organising wrksheet 1

QUESTION-BANK (2014-15)BUSINESS STUDIES

CLASS- XII GR12/BST/CH5/AKChapter 5:Organising

Topic: Concept, importance, organising process, structure of organisation-functional and divisional, formal and informal organisation.

Section A1 mark questions:

1. Define organizing as a function of management.Ans: Organizing is the process of defining and grouping activities and establishing authority relationships among them.

2. This function of management manages various resources for accomplishment of objectives?Ans: Organizing

3. Which is the first step in the process of organizing?Ans: Identification and division of work.

4. Give any one importance of organizing.Ans: Benefits of specialization-Organizing leads to a systematic allocation of jobs amongst the workforce. This reduces the workload as well as enhances productivity because of the specific workers performing a specific job on regular basis. Repetitive performance of a particular task allows a worker to gain experience in that area and leads to specialization.

5. Name the organizational structure designed and established by the management.Ans: Formal organizational structure.

6. Give anyone benefit of informal organization.Ans: Prescribed lines of communication are not followed. Thus, the informal organization leads to faster spread of information as well as quick feedback.

7. What is the aim of organization?Ans: The aim of organizing is to bring order out of chaos, remove conflict among employees and creating an environment suitable for teamwork.3 marks questions:

8. What is meant by ‘formal organization’? List to any two advantages of formal organization.Ans: It’s a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability. Formal organization refers to the organisation structure which is designed by the management to accomplish a particular task.The two advantages are:-

It’s easier to fix responsibilities since mutual relationships are clearly defined. Unity of command is maintained through an established chain command.

9. Explain the meaning of organizing or define organizing as a structure.Ans: Organising essentially implies a process which coordinates human efforts, assembles resources and integrates both into a unified whole to be utilized for achieving

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specified objectives. Organising can be defined as a process that initiates implementation of plans by clarifying jobs and working relationships and effectively deploying resources for attainment of identified and desired results (goals).

10. What is meant by ‘formal organization’? List to any two limitations of formal organization.Ans: Formal organization is designed by the management to achieve organizational

goals. Rules and procedures related to work processes have strictly, rigidly been laid down.

The limitations are: 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.

Poor organization practices may not provide adequate recognition to creative talent since it does not allow any deviations from rigidly laid down polices.

11. 2. State any three advantages of informal organization.Ans: The 3 advantages of informal organization are:

Prescribed lines of communication are not followed. Thus the informal organization leads to faster spread of information as well as quick feedback.

It helps to fulfill the social needs of the members and allows them to find like-minded people. This enhances their job satisfaction since it gives them a sense of belongingness in the organization.

It contributes towards fulfillment of organizational objectives by compensating for inadequacies in the formal organization. For example employee’s reactions towards plans and policies can be tested through the informal network.

12. Explain by giving any three reasons why organizing is considered as an important function of management.

OR“Organization is the harmonious adjustment of specialized parts for the accomplishment of some common purpose or purposes”. In the light of this statement explain any four points over the importance of organizing.

Ans: The reasons are:Benefits of specialisation: Organising leads to a systematic allocation of jobs amongst the work force. This reduces the workload as well as enhances productivity because of the specific workers performing a specific job on a regular basis. Repetitive performance of a particular task allows a worker to gain experience in that area and leads to specialisation.

Clarity in working relationships: The establishment of working relationships clarifies lines of communication and specifies who is to report to whom. This removes ambiguity in transfer of information and instructions. It helps in creating a hierarchical order thereby enabling the fixation of responsibility and specification of the extent of authority to be exercised by an individual.

Optimum utilization of resources: Organising leads to the proper usage of all material,

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financial and human resources. The proper assignment of jobs avoids overlapping of work and also makes possible the best use of resources. Avoidance of duplication of work helps in preventing confusion and minimizing the wastage of resources and efforts.4 marks questions:

13. Enumerate the steps in the process of organizing.OR

“Organizing is the process of defining and grouping the activities of the enterprise and establishing the authority relationship among them”. In the light of the statement explain the steps in the process of organizing.Ans: The process of organizing is as follows:

1. Identification and division of work: The first step in the process of organizing involves identifying and dividing the work that has to be done in accordance with previously determined plans. The work is divided into manageable activities so that duplication can be avoided and the burden of work can be shared among the employees.

2. Departmentalization: Once work has been divided into small and manageable activities then those activities which are similar in nature are grouped together. Such sets facilitate specialization. This grouping process is called departmentalization. Departments can be created using several criteria as a basis. Examples of some of the most popularly used basis are territory (north, south, west etc).

3. Assignment of duties: It is necessary to define the work of different job positions and accordingly allocate work to various employees. Once departments have been formed, each of them is placed under the charge of an individual. Jobs are then allocated to the members of each department in accordance to their skills and competencies. It is essential for effective performance that a proper match is made between the nature of a job and the ability of an individual. The work must be assigned to those who are best fitted to perform it well.

4. Establishing reporting relationships: Merely allocating work is not enough. Each individual should also know who he has to take orders from and to whom he is accountable. The establishment of such clear relationships helps to create a hierarchal structure and helps in coordination amongst various departments.

14. State any four features of informal organization.Ans:The features are:

1. It originates from within the formal organizations as a result of personal interaction among employees

2. The standards of behavior evolve from group norms rather than officially laid down rules

3. Independent channels of communication are developed by group members4. It emerges spontaneously and is not deliberately created by management.

5 marks questions:15. Distinguish between functional structure and divisional structure.

Ans:

Basis Functional Structure Divisional Structure

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Formation Formation is based on functions.

Formation is based on product lines and the supported by

functions

Specialization Functional specialization Product specialization

Responsibility Difficult to fix on a department

Easy to fix responsibility for performance

Managerial development

Difficult, as each functional manager has to go to the top

management

Easier, autonomy as well as the chance to perform multiple

functions helps in managerial development

Cost Functions are not duplicated hence economical

Duplication of resources in various departments hence

costly.

Coordination Difficult for a multi-product company

Easy, because all the functions related to a particular product

are integrated in one department.

16. What is meant by functional structure of organization? Explain any 2 advantages and 2 limitations of this structure.Ans: Grouping together the entire work into major functional departments and entrusting these departments to functional specialists is known as functional structure of the organisation.Advantages:

Promotes division of work which leads to specialisation Ensures effective utilisation of workforce Supervision and coordination becomes easy since each individual manager is

specialised in his job.

Limitations:

As each function is separate and each departmental head is concerned with the performance of his department, conflicts may arise and the overall objectives of the organisation suffer.

In large functional organisations, taking quick decisions & coordination becomes difficult

It becomes difficult to hold a particular department accountable if any problem arises.

For example, if a product fails the production, sales and research departments may point accusing fingers at each other.6 marks questions:

17. What is meant by formal organization? Explain any five features of formal

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organization.Ans: This structure is designed by the management to achieve organisational goals in which the responsibilities, authority and mutual relationships among all the employees working in an enterprise are clearly defined. It can be functional or divisional.Features :-1. It in deliberately created by the top management.2. It is based on rules and procedures. Which are in written form3. It is impersonal - Does not take into consideration emotional aspect.4. It clearly defines the authority and responsibility of every individual.5. It is created to achieve organisational objectives.Section B1 mark questions:

18. ‘Identifying and dividing the work’ is the first step in the process of one of the functions of management. Identify the function.Ans: organizing.

19. Why is it easy fix responsibility in formal organization?Ans: It is easier to fix responsibility in formal organization since mutual relationships are clearly defined.

20. Identify the type of suitable organizational structure for a large scale organization having diversified activities requiring high degree of specialization in operation.Ans: The type of organizations structure suitable for a large scale organization having diversified functions requiring high degree of specialization in operations is the functional structure.

21. Organizing helps in optimum utilization of resources. Which type of resources does it prefer?Ans. Human, financial and material resources

22. It is formed by grouping together the entire work to be done into major functional departments. Name it.Ans: functional structure.

23. Divisional structure is more suitable for the firm having several products and each product has distinct features. Do you agree? Give one reason.Ans: Yes, I agree with this statement as in the divisional structure, the organizations structure comprises of separate business units for distinct products which helps in specialization.

24. Name the organizational structure designed and established by the management.Ans: Formal and organizational structure.

25. Name the process of grouping the activities of similar nature.Ans: The process is organizing.

26. What determines the number of levels of management in the organization structure?Ans: span of management.

27. Which organizational structure promotes better coordination?Ans: Divisional Structure

28. Name the process which brings order out of chaos, removes conflict among people over work and creates an environment suitable for teamwork.

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Ans: organizing.29. Which type of organizational structure is suitable for high degree of specialization?

Ans: functional structure.30. Why is it said that management must continuously review its plans, objectives and

organizational structure?Ans: The process of management is a series of continuous, composite, but separate functions (planning, organizing, directing , controlling ). These functions are simultaneously performed by all managers all the time. It is a dynamic function and has to keep adapting to the changing environment.

31. Name the type of organizational structure which comprises of separate business units.Ans: The organizational structure which comprises of separate business units is the

divisional structure.32. Name the type of organization which does not provide a complete picture of how an

organization works. Why?Ans: The formal organization does not provide a complete picture of how an organization works. This is because it emphasizes on structure and work rather than human relationships.3 marks questions:

33. State any 3 circumstances in which functional organization is more suitable.Ans: The three circumstances are:

a. Size of organization is largeb. Has diversified activitiesc. Operations require a high degree of specialization

34. State any 3 circumstances in which divisional organization is more suitable. Ans: when the organization wants to create more departments, add more

employees and increase the levels of management. When large varieties of products are manufactured using different productive

resources. When it is important to determine profit and loss made by each product line so

that the decisions can be taken to expand, continue or close a particular product line.

4 marks questions:35. State any two advantages and any two limitations of informal organization.

Ans: Two advantages of informal organization:1. Prescribed lines of communication are not followed. Thus the informal

organization leads to faster spread of information as well as quick feedback.2. It helps to fulfill the social needs of the members and allows them to find like-

minded people. This enhances their job satisfaction since it gives them a sense of belongingness in the organization.

Two limitations of informal organizations:1. The management me not be successful in implementing changes is the informal

organization opposes them. Such resolutions to change may delay or restrict growth.

2. It pressurizes members to conform to group expectations. This can be harmful for

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the organization is the norms set by the group are against Organization interests.36. State any two advantages and any two limitations of formal organization.

Ans: The merits are:1. It is easier to fix responsibility as mutual relationships are clearly defined2. Unity if command is maintained through an established chain of command.

The demerits are:1. It may lead to procedural delays2. Poor organisation practices may not provide adequate recognition to creative

talent.5 marks questions:

37. What is meant by ‘divisional structure’ of an organization? Explain it’s advantages and limitations.Ans: When the organization 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 is known as the divisional structure.

Advantages:-1. Product specialization – All the activities related to on type of product are

grouped under one department only which brings integration and coordination in the activities.

2. Fast decision making – The decisions are taken much faster in divisional structure because there is no dependence on other departments for taking decisions.

3. Flexibility – Fast decision making leads to flexibility.

Disadvantages:-1. Each department will require all the resources as every division will be working

as an independent unit.2. Each department focuses on their product and they fail to keep themselves as a

part of one common organization.3. Conflict on allocation of resources.

38. What is meant by informal organization? Explain any four features of it.Ans: Informal Organisation arises out of interaction amongst people at work. Its advantages are speed, fulfilment of social needs, fills inadequacies of formal structure. Its disadvantages are: disruptive force, resistance to change and priority to group interests.Features of informal organisation:

1. An informal organisation originates from within the formal organisation as a result of personal interaction among employees.

2. The standards of behaviour evolve from group norms rather than officially laid down rules and regulations.

3. Independent channels of communication without specified direction of flow of information are developed by group members.

4. It emerges spontaneously and is not deliberately created by the management.39. Differentiate between formal and informal organization.

Ans: Formal Organisation

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Meaning – Structure of authority relationships created by the management.Origin – Arises as a result of company rules and policies.Authority – Arises by virtue of position in management.Behaviour – It is directed by rules.Flow of Communication – Communication takes place through the scalar chainNature – RigidLeadership – Managers are leadersInformal OrganisationMeaning – Network of social relationships arising out of interaction among employeesOrigin – Arises as a result of social interactionAuthority – Arises out of personal qualitiesBehavior – There is no set behaviour patternFlow of Communication – Flow of communication is not through a planned route. It can take place in any directionNature – FlexibleLeadership – Leaders may or may not be managers. They are chosen by the group.

Basis Formal Organisation Informal Organisation

Meaning Structure of authorityrelationships created by the

management

Network of socialrelationships arising out

of interaction amongemployees

Origin Arises as a result ofcompany rules and policies

Arises as a result of socialinteraction

Authority Arises by virtue of positionin management

Arises out of personalqualities

Behaviour It is directed by rules There is no set pattern

Flow of Communication

Takes place through scalar chain

It is not through a planned route. Can take place in any

direction.

Nature Rigid Flexible

Section C1 mark questions:

40. Name the type of organization in which:a. Friendly relationship exists among the members.b. Official relationship exists among the members.Ans: a. Formal b. Informal

41. ‘It gives the organizational structure’. Name the term which is being referred to.Ans: Span of management.

42. “Identifying and grouping activities” is a step in the process of which function of

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management?Ans: Organizing

43. “Division of work is the first step in the process of organizing”. Explain.Ans: Division of work is the first step in the process of organization according to predetermined plans. The work is divided so that duplication can be avoided and workload is shared among the employees.3 marks questions:

44. Informal organization is considered better than formal organization. Do you agree with this statement? Give reasons.Ans: Yes, I agree.

1. Fast communication – This structure does not follow scalar chain so there can be faster spread of communication.

2. Fulfills social need – Informal communication gives due importance to psychological and social need of employees which motivates the employees.

3. Correct feedback – Through informal structure the top level managers can know the real feedback of employees on various policies and plans.

4 marks questions:45. Formal organization is considered better than informal organization. Do you agree

with this statement? Explain.Ans: Yes, I agree that formal organization is better than informal organization.

1. Systematic working – Formal organization structure results in systematic and smooth functioning of an organization

2. Achievement of organizational objectives – Formal organization structure is established to achieve organizational objectives.

3. Coordination – Formal organization structure results in coordinating the activities of various departments.

4. More emphasis on work – It lays more emphasis on work than interpersonal relationships.

46. “Organizing plays an important who is in any business enterprise”. Explain by giving any four reasons.Ans: Organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.Importance of Organising :-1. Benefits of specialisation: - In organising every individual is assigned a part of total work and not the whole task. Due to this division of work into smaller units and repetitive performance leads to specialisation. Thus organising promotes specialisation which in turn leads to efficient & speedy performance of tasks.2. Clarity in working Relationship: - It helps in creating well defined jobs and also clarifying the limits of authority and responsibility of each job. The superior, subordinate relationship is clearly defined in organising.3. Effective Administration: It provides a clear description of jobs and related duties which helps to avoid confusion and duplication. Clarity in working relationships enables

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proper execution of work which results in effective administration.4. Optimum Utilisation of resources: The proper assignment of jobs avoids overlapping/duplication of work. This helps in preventing confusion and minimizing the wastage of resources and efforts6 marks questions:

47. Truck manufacturing company has its registered office in Delhi and manufacturing unit in Chennai. The company manufactures different types of trucks. Its marketing division is located at Noida. Suggest a suitable organizational structure for this company giving reason in support of your answer. Also explain any five advantages of this structure of organizing.Ans: Functional structure would be a suitable organizational structure for this company. Since this company has diversified activities and the operations require a high degree of specialisation. The company has a manufacturing unit, a marketing division so jobs of similar nature are functioning as separate departments. Hence, functional structure would be the most suitable form of organizational structure.Five advantages of functional organizational structure :1) A functional structure leads to occupational specialisation since emphasis is placed on specific functions. This promotes efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve performance.2) It promotes control and coordination within a department because of similarity in the tasks being performed3) It helps in increasing managerial and operational efficiency and this results in increased profit.4) It leads to minimal duplication of effort which results in economies of scale and this lowers cost.5) It makes training of employees easier as the focus is only on a limited range of skills.

48. Company’s manufacturing televisions, refrigerators, air-conditioners, washing machines and gas stoves using different productive resources and is at the threshold of growth, requiring more employees.Suggest a suitable organizational structure for this company giving reason in support off your answer. Also explain any three advantages and two limitations of this structure of organizing.Ans: The organization structure suitable for this company would be the divisional structure. This is because the company deals with various types of products. In the divisional structure the organization structure comprises of separate business units or divisions. Each unit has a divisional manager responsible for performance and who has authority over the unit. Generally, manpower is grouped on the basis of different products manufactured. Each division is multifunctional because within each division functions like production, marketing, finance, purchase, etc. are performed together to achieve a common goal. Each division is self-contained as it develops expertise in all functions related to a product line. Advantages:

1. Product specialization helps in the development of varied skills in a divisional head and this prepares him for higher positions. This is because he gains

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experience in all functions related to a particular product.2. It promotes flexibility and initiative because each division functions as an

autonomous unit which leads to faster decision making.3. Facilitates expansion and growth as new divisions can be added without

interrupting the existing operations by merely adding another divisional head and staff for the new product

Disadvantages1. Conflict may arise among different divisions with reference to allocation of funds

and further a particular division may seek to maximize its profits at the cost of other divisions.

2. It may lead to increase in costs since there may be a duplication of activities across products.

3. It provides managers with the authority to supervise all activities related to a particular division. In course of time, such a manager may gain power and in a bid to assert his independence may ignore organisational interests.

Section D4 marks questions:

49. The Informal Organization is used primarily for spreading rumors .Its existence cannot be removed .What values should be imbibed to make the Informal Organization effective and useful?(a) Mutual understanding.(b) Empathy.(c) Caring.

50. An Organization should allocate work to employees who are best suited for the job. In practice it is not so, most business organizations are dominated by fresh engineers, B- school graduates. Experience persons are not given preference in the present scenario. What values are missing in these kinds of job allocation? Give suggestions.(a) Recognition(b) Respect for seniority.

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organising wrksheet 1

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