Friday, December 26, 2014

AHSEC - 12: Organising Important Notes for Feb' 2017 Exam

Unit – 5: Organising
Objective Questions (1 mark)
Q.1 What is meant by organising?
Ans: Organising can be defined as identifying and grouping different activities in the organisation and bringing together the physical, financial and human resources for the achievement of specific goal of organisation.
Q.2 Mention various types of organisation.
Ans: Formal and Informal organisation
Q.3 Which level of managers are responsible for determining formal organisation?
Ans: Top level management
Q.4 Name the type of organisation which does not have any predetermined objectives.
Ans:  Informal organisation
Q.5 Give the meaning of organisation as structure.  2007
Ans: Organisation structure can be defined as a framework within which managerial and operating tasks are performed. It specifies the relationship between people, work, and resources.
Q.6. A superior is responsible to his subordinates.                          2008
Ans: This statement is false.
Q.7 Mention the essential elements of delegation of authority.
Ans: Authority, Responsibility and Accountability
Q.8 Can responsibility be delegated?                    2008, 2010, 2013

Ans: According to the principle of absolute responsibility, authority can be delegated but responsibility can’t be delegated by a manager. The manager remains responsible our accountable to his own superior for the tasks which he may assign to his subordinate.
Q.9 What is decentralization?
Ans: Decentralization means the delegation of all decision making functions to the lower level of the hierarchy. Decision making authority is shared with lower levels of Management Mangers have more freedom of action. It is suitable for large organisation.
Q.10 Which organizational structure is suitable for a multi-product manufacturing company?
Ans:  Divisional organization structure
Q.11 Which organizational structure is suitable for a uni-product manufacturing company?
Ans: Functional organization structure
Q.12 Out of formal and informal organisation which is dependent upon which?
Ans: Informal organization depends on formal organization.
Q.13 How is informal organisation created?       2010
Ans: Informal organisation is created spontaneously by the employees working together and interacting with each other. It is an unintentional creation.
Q.14 Name the organisation in which employees are allowed to communicate freely and there are no rules and regulations.
Ans: Informal organisation
Q.15 Define span of control.
Ans: It refers to the number of subordinates coming under direct control and supervision of the superior.
Q.16. “Delegation can take place without decentralisation”. Explain.                    2009
Ans: This statement is true because delegation is necessary in every organisation but decentralisation is not necessary.
Q.17 Authority always flows downwards, while responsibility always flows upwards.                   2009

Short Answer Type Question (2/3/5/8 marks)
Q.1. What is Organising? Discuss the steps of Organising. 2008, 2010, 2015
Ans: Meaning: Organising can be defined as “identifying and grouping different activities in the organisation and bringing together the physical, financial and human resources for the achievement of specific goal of organisation.
In the words of Henry Fayol, “To organise a business is to provide it with everything useful to its functioning: raw materials, machines and tools, capital and personnel”.
Steps in Organising:                                                       2016
a)      Identification and Division of Work: The first step in the process of organizing involves identifying and dividing the total work to be done into specific activities (called jobs) in accordance with previously determined plans. Such division of work into jobs is necessary because one individual cannot perform the entire work.
b)      Grouping jobs and Departmentalisation: The second step in organizing is to combine or group similar/related jobs into larger units called departments, divisions or sections. This grouping process is called “Departmentalisation”.
c)       Assignment of Duties: It is necessary to allocate work to various employees. Once departments have been formed, each of them is placed under the charge of an individual, called departmental head. Jobs are then allocated to the members of each department according to their skills and competencies.
d)     Establishing Reporting Relationships: Merely allocating work is not enough. Each individual should also know from whom he has to take orders and to whom he is accountable. The establishment of such reporting relationships helps in coordination amongst various departments.
Q.2. Why is organising considered an important function of management? Give any six reasons.  2007, 2009, 2011, 2014, 2016
Ans: Organising is a process by which the management removes conflict among people over work or responsibility, and creates an environment suitable for teamwork. The importance of organizing may be summaries as follows:
a)      Benefits of specialization: The activities are grouped very carefully into specialized jobs on the basis of similarity. Repetitive performance of a particular task leads to specialization.
b)      Clarity in working relationships: The jobs of managers and non managers are clearly defined & differentiated.
c)       Effective administration: Organising provides a clear description of a jobs and related duties. This helps to avoid confusion and duplication. Clarity in working relationship enables proper execution of work. This brings effectiveness in administration.
d)      Source of support and security improves job satisfaction: Organising is a source of support, security and satisfaction to managers and employees in performing their assigned tasks. In a sound organisation every individual is assigned the job for which he is best suited. The assignment of right jobs to right persons improves job satisfaction among the employees.
e)      Optimum utilization of resources: A sound organisation helps In the optimum utilization of technological and human resources by avoiding duplication of work and overlapping of efforts.
f)       Adaptation of change: The process of organizing allows a business enterprise to adapt itself according to changes in the business environment. It allows the organisation structure to be suitably modified and the revision of inter-relationships amongst managerial levels to pave the way for a smooth running of the business.

Q.3. Write a note of Formal Organisation.           2008
Ans: Formal Organisation: In the words of Chester Barnard, “An organisation is formal when the activities of two or more persons are consciously co-ordinated towards a common objective".
Features of Formal Organisation:
a)      The positions, authority, responsibilities, accountability of each level are clearly defined.
b)      It prescribes the relationships amongst the people working in the organisation.
c)       A formal organisation is bound by rules) regulation and procedures.
d)      It is deliberately impersonal.
Advantages of Formal organisation:
a)      It makes everybody responsible for a given task.
b)      It ensures law -and order in the organisation by prescribing rules, regulations and procedures.
c)       It contributes to accomplishment of the common objectives of the enterprise.
Drawbacks or Criticisms of Formal Organisation:
a)      It is impersonal. So, emotions and sentiments of individuals are ignored in determining accountability.
b)      It is designed to achieve the goals of the enterprise. It does not consider the goals of the individuals.
c)       Rules and Regulation in such organisations are rigid and so, it may become difficult to achieve goals.
Q.4. Write a note of Informal Organisation.                        2009, 2011, 2013
Ans: Informal Organisation: In the words of Keith Davis, “Informal organisation is a network of personal and social relations not established or required by the formal organisation but arising spontaneously as people associate with one another.”
Features of Informal Organisation:
a)      It is not established by any formal authority. It arises from the personal and social relations amongst the people working in the organisation.
b)      Informal Organisation arises unintentionally, and not by deliberate or conscious efforts.
c)       It is influenced by the personal attitudes, emotions, likes and dislikes, etc. of the people in the organisation.
d)      It is based on rules, regulations and procedures.
e)      The existence of informal organisational structure depends on the formal organisation structure.
Benefits of Informal organisation:
a)      It helps the formal organisation to make a workable system to get the work done.
b)      It assists the formal organisation to become humanistic.
c)       It helps the group members to attain specific personal objectives.
d)      It provides social satisfaction to group members.
Drawbacks of Informal Organisation:
a)      The communication in informal organisation may, sometimes, lead to rumours.
b)      Informal organisation may put resistance to changes and innovations.
c)       It may not effectively contribute to the attachment of the objectives of the enterprise.
Q.5. Distinguish between Formal and Informal Organisation.  2007, 2010, 2014
Formal Organisation
Informal Organisation
It is created by the Management in the form of structure of authority.
It is created spontaneously by the mutual relations of the employees.
It is established because of the rules and policies of the organization.
It is established due to the social relationship.
Flow of Communication
Communication is defined. It moves according to the chain of command.
Communication can move in any direction.
It is more stable.
It is not stable and so is temporary in nature.
Behaviour of the employees is influenced by the rules and procedures lay down by the management.
Behaviour of employees is spontaneous and governed by personal belief, values and attitudes.
Q.6. What is organisational structure? Mention the points to be taken into consideration while framing organisational structure. What are its two types?          2007, 2015
Ans: Organisational structure can be called as a framework within which managerial and operational tasks are performed by various managers. It specifies the relations between people, work and resources.
Points to be taken while framing organisational structure:
a)      Job design and expected result of the job.
b)      Departmentation of various jobs.
c)       Span of management i.e., How many subordinates are under one superior.
d)      Delegation of authority.
Types of Organisational Structure:
a)      Functional Structure
b)      Divisional Structure
Q.7. What is meant by functional structure? Give its merits & demerits.
Ans:  Functional organisation structure is a structure whereby the departments are created on the basis of functions of the organization such as Production, marketing, finance etc.
a)      Specialisation: A functional structure leads to occupational specialization. This promotes efficiency in utilization of manpower as employee performs similar tasks within a department.
b)      Efficiency: It helps in increasing managerial and operational efficiency and these results in increased profit.
c)       Minimises costs: It leads to minimum duplication of efforts thus lowers cost.
d)      Better control and coordination: It promotes control and coordination within a department because of similarity in the tasks being performed.
a)      Functional empires: A functional structure places less emphasis on overall organizational objectives than the departmental objectives.
b)      Problems in coordination: Pursuing departmental interests at the cost of organizational interests can also hinder the interaction between two or more departments. It may lead to problems in coordination.
c)       Conflict of interests: A conflict of interests may arise among departments when the interests of two or more departments are not compatible.
d)      Inflexibility: It may lead to inflexibility.
Q.8. What is meant by divisional structure? Give its merits and demerits.                           2015
Ans: When the organisation is large in size and is producing more than one type of product then activities related to one product are grouped under one department. This type of organisation is called divisional structure organisation.
a)      Product specialisations as one type of product are grouped under one department.
b)      Fast decision making since there is no dependence of one department on other department.
c)       Fast decision making leads to flexibility.
d)      Expansion of new department without disturbing existing departments.
a)      Each department will require all the resources as every division will be working as an independent unit.
b)      Conflict on allocation of resources.
c)       Each department focuses on their product only.
Q.9. State any two circumstances in which Divisional organization structure is more suitable.   2013
Ans: Suitability (i) Divisional structure is suitable for those business enterprises where a large variety of products are manufactured using different productive resources (Cosmetics). (ii) When an organisation grows and needs to add more employees, create more departments and introduce new levels of management, it will decide to adopt a divisional structure.
Q.10. What do you mean by Delegation of authority? Mention its elements (Responsibility, Authority and Accountability).                                               2016
Ans: In every organisation managers are assigned lot of work and manager alone cannot perform all the work. So, he divides the work among different individuals working under his according to their qualification and gets the work done from them. After passing the responsibilities the manager also shares some of his authority with his subordinates. To make sure that his subordinates perform all works effectively and efficiently the manager creates accountability and this whole process is known as delegation of authority.
Elements of Delegation of Authority:                    2009, 2016
a)      Responsibility: Responsibility means assigning the work amongst subordinates. The process of delegation begins when manager divides his work among different individuals.
b)      Authority: Authority means power to take decision. To carry on the responsibilities every employee needs to have some authority, so, when managers are passing their responsibilities to the subordinates, they also pass some of the authority to the subordinates.
c)       Accountability: To make sure that his subordinates perform all works effectively and efficiently the manager creates accountability. Accountability means subordinates will be answerable for the non-completion of the task. It is the third and final step of delegation process.
Q.11. State five advantages of Delegation of Authority. (Importance of Delegation of authority or Necessity of Delegation in every Business organisation)                2009, 2012, 2014, 2016
Ans. Delegation of authority is necessary in all types of organizations. Reasons can be seen through the importance. The importance of delegation of authority may be outlined as follows:
a)      Reduced workload of managers: Delegation of authority permits a manager to share his workload with his subordinates. By passing on the routine work to the subordinates, the manager is able to concentrate on policy matters and decision-making. This would increase his effectiveness.
b)      Effective management: The manager who delegates’ authority can perform much more than the one who does not. This is because the manager can get some work done by his subordinates and is able to concentrate on policy matters and decision-making. This would increase his effectiveness.
c)       Motivation of employees: Delegation implies grant of authority to the subordinates along with responsibility for work. As a result, subordinates have a sense of recognition. They are motivated to work for higher performance.
d)      Employee development: As a result of delegation, employees get more opportunities to utilize their talent. It allows developing those skills which will improve their career prospects.
e)      Reduce the work load of managers: Managers can reduce their workload by sharing their responsibilities and work with the subordinates.
Q.12. What is Decentralisation? Mention its Importance.                            2010
Ans: Decentralisation is defined as systematic distribution of authority at every level of management. Under decentralisation every employee working at different levels gets some share in the authority.
Importance of Decentralisation:
a)      Develop trust and faith among subordinates which motivates them.
b)      Develop managerial talent for future.
c)       Quick decision-making is possible because employees are allowed to take decisions also.
d)      Relief to top management as they systematically pass the authority and responsibility at different levels.
e)      It develops team spirit among the employees.
Q.13. Distinguish between Delegation of Authority and Decentralisation 2008, 2011, 2013
Delegation of Authority
Sharing of the task with the subordinate and granting authority in a prescribed limit by the superior is Delegation.
The systematic delegation to the lowest level of management is called decentralization.

It becomes compulsory in all the organizations as the complete task cannot be performed by the superior.
It becomes compulsory in the large organisations.

Freedom in action
Less freedom to the subordinate Final authority lies with the delegator.
More freedom given to the subordinate.

This is a process done as a result of Division of work.
This is the result of the policies framed by higher officials.
It depicts limited distribution of work, so has a limited scope.
It depicts broader distribution of authority so has a wider scope.
Its purpose is reduction of workload of the officer.
The purpose is expansion of the authority in the organization.
Q.14. What are the barriers to effective delegation of authority? How these can be improved?                     2007, 2009, 2011
Ans: Barriers in delegation of authority
a)      Reluctance to delegate: - In many cases managers will not be interested to delegate to authority. They will not be willing to give authority to subordinates. They will not make any plan to delegate authority.
b)      Fear of subordinates: - Managers in many cases fear from subordinates because they think that when there is delegated authority their performance will be superior to the performance of manager and subordinate may pose challenge to the manager.
c)       Lack of trust: - Managers may lack confident or trust on subordinates. They do not think or believe that after delegating authority, subordinates will do better or their performance will improve.
d)      Incompetence of subordinates: - Subordinates must be competent enough for effective delegation of authority. Subordinate must be willing and competent to accept delegated authority. In many organizations due to the incompetency of subordinates delegation of authority is affected.
e)      Lack of control: - When employees are delegated authority, they will be free to work. They will work autonomously; managers cannot exercise effective control over them. Delegation is affected.
Principles of Effective Delegation of Authority or How barriers can be removed or Elements of delegation:
a)      Knowledge of Objectives: Before delegating authority, the subordinates should be made to understand their duties and responsibilities. In addition, knowledge of objectives and policies of the enterprise should be provided to them.
b)      Parity of Authority and Responsibility: This principle of delegation suggests that when authority is delegated, it should be commensurate with the responsibility of the subordinate.
c)       Unity of Command: This principle of delegation suggests that everyone should have only one boss. A subordinate should get orders and instructions from one superior and should be made accountable to one superior only.
d)      The Scalar Principle: The scalar principle of delegation maintains that there should be clear and direct lines of authority in the Organisation, running from the top to the bottom. The subordinate should know who delegates authority to him and to whom he should contact for matters beyond his authority.
e)      Clarity of Delegation: The principle of clarity of delegation suggests that while delegating authority to subordinates, they should be made to understand the limits of authority so that they know the area of their operation and the extent of freedom of action available to them. Such clarity guides subordinates while performing their jobs.
Q.15. “Authority can be delegated but responsibility cannot.” Explain.              2008, 2010, 2013
Ans: Yes, it is right to say that authority or decision-making power can be delegated but the accountability can never be delegated according to the principle of absolute responsibility or principle of abdication. The accountability remains with the manager even after delegating the work. For example, the directors of a computer manufacturing company have asked their production manager to achieve a target production of 150 computers per day. The production manager has asked five foremen to achieve this target. Two of them could not achieve the target. In this case production manager is responsible and accountable for non-completion of target because by passing authority and work to foremen, manager cannot get rid of his responsibility and accountability.
Q.16. What is centralisation? How centralisation differs from decentralisation?                  2015
Ans: Centralisation refers to concentration of power or authority in few hands i.e., top level. An organisation is centralised when the decision-making authority is in the hands of top level management only.
Difference between cetralisation and decentralisation:
1. Meaning
It refers to concentration of power at higher level only.
It refers to distribution of powers at every level of management.
2. Suitable
It is suitable for small size organisations.
It is suitable for large scale organisation.
3. Freedom of actions
Managers have less freedom of actions.
Managers have more freedom of actions.
Authority at different levels
Top management retains maximum authority.
The authority is systematically divided at every level.


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