CBSE Class 12 — Notes, Chapters & Practice Quizzes

Chapter 5: Organising

Summary

Organising is the management function of identifying and grouping the work to be done, assigning duties, establishing authority-responsibility relationships and allocating resources to achieve goals. The organising process involves identifying and dividing the work, departmentalisation, assigning duties and establishing reporting relationships. Its importance lies in the benefits of specialisation, clarity in working relationships, optimum use of resources, adaptation to change, effective administration, the development of personnel and the expansion and growth of the enterprise. Organising results in an organisation structure, which may be functional (grouping jobs of similar nature under functional departments) or divisional (grouping activities by product lines). The functional structure suits firms with a single product line, gives specialisation and economy, but can create departmental conflict; the divisional structure suits multi-product firms, fixes accountability and aids growth, but costs more and may lead to inter-divisional rivalry. A formal organisation is a deliberately designed structure of roles, while an informal organisation arises spontaneously from social interaction among employees; both have merits and limitations. Delegation is the downward transfer of authority and the entrustment of responsibility; its elements are authority, responsibility and accountability. Decentralisation is the systematic delegation of authority throughout the organisation, giving lower levels more decision-making power. Delegation reduces a manager's workload and develops subordinates, while decentralisation relieves top management, develops initiative and managerial talent and gives quicker decisions.

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