CBSE Class 12 Business Studies Chapter 5: Organising NCERT Solutions

Solution: Organising is a fundamental management function that involves establishing the structure and relationships within an organization to facilitate the implementation of plans. It is a process that clarifies roles, assigns duties, delegates authority, and establishes reporting relationships to ensure that resources are effectively deployed for the attainment of organizational objectives.

Solution: The process of organising involves a series of sequential steps to establish an organizational structure:

1. Identification and Division of Work: The total work of the organization is identified and broken down into smaller, manageable tasks or units. This ensures that work is distributed systematically.
2. Departmentalisation: Similar and related jobs are grouped together to form distinct departments. For example, all marketing-related activities might be grouped under a Marketing Department.
3. Assignment of Duties: The divided tasks are assigned to individual employees based on their skills, abilities, and qualifications. Each employee is given a clear job description.
4. Establishing Reporting Relationships: For each position, it is clearly defined who the individual reports to and to whom they are accountable. This creates a hierarchy and facilitates coordination and control among different departments and individuals.

Solution: Delegation is the process of entrusting responsibility and authority to subordinates. It involves three key elements:

1. Authority: This refers to the right and power of an individual to command their subordinates and to take decisions within the scope of their position. Authority originates from the formal organizational structure and flows downwards from superior to subordinate. It is essential for a subordinate to be able to perform their assigned duties effectively.
2. Responsibility: This is the obligation of a subordinate to perform the assigned duty to the best of their ability. Responsibility arises from the superior-subordinate relationship, as the subordinate is bound to carry out the tasks assigned by their superior. Responsibility flows upwards, meaning a subordinate is responsible to their superior.
3. Accountability: This implies being answerable for the final outcome of the assigned task. Once authority is delegated and responsibility is accepted, the subordinate becomes accountable for the results. Accountability cannot be delegated and flows upwards; the subordinate is accountable to the superior for the satisfactory performance of the work.

Solution: The 'Span of management' refers to the number of subordinates that a superior can effectively supervise and manage. It indicates the extent of a manager's direct influence. A narrow span of management (few subordinates per manager) typically leads to a taller organizational structure with multiple layers, while a wide span (many subordinates per manager) results in a flatter structure with fewer layers. The span of management significantly shapes the overall organizational structure.

Solution: A functional structure is considered an appropriate choice under the following circumstances:

• When the organization is large in size.
• When the organization has a wide variety of diversified activities and operations.
• When the operations require a high degree of specialization and expertise within specific functions.

This structure promotes efficiency, specialization, and better control and coordination within each functional department, ultimately leading to increased profitability.

Solution: A divisional structure organizes activities around products, services, or geographical locations. Each division typically operates as a semi-autonomous unit with its own set of functional departments (like production, marketing, finance). Here is a simplified diagram representing a divisional structure:

Managing Director

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Division 1: Cosmetics | Division 2: Garments

Production | Purchase | Finance | Marketing | Production | Purchase | Finance | Marketing

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Division 3: Skin Care | Division 4: Footwear

Production | Purchase | Finance | Marketing | Production | Purchase | Finance | Marketing

Solution: No, a large-sized organization cannot be totally centralized or totally decentralized. Both extremes are unrealistic and impractical.

• Complete Centralisation: This would mean all decision-making authority rests solely at the apex of the management hierarchy. This would render the lower and middle management levels redundant and negate the purpose of having a management structure.
• Complete Decentralisation: This would imply delegating all decision-making authority down to the lowest possible level. While this empowers employees, it could lead to a lack of strategic direction, inconsistency, and potential chaos if not managed properly. It also diminishes the role of top management in strategic oversight.

As organizations grow, there is a natural tendency towards decentralization because employees closer to the operations often possess more relevant knowledge. However, top management must retain strategic decision-making authority. Therefore, a balance between centralization and decentralization is crucial for effective management in large organizations.

Solution: The statement 'Decentralisation is extending delegation to the lowest level' is accurate. Decentralisation refers to the systematic delegation of authority throughout all levels of the organization. It involves pushing decision-making authority down the chain of command, placing it nearest to the point of action. While delegation is the act of entrusting a task and the authority to perform it to a subordinate, decentralisation is the broader policy of distributing decision-making powers across various levels. For example, if a director authorizes a production head to meet a target and hire workers, and that production head, in turn, delegates the responsibility of selecting workers to a manager, who then authorizes supervisors to make the final selection, this demonstrates decentralisation. It is achieved through systematic and widespread delegation, empowering lower-level employees to make decisions relevant to their roles.