or form because it is a complex

network of social relationships among members.

Advantages of Informal Organisation:

The informal organisation offers following benefits:
(a) Faster spread of information: Prescribed lines of communication are not followed.
Thus, the informal organisation leads to faster spread of information as well as quick
feedback.
b) Sense of belongingness: It helps to fulfil the social needs of the members and allows
them to find like-minded people. This enhances their job satisfaction and creates a sense
of belongingness in the organisation.
(c) Fulfilment of Organisational Objectives: It contributes towards fulfilment of
organisational objectives by compensating for inadequacies in the formal organisation.

Limitations of informal organisation

1. Disruptive force: It acts as a disruptive force against the interest of the formal
organisation.
2. Resistance to change: The management may not be successful in implementing changes if
the informal organisation opposes them. Such resistance to change may dclay or restrict
growth.

3. Group expectations: It pressurizes members to conform to group expectations. This can

be harmful to organisations if the norms set by the group are against organisational
interests.

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 STCLARET

PRE UNIVERSITY COLLEGE Chapter 5 - Organising

DISTINCTION BETWEEN FORMAL AND INFORMAL ORGANISATION

SI. Basis Formal Organisation Informal Organisation

. Mcaning It is structure of authority It is network of social
relationships created by the relationship arising out of
management. interactions among employees.
2. Origin It arises result of company
as a It arises as a result of social
rules and policies. interaction.
3. Authority It arises by virtue of position in It arises out of personal qualities.
managenment.
4. Behaviour It is directed by rules. There is no set behaviour pattern
in it
5. Flow of Communication takes Flow of communication is not
place
communication through the scalar chain. through a planned route. It can

take place in any direction.

6. Nature It is rigid. It is flexible.
7. Leadership ManagerS are leaders in it. Leaders may or may not be
managers. They are chosen by
the group.
8. Flow of Authority flows from top to Authority flows vertically as well
authority bottom. as horizontally.

DELEGATION

Meaning: It refers to the downward transfer of authority from superiors to subordinates. It

enables a manager to use his time on high priority activities. It also satisfies the subordinate's
need for recognition and opportunities to develop initiative.

Definition: According to Theo Haimman, "Delegation of authority merely means the

granting of authority to subordinates to operate within prescribed limits".

Elements of delegation: There are three elements of delegation namely;

(1) Authority
(2) Responsibility
(3) Accountability.
1. Authority: Authority is the power to command employees and instruct them to perform a
job. Authority determines the superior-subordinate relationship. It flows from top to
bottom. The superior communicates his decision to the subordinate and expecting to
perform it.
2. Responsibility: Responsibility is the obligation of a subordinate to perform the assigned
duty. It arises from superior-subordinate relationship because the subordinate is bound to
perform the duty assigned to him. Thus, responsibility flows upwards.
. Accountability: Accountability means being answerable for the final results. It is

obligation to carry out responsibility and to give reports about ones performance to the

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PRE UNIVER-

but
superior to
his
subordinates

bility
accountahil

can be delegated by a

superior. Authority
can n e v e r
be delegated.
&ACCOUNTABILITY
RESPONSIBILITTY
AUTHORITY,
DIFFERENCES
BETWEEN Accountability
Responsibility
Authorityy Accountability means
Basis Responsibility is the
for the
Authority is the right
answerable
1. Meaning the being
to command duty to perform final result.
assignedduty. at
employees.
It cannotbe fully Itcannot be delegated
2.Delegation | It can be delegated. all.
delegated.
Arises from
Arises from delegated
3. Origin It arises from formal responsibility.
Position. authority. Flows upward from
Flows from superior Flows from
4. Flow subordinate to superior.
subordinates to
to subordinates.
superior.
Accountability is
Authority is power
Responsibility is duty.
5. Nature Answerability.

Importance of delegation
tasks on behalf of the manager thereby
Delegation ensures that the subordinates perform on important
with more time to concentrate
reducing his workload and providing him
matters. Effective delegation leads to the following benefits:
work to
Effective Management: Delegation enables the manager to assign routine
1. functions of
to concentrate on higher
subordinates. This enables the managers
results in efficient
in increasing efficiency, which
management and helps them
management.
to
2. Employee Development: The managers delegate
authority as well as responsibility
and qualification. This gives them
subordinates on the basis of their ability, knowledge
their skills and talents
to develop themselves for higher positions by using
opportunities
in performing the job.
trained
3. Facilitation of growth: Delegation facilitates growth and expansion by providing
and experienced personnel for taking up leading positions in new project.

establishes superior-subordinate
4. Basis of management hierarchy: Delegation
of Thus delegation decides who
relationship which is the base for hierarchy managers.
will report to whom and the power at each job position.
related to
5. Better co-ordination: By clearly defining powers, duties and answerability
various departments, delegation helps in achieving co-ordination among various

departments and functioning of management.

6. Motivation to employees: Delegation helps in developing the talents of the employees.
Responsibility for work builds the self-esteem and confidence of employees and tries to
improve his performance.

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 ST.CLARET
PRE UNIVERSITY COLLEGE
Chapter 5- Organising
DECENTRALISATION OF AUTHORITY
Meaning: Decentralisation of authority mecans dispersal of decision making authority among
more persons in the lower
levels of
management. It denotes relationship between the top
management and various departments. In simple words, Decentralisation refers to delegation
of authority throughout all the levels of anorganisation.
Importance of decentralisation
Decentralisation is a fundamental step and its importance can be understood from the
following points:
1. Quick decision-making: By giving authority for decision making to the lower levels,
decentralisation facilitates quick decisions. Thus it enables an enterprise to adopt to
dynamic operating conditions.
2. Relief to top management: Decentralisation relieves the top executives from routine
works and enables them to concentrate functions such
on more
important as corporate
planning, control and coordination.
3. Develops initiative among subordinates: Decentralisation helps in improving the
confidence and morale of the employees as they are involved in the decision making8
process. It helps to identify those executives who have the potential to become dynamic
leaders.

4. Facilitates growth: Decentralisation provides greater freedom to lower levels as well as

departments. This develops a sense of competition among them where everyone tries to
do better than the other. This results in higher productivity, growth and diversification
5. Better control: Decentralisation makes it possible to evaluate performance at each level
and the departments are held accountable for their results. Feedback from all levels helps
to analyse variances and improve operations.

6. Develops managerial talent for the future: Decentralisation gives the subordinates a
chance to prove their abilities. In turn, it helps to develop a qualified team of subordinates
who can be considered to fill up more challenging managerial positions through
promotions.
Decentralisation must always be balanced with centralisation in areas of major policy
decisions. Routine and less important decisions can be taken by lower level management.
Hence, there is a need for a balance between these co-existing forces.
Thus, it can be said that every organisation will be characterised by both centralisation and
decentralisation.
CENTRALISATION OF AUTHORITY

Meaning: Centralisation refers to the concentration of decision-making authority at top level

management. The lower levels of management have to follow it and they do not have
decision making power.

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 PRE UNIVERSITY

Decentralisation

Centralisation
and
Differences
between Decentralisation

Centralisation making authority is

is 1. The decision
1. The decision making authority to lower levels
of management,
levels. delegated
retained by higher management of authority.
2. There is delegation
|2. There is no delegation of authority. of large organisations.
3. Found in case
3. Found in small organisations.
Decentralisation
and
Difference between Delegation Decentralisation
Basis Delegation done at
1. Nature |It is a compulsory act because no | It is an optional as it is
individual can perform all tasks the discretion of the top
on his own. management.
It has wide scope as it implies
2 Scope It has narrow scope as it is limited
to superior and his immediate extension ofdelegation to the
subordinate. lower leves of management.
3. Pupose To lessen the burden of managers To increase the role of the
subordinates.
4. Freedom of | Less freedom to take own Greater freedom of action.
action decision.

EXERCISES
I. Fill in the blanks
1.
is the management function that translates the
action. plans into
2. For delegation to be
effective, it is essential that
responsibility be accompanied with
necessary
3. Grouping of activities on the basis of
product lines is a part of_
organisation.
4. The form of organisation known for giving rise to rumours is called
organisation.
5.
is extending delegation to the lower level of
management.
6. When
decision-making authority is retained by higher
organisation is said to be management levels, an
II
Multiple choice questions:
1.
Organising process includes one of the
a) Grouping of activities following:
(c) Determining objectives (b) Prescribing
disciplinary action
(d) Prescribing work schedule
2. Which of the
following is not an element of
(a) Accountability delegation?
(C) Responsibility b) Authority
(d) Informal Organizationg
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 Chaple)- ganising
3. A network of social relationship that arise spontaneously due to interaction at
work is called
(a) Formal Organisation
(b) Informal Organization
(c) Decentralisation
(d) Delegation
4. Which of the following does not follow the scalar chain?
(a) Functional Structure
(c) Formal Organisation (b) Divisional Structure
(d) Informal Organization.
5. Span of management refers
to
(a)No. of subordinates under a superior
(b) Length of term for which a
manager is
(c)Number of subordinates under a superiorappointed
(d) Number of members in top
Management
6. Grouping of activities on the basis of functions is a
(a) Decentralized organization part of
(c) Functional organization
(6) Divisional organisation
(d) Centralised organization
7. Divisional structure leads to conflict in
(a) resouree allocation
(c) motivation
(b) marketing management
(d) planning process.
8. A tall structure has a
(a) Narrow span of management
b) Wide span of management
(c) No span of management
(d) Less levels of management
9. is the right to command.
(a) Authority (b) Responsibility
(c) Accountability (d) Both (b) and (c)
10. Centralisation refers to
(a) Retention of decision making authority (b)
(c) Creating divisions as profit centre Dispersal of decision making authority
(d) Opening new centres or branches
Im One word/ sentence
answer type
1. What is
questions (1 mark)
Organisation Structure?
Ans: It is the framework within which
in an enterprise.
managerial and operating tasks are
performed
2. Which
type of organisation structure is suitable for
variety of products? enterprises having large
Ans: Divisional Structure.
3. What is
Ans:
Delegation?
Delegation refers to the downward transfer of authority from a
subordinate. superior to a

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45
 them to perform
4. What is Authority? command employees
and instruct
rm a
the power to
Ans: Authority is

job.
5. What is Responsibility? to perform the assigned duty,
Responsibility is the
obligation of a subordinate
Can Accountability be
delegated? (Yes/No)
6.
Ans: No. It cannot be delegated.
centralized?
When can one
organisation is
say that an
7.
lies at top level management.
Ans: When decision-making authority

8. What is Centralisation? with the top management is

Ans: The concentration of
decision making authority
called centralisation.

9. What is Decentralisation?
dispersal of decision making authority
Ans: Decentralisation of authority means

levels of management.
among more persons in the lower

IV Short Answer type questions (2 marks)

1. Define Organizing. and
is the process of defining
Ans: According to Theo Haimman, "Organising

grouping the activities of the enterprise and establishing

authority relationships among
them."

2. Give the meaning of Organizing.

assembles resources and
Ans: Organising is the process that coordinates group efforts,
utilized for achieving specified objectives.
integrates both into a unified whole to be
3. What are the steps in the process of organising?
Ans: 1. Identification and Division ofwork.
2. Departmentalisation.
3. Assignment of duties.
4. Establishment of reporting relationships.
Functional and Divisional Structures.
4. Write any two differences between

Functional Structure Divisional Structure.

1. Functional specialisation. 1. Product specialisation.
2. Difficult to fix responsibility on a 2. Easy to fix responsibility for

department. performance.
5. Give the meaning of Formal Organisation.
Ans: A formal organisation refers to the organisation which is designed by the

specifies clearly the authority and

management to accomplish a particular task. It
responsibility relationship among the employees.

For Private Circulation Only 46

 6. State any two features of Formal
Ans: (a) Clarity in working Organisation.
various job and
relationship: It specifies the relationships among
positions.
(b) Co-ordination of Efforts: Efforts of
various departments are coordinated.
7. Give the meaning Informal organisation.
of
Ans: Informal organisation is a network of social relationship
arise among employees that
spontaneously due to interaction among people at work is called informal
organisation.
8. State the difference between
Authority and Responsibility
Authority Responsibility
1. It is the
right to command employees. |It is the obligation
to perform an assigned
| 2. Flows downward from superior duty.
toD Flows upward from subordinate to
subordinate.
superior.
9. Compare and contrast Authority and Accountability
(any two).
Authority Accountability
1. It is the right to command employees. 1. Being answerable for the end results.
2. It can be delegated. 2. It cannot be
delegated.
10. State any two differences between Delegation and Decentralisation.
Delegation Decentralisation.
1. It is a compulsory act. 1. It is optional.
2. Less freedom to take decisions. 2. Greater freedom to take decisions
V Long answer type questions
1. Explain the steps in the process of Organising.
2. What is organising? Explain the importance
3.
of Organizing. (1 for introduction+7)
What is Functional structure? State any three advantages and three
disadvantages of
Functional Structure.
4. What is divisional structure? Write any three
advantages and three disadvantages of
Divisional Structure.
5. Explain
the features of Formal Organisation.
6. State the advantages and
disadvantages of Formal Organization.
7. Explain the features of Informal
Organisation.
8. State the advantages and
disadvantages of Informal Organisation.
9. Distinguish between Formal and Informal
Organisation.
10. Explain
briefly the elements of Delegation.
11. What is Delegation? Explain the
importance of Delegation.
12. What is Decentralization?
Explain its importance.
13.
Distinguish between delegation and decentralization.
PRE UNIVERSITY COLLEGE

Practical oriented question (5 marks) Divisional and Functional Structure,

VI
Chart showing
Draw the Organization
1.
 Test Your Und
Chapter 5 erstanding
rganisation ructure
I. Organisati
ORGANISING
(a) organisati and establishes relationships
environment
ic) organisation and society. (b) between
(d)
people, work and
enect does
Inwhich respect formal suppliers and customers.
resourccs.
(a) Production process (b) organisation differ from
Structuring(c) Financial informal
organisation?
3. Ast
anagement increases in an procedure (d)
management in the organisation
(a) Increases (b) Decreases organisation, the numberPurchasing
of levels
(c) Remains of

involves giving authority and

unaffected (d) None of the
above
(a) Division of work
responsibility to
(b) Decentralisation
subordinates.
is th (c)
Delegation (d) Centralisation
5. process of grouping similar
(a) Division of work activities together and
b)
is the Departmentalisation (c) Delegation (d)creating departments.
.
products.
organisational structure in which activities Centralisation
are
(a) Divisional structure (b) grouped on the basis of
Functional structure
is the
(c) Formal (d) Informal
.
results.
organisational structure in which no
department is responsible for end
(a) Divisional structure (b) Functional
structure (c) Formal
(d) Informal
8.
is duty for job performance.
the
(a) Authority (b) Responsibility (c) Accountability (d) Both(a) and(c)
9. is the right to command.
(a) Authority (b) Responsibility (c) Accountability (d) Both (b) and (c)
10. cannot be delegated.
(a) Authority (b) Responsibility (c) Accountability (d) Both (a) and (b
11. The
accountability flows
(a) In all directions
(b) Downwards (c)Upwards (d) None of the above
12.
Authority granted to an employee should be
a) More than the responsibility entrusted to
him(b) Less than the responsibility entrusted
C) Equal to the
responsibility entrusted to him (d) All of the above
Aplication Type Questions:
T u n s a factory wherein she manufactures shoes. The business has been doing well and she
COm
nt APand by diversifying into leather bags as well as western formal wear thereby making her

pany a complete provider of porate wear. This will enable her to market her business unit as the
ro working women. Which type of structure would you recommend for her expanded
OTganisation and why?
2.The production mana asked the foreman to achieve target production of 200 units per day, but
a
nanager
t
give him the authority to requisition tools and materials from the stores department. Can the
producti Cr
desired
blame the foreman if he is not able to achieve the
Give target? reasons.

For 173
Private Circulation
Only
 Staialng
ST.CLAR=T PRE UNIVERSITY COLLEGE
month but the
ne aauthority
uth.
700 units per to
units to
target
from 500 could not ve
achieve revised
the res
3 m cnhances the production production
manager

given by him. The

gcr
matcrial was not violatcd:
was
raw
responsible and which principle
marketing and e.
Who
POuction
target. is
unit at Gurgaon
and
sales
manufacturing
has its registercd office in Delhi, thc consumer producis, Which tyne
e of
company manuactures
0cpartment at Faridabad. The company

to achieve its
targct?
organisational stnicture should it adopt

Case problcms: has bCCn enjoying good market

A company, which manufactures a popular
brand of toys,
structure with separate departments for Production
ion,
It has a functional organisational to use its bran.
Tcputation. Rescarch and Development. Lately and
Markcting. Finance. Human Resources and it 1s thinking to diversify
business opportunities into
name and also to cash on to new

for which a new market

is emerging.
manulacture of new range of clectronic toys

Questions concrete reasons With regard to benefits

Tepare a report regarding organisation structure giving
the company will derive from the steps it should take.
A company manufacturing sewing machines set up in 1945 by the British promoters follows
2.
1ormal organisation culture in totality. It is facing lot of problems in delays in decision making,
As the result it is not able to adapt to changing business environment. The work force 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 business environment.
Questions
You are to advise the company with regard to change it should bring about in its organisation
structure to overcome the problems faced by it. Give reasons in terms of benefits it will derive
from the changes suggested by you. In which sectors can the company diversify keeping in
mind the declining market for the product the company is
manufacturing?
3. A 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,
liberalised new
environment has seen entry of many MNC's in the sector. With the
result
the market share of
X limited has declined. The
company had followed a very centralised 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
pressure to reform. company is under
Questions
What organisation structure changes should the company
market share? How will the bring about in order to retain its
changes suggested by you help the firm?
sector in which the company is
FMCG. Keep in mind that the