Revision Notes for Class 12 Business Studies Chapter 5 Organising
Here we are providing Revision Notes for Class 12 Business Studies Chapter 5 Organising. These are the important points related to the chapter. Students should remember these points.
CONCEPT OF ORGANISING
Organising is defined as a process of defining and grouping the activities of the entire process and establishing the authority and relationship among them.
Steps involved in the process of organising
(a) Identification and division of work: The process of organising is initiated with identification of varied activities and divide the work to be performed in order to carry out an assigned task the work so identified is divided among members.
(b) Departmentalisation: The organising process involves grouping of similar and manageable activities into departments or units or sections on the basis of some predetermined criteria.
(c) Assigment of duties: Then the work is assigned to individual employees on the basis of their relative potential.
(d) Establishing Reporting Relationships: In order to ensure effective coordination, it is essential that while assigning jobs each member is told that from whom he/she has to take orders and to whom he/she will be accountable.
IMPORTANCE OF THE ORGANISING
The following points highlight the crucial role that organising plays in any business enterprise:
(a) Organising offers benefits of specialisation: Organising leads to specialisation as by performing the same task repetitively the employees gain proficiency.
(b) It brings clarity in working relationships: The process organising involves establishing a hierarchical order of well defined jobs.
(c) It leads to optimum utilisation of resources: Effective organising ensures proper allocation of jobs and helps to avoid duplication of activities.
(d) It facilitates adaptation to change: Organising helps to create a stable organisation and ensures that the required changes do not impede the survival and growth of organisation.
(e) It leads to effective administration: Organising makes it easy to manage the organisation and promotes effective administration.
(f) Development of personnel: Organising involves delegation of work to the employees in accordance to their relative competence which enables them to realise their full potential.
(g) It leads to expansion and growth of an enterprise: Organising offers numerous benefits to an organisation by promoting its smooth working and stability.
ORGANISATION STRUCTURE
The organisation structure refers to the framework within which managerial and operating tasks are performed. It specifies the relationships between people, work and resources.
SPAN OF MANAGEMENT
Span of management may be defined as the number of subordinates that can be effectively managed by a superior. There is an inverse relationship between the span of management and the levels of management in the structure.
TYPES OF ORGANISATIONAL STRUCTURE
The organisational structure can be classified under two types which are as follows:
(a) Functional structure: When activities within an organisation are grouped on the basis of major functions like production, finance, marketing and human resource and separate departments are created for each of these functions a functional structure is said to be created.
(b) Divisional structure: In a divisional structure separate divisions are created within an organisation on the basis of product lines and supported by functions. Divisional structure is suitable for a company manufacturing multiple products.
TYPES OF ORGANISATION
(a) Formal Organisation: An organisation structure which is created deliberately by the top level management in order to realise the organisational objectives is known as a formal organisation.
(b) Informal Organisation: An informal organisation arises spontaneously on its own from within the formal organisation when people interact beyond their formally defined roles.
DELEGATION
Delegation of authority is a process by which a manager shares some of his work and authority with his subordinate.
Elements of Delegation
(a) Authority: Authority refers to the right of a person give command to his subordinates and ensure compliance. The concept of authority arises from the superior subordinate relationship which is established through a scalar chain and reflected in an organisational structure. Authority is said to be flowing downwards as a superior delegates authority to his subordinate.
(b) Responsibility: Responsibility refers to the obligation of a subordinate to carry out assigned task the best of once ability and skill. Responsibility arises from the authority and it flows upwards from a subordinate to his/her superior. Responsibility cannot be delegated completely. In order to ensure effective delegation it is important that there is a balance between the authority granted and the responsibility entrusted to an employee.
(c) Accountability: Accountability refers to the answerability of an employee with respect to the work for which he has been made responsible and delegated authority. Accountability arises out of responsibility. It flows upwards from the subordinate to the superior. Accountability can never be delegated. Accountability is said to be imposed.
IMPORTANCE OF DELEGATION
(a) Effective management: Delegation leads to effective management of a business enterprise this is because it enables the managers to utilise their competence and the potential of their subordinates optimally.
(b) Employee development: When the subordinate are entrusted with more opportunities to utilise their talent, perform complex tasks and assume those responsibilities which is likely to improve their career prospects.
(c) Motivation of employees: Delegation helps to motivate employees because when a superior assigns a task to his subordinate it fosters relationship of trust and commitment amongst the two of them.
(d) Facilitation of growth: Delegation facilitates the growth of an organisation as it seeks to enrich the quality of manpower and widens the scope of using internal recruitment by providing them with training and experience through exposure to varied jobs.
(e) Basis of management hierarchy: Delegation of authority provides the basis of management hierarchy as it establishes superior-subordinate relationships.
(f) Better coordination: Delegation facilitates better coordination amongst the departments, levels and functions of management by providing clarity in reporting relationships.
CONCEPT OF CENTRALISATION
Centralisation refers to concentration of authority and the top level of the management.
CONCEPT OF DECENTRALISATION
Decentralisation refers to the process of systematic dispersal of authority up to the lowest level within an organisation so as to enable the managers at each level take those decisions and actions which line within their area of jurisdiction. Decentralisation in practice may not be considered absolutely essential like delegation by the small and medium-sized organisations. However, as the size of an organisation grows beyond a certain level in becomes difficult to manage business efficiently and effectively unless it is decentralised.
IMPORTANCE OF DECENTRALISATION
(a) Develops initiative among subordinates: Decentralisation seeks to develop initiative in the subordinates by promoting self-reliance and confidence amongst them.
(b) Develops managerial talent for the future: Decentralisation provides ample opportunities to the subordinates to exhibit their knowledge and skill.
(c) Quick decision making: Decentralisation facilitates quick decision making as the managers are provided freedom to take independent decisions and action.
(d) Relief to top management: Decentralisation provides relief management as it eliminates the need for direct supervision which enables the managers to pay attention to other important issues.
(e) Facilitates growth: Decentralisation helps to steer an organisation towards greater heights because it helps in increasing its productivity and profitability. if) Better control: Decentralisation facilitates control by ensuring continuous evaluation of performance at each level and the contribution of each department so that they can be individually held accountable for their results.
CAUTION IN IMPLEMENTING A DECENTRALISATION POLICY
Decentralisation must always be balanced with centralisation in areas of major policy decisions.
Complete centralisation would imply concentration of all decision making functions at the apex of the management hierarchy and would eliminate the need for a management hierarchy.
Complete decentralisation can lead to organisational disintegration as the departments may start operating on their own guidelines which may be contrary to the interest of the organisation.
