Organising

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Summary

Organising

Summary

Organising is the process of defining and grouping activities and establishing authority relationships among them.
Process of Organising:
- Identification and division of work
- Departmentalisation
- Assignment of Duties
- Establishing reporting relationships
Importance of Organising:
- Leads to division of work
- Clarity in reporting relationships
- Optimum utilization of resources
- Growth and better administration
- Greater creativity
Organisational Structure: Framework for managerial and operating tasks; can be functional or divisional.
Span of Management: Number of subordinates under a superior.

Functional Structure

Advantages:
- Specialisation
- Better control
- Managerial efficiency
- Ease in training employees
Disadvantages:
- Functional empires
- Conflict of interest
- Inflexibility
- Restriction in managerial development

Divisional Structure

Advantages:
- Integration
- Product specialisation
- Greater accountability
- Flexibility
- Better coordination
- More initiative
Disadvantages:
- Departmental conflicts
- Costly process
- Ignoring of organisational interests
- Increase in requirements of general managers

Formal Organisation

Designed by management to achieve goals.
Advantages:
- Fixation of responsibility
- Clarity of roles
- Unity of command
- Effective accomplishment of goals
Disadvantages:
- Procedural delays
- Inadequate recognition of creativity
- Limited in scope

Informal Organisation

Arises from interaction among people at work.
Advantages:
- Speed
- Fulfillment of social needs
- Fills inadequacies of formal structure
Disadvantages:
- Disruptive force
- Resistance to change
- Priority to group interests

Delegation

Transfer of authority from superior to subordinate.
Elements: Authority, Responsibility, Accountability.
Importance: Effective management, employee development, motivation, growth, and coordination.

Decentralisation

Delegation of authority throughout the organisation.
Importance: Development of managerial talent, quick decision making, reducing burden on top management, development of initiative, growth, and better control.

Learning Objectives

Explain the concept of organising.
Explain the process of organising.
Describe the importance of organising.
Explain the meaning, advantages and disadvantages of functional organisation.
Explain the meaning, advantages and disadvantages of divisional organisation.
Explain the meaning, advantages and disadvantages of formal and informal organisation.
Distinguish between formal and informal organisation.
Explain the concept of delegation and decentralisation.
Describe the importance of delegation and decentralisation.
Distinguish between delegation and decentralisation.

Detailed Notes

Organising

Definition of Organising

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.

Steps in the Process of Organising

Identification and Division of Work: Identify and divide the work that has to be done according to previously determined plans.
Departmentalisation: Group similar activities together to facilitate specialisation.
Assignment of Duties: Define the work of different job positions and allocate work accordingly to various employees.
Establishing Reporting Relationships: Ensure each individual knows who to take orders from and to whom they are accountable.

Importance of Organising

Benefits of Specialisation: Leads to systematic allocation of jobs, reducing workload and enhancing productivity.
Clarity in Reporting Relationships: Helps in establishing authority and accountability.
Optimum Utilisation of Resources: Ensures resources are used effectively to achieve goals.
Growth and Better Administration: Facilitates the growth of an enterprise and improves administrative efficiency.
Greater Creativity: Encourages innovation and adaptability in a dynamic business environment.

Organisational Structure

Definition: The framework within which managerial and operating tasks are performed.
Types: Can be functional (grouped by functions) or divisional (grouped by products).
Span of Management: Refers to the number of subordinates under a superior.

Types of Organisation

Functional Organisation

Advantages: Specialisation, better control, managerial efficiency.
Disadvantages: Functional empires, conflict of interest, inflexibility.

Divisional Organisation

Advantages: Integration, product specialisation, greater accountability.
Disadvantages: Departmental conflicts, costly process, increase in general manager requirements.

Formal Organisation

Definition: Designed by management to achieve organisational goals.
Advantages: Clarity of roles, unity of command.
Disadvantages: Procedural delays, limited scope.

Informal Organisation

Definition: Arises from social interactions among employees.
Advantages: Speed, fulfillment of social needs.
Disadvantages: Resistance to change, may spread rumors.

Delegation and Decentralisation

Delegation

Definition: Transfer of authority from superior to subordinate.
Elements: Authority, Responsibility, Accountability.

Decentralisation

Definition: Distribution of decision-making authority to lower levels of management.
Comparison with Delegation:
- Nature: Delegation is compulsory; Decentralisation is optional.
- Freedom of Action: More control in delegation; greater freedom in decentralisation.
- Scope: Narrow in delegation; wide in decentralisation.

Key Terms

Organising
Organisational structure
Departmentalisation
Delegation
Authority
Responsibility
Accountability
Functional structure
Divisional structure
Formal organisation
Informal organisation
Span of management
Centralisation
Decentralisation

Exam Tips & Common Mistakes

Common Mistakes and Exam Tips

Common Pitfalls

Misunderstanding Authority and Responsibility: Students often confuse authority with responsibility. Remember, authority is the right to command, while responsibility is the obligation to perform assigned tasks.
Neglecting Accountability: Failing to recognize that accountability flows upward can lead to confusion in reporting relationships.
Overlooking the Importance of Delegation: Many students underestimate the significance of delegation in management, which can lead to inefficiencies in task completion.

Exam Tips

Clarify Definitions: Ensure you understand key terms such as authority, responsibility, and accountability. Use definitions from the excerpts to reinforce your understanding.
Use Examples: When discussing concepts like delegation or decentralization, refer to examples provided in the text, such as Wipro's restructuring.
Focus on Structure Types: Be prepared to differentiate between functional and divisional structures, including their advantages and disadvantages, as outlined in the excerpts.
Understand Organisational Changes: Be ready to discuss how changes in organisational structure can impact a company's performance, especially in response to market pressures.

Practice & Assessment

Multiple Choice Questions

Flows downward from superior to subordinate

Flows horizontally across departments

Flows upward from subordinate to superior

Flows in a circular manner among peers

Correct Answer: C

Solution:

Accountability flows upward from subordinate to superior, as subordinates are answerable to their superiors for their performance.

By strictly adhering to formal rules and procedures.

By providing a rigid structure for communication.

By fulfilling social needs and facilitating faster communication.

By replacing the formal structure in decision-making.

Correct Answer: C

Solution:

An informal organization complements a formal organization by fulfilling social needs of employees and facilitating faster communication through unofficial channels, which can enhance job satisfaction and information flow.

The number of subordinates under a superior.

The total number of departments in an organisation.

The hierarchical levels in an organisation.

The geographical spread of an organisation's operations.

Correct Answer: A

Solution:

Span of management refers to the number of subordinates that a manager can effectively manage. It determines the number of direct reports a manager has.

The number of subordinates under a superior.

The total number of employees in an organisation.

The number of departments in an organisation.

The number of managers in an organisation.

Correct Answer: A

Solution:

Span of management refers to the number of subordinates that a manager or superior can effectively manage.

Arises out of social interaction

Has a rigid structure

Fulfills social needs

Leads to faster spread of information

Correct Answer: B

Solution:

Informal organisation is characterized by its flexible structure, arising spontaneously from social interactions among employees, and often leads to faster information dissemination and fulfills social needs.

Increases monotony and stress

Leads to procedural delays

Ensures optimum utilisation of resources

Limits employee creativity

Correct Answer: C

Solution:

Organising ensures optimum utilisation of resources, which is crucial for the survival and growth of an enterprise.

Clearly defined authority and responsibility

Arises from social interactions

Follows a structured communication pattern

Correct Answer: B

Solution:

A formal organisation is designed by management with clearly defined roles and follows structured communication patterns, whereas informal organisation arises from social interactions.

It allows for quicker decision-making by reducing the burden on top management.

It ensures strict control and uniformity across all departments.

It centralises authority, leading to more consistent decision-making.

It eliminates the need for delegation of authority.

Correct Answer: A

Solution:

Decentralisation allows decision-making authority to be distributed throughout the organisation, which can lead to quicker decisions and reduces the workload on top management.

Greater flexibility

Improved specialization

Faster decision-making

Reduced conflict

Correct Answer: B

Solution:

A functional organisational structure improves specialization by grouping activities based on functions, allowing employees to focus on their specific areas of expertise.

Enhanced flexibility

Increased specialisation

Functional empires

Improved managerial efficiency

Correct Answer: C

Solution:

A functional structure can lead to the creation of 'functional empires', where departments may prioritize their own goals over the organisation's overall objectives, leading to conflicts.

Authority flows upward, responsibility flows downward.

Authority and responsibility both flow downward.

Authority flows downward, responsibility flows upward.

Both authority and responsibility flow upward.

Correct Answer: C

Solution:

In an organisational hierarchy, authority is delegated from superior to subordinate (flows downward), while responsibility is the obligation to perform tasks and is directed towards the superior (flows upward).

Concentrated at the top management level

Distributed throughout the organisation

Retained by the board of directors

Limited to the immediate supervisors

Correct Answer: B

Solution:

Decentralisation involves distributing decision-making authority throughout the organisation, allowing for quicker decisions and development of managerial talent at various levels.

It is rigid and follows a formal chain of command.

It arises from social interactions and is flexible.

It is established by management to achieve specific tasks.

It strictly adheres to company policies and rules.

Correct Answer: B

Solution:

Informal organisation arises from social interactions among employees and is characterized by its flexibility, unlike the formal organisation which is rigid and structured by management.

Increased managerial talent development

More control by superiors

Narrow scope of decision-making

Centralised decision authority

Correct Answer: A

Solution:

Decentralisation helps in the development of managerial talent by allowing lower-level managers to make decisions and take initiative.

By enforcing strict adherence to rules and procedures.

By filling inadequacies in the formal structure through social interactions.

By creating additional layers of management.

By increasing procedural delays.

Correct Answer: B

Solution:

Informal organisation supports the formal organisation by fulfilling social needs and providing a channel for faster communication, thus compensating for inadequacies in the formal structure.

It strictly follows the scalar chain

It can resist changes proposed by formal management

It creates rigid authority lines

It limits social interactions among employees

Correct Answer: B

Solution:

Informal organisations can resist changes if they oppose the interests of the formal organisation, potentially delaying or restricting growth.

It replaces formal communication channels.

It operates independently of formal structures.

It supports and complements formal organisation by fulfilling social needs.

It strictly follows the formal hierarchy.

Correct Answer: C

Solution:

Informal organisation arises from social interactions and helps fulfill social needs, providing a sense of belonging and complementing the formal structure.

Rigid structure

Informal communication

Defined authority relationships

Procedural delays

Correct Answer: B

Solution:

Informal communication is not a characteristic of a formal organisation; it is more associated with informal organisations.

Arises from social interaction

Has a flexible structure

Follows a rigid structure

Lacks defined authority relationships

Correct Answer: C

Solution:

A formal organisation follows a rigid structure as it is designed by management to accomplish specific tasks.

It leads to increased monotony and stress.

It allows for the systematic allocation of jobs, enhancing productivity.

It restricts the growth of the enterprise.

It creates confusion in reporting relationships.

Correct Answer: B

Solution:

Organising leads to a systematic allocation of jobs among the workforce, reducing workload and enhancing productivity through specialisation.

Increased workload

Enhanced specialisation

Reduced accountability

Centralised management

Correct Answer: B

Solution:

Organising a business into departments enhances specialisation as it allows specific tasks to be handled by specialised teams.

Enhanced specialisation and expertise in specific functions

Better coordination and decision-making for specific products

Increased flexibility and adaptability to changes in the environment

Reduced costs due to economies of scale

Correct Answer: B

Solution:

A divisional structure allows for better coordination and decision-making as each division focuses on specific products or services, leading to more effective management and accountability.

It leads to procedural delays.

It can spread rumors that disrupt formal processes.

It restricts managerial development.

It increases operational costs.

Correct Answer: B

Solution:

Informal organisations can spread rumors quickly, which may disrupt formal processes and go against the interests of the formal organisation.

The right to command

The obligation to perform a task

Answerability for the outcome of a task

The ability to delegate tasks

Correct Answer: C

Solution:

Accountability implies being answerable for the final outcome of a task, even if authority has been delegated.

To centralise decision-making

To lessen the manager's workload

To increase the number of subordinates

To create informal networks

Correct Answer: B

Solution:

Delegation is primarily aimed at reducing the manager's workload by assigning tasks to subordinates.

Horizontal

Random

Through the scalar chain

Circular

Correct Answer: C

Solution:

In a formal organisation, communication flows through the scalar chain, which is a structured path.

Increased managerial efficiency

Greater accountability

Quick decision making

Reduced need for formal communication

Correct Answer: C

Solution:

Decentralisation allows for quicker decision making as authority is distributed closer to the point of action, reducing the time taken for decisions to be communicated from the top management.

A compulsory act

An optional policy decision

A method to centralise authority

A way to increase managerial workload

Correct Answer: B

Solution:

Decentralisation is an optional policy decision that involves dispersing decision-making authority.

Creating a single department for all tasks

Grouping activities based on criteria like territory or products

Eliminating departments to streamline processes

Assigning all tasks to top management

Correct Answer: B

Solution:

Departmentalisation involves grouping activities using criteria such as territory or products to create a hierarchical structure.

The obligation to perform an assigned task

The right to command and expect compliance

The ability to resist changes

The network of social relationships

Correct Answer: B

Solution:

Authority in an organisation refers to the right to command and expect compliance from subordinates.

Inflexibility

Increased costs

Lack of specialization

Slow decision-making

Correct Answer: B

Solution:

A divisional structure can lead to increased costs due to duplication of resources across divisions, as each division may require its own set of functional departments.

Authority

Responsibility

Accountability

Autonomy

Correct Answer: B

Solution:

Responsibility is the obligation to perform assigned tasks and is derived from the authority delegated to an individual.

Increased profitability

Decreased employee motivation

Reduced clarity in roles

Increased workload

Correct Answer: A

Solution:

An effective organisation structure results in increased profitability by specifying relationships between people, work, and resources.

Increased flexibility

Specialisation and better control

Reduced need for managers

Lower costs

Correct Answer: B

Solution:

A functional structure groups activities based on functions, leading to specialisation and better control.

Ensuring authority exceeds responsibility

Ensuring responsibility exceeds authority

Ensuring authority and responsibility are balanced

Ensuring accountability is eliminated

Correct Answer: C

Solution:

For effective delegation, the authority granted must be commensurate with the assigned responsibility to avoid misuse of authority or ineffectiveness.

Increased managerial efficiency

Flexibility and better coordination

Functional empires and conflict of interest

Greater accountability and product specialisation

Correct Answer: C

Solution:

A functional structure can lead to functional empires and conflicts of interest, as departments may prioritize their own goals over the organisation's.

Specialisation in product lines

Centralised decision making

Reduced costs

Increased rigidity

Correct Answer: A

Solution:

A divisional structure groups activities based on products, which allows for specialisation in product lines, leading to better focus and accountability.

Specialisation in functions

Greater accountability

Ease in training employees

Unity of command

Correct Answer: B

Solution:

A divisional structure groups activities based on products or services, which allows for greater accountability as each division operates like a separate business unit with its own resources and objectives.

To increase the workload of subordinates

To enhance managerial control over subordinates

To reduce the manager's burden and develop subordinates

To centralise decision-making authority

Correct Answer: C

Solution:

Delegation aims to reduce the manager's workload by assigning tasks to subordinates, thus allowing managers to focus on more critical tasks and facilitating the development of subordinates.

Activities are grouped based on geographical territories

It is highly flexible and adaptable

It groups activities based on functions like marketing, finance, etc.

It allows for greater product specialisation

Correct Answer: C

Solution:

A functional organisational structure groups activities based on specific functions such as marketing, finance, etc., allowing for specialisation in those areas.

Authority is delegated, responsibility is assumed, accountability is imposed.

Responsibility is delegated, authority is assumed, accountability is imposed.

Accountability is delegated, responsibility is assumed, authority is imposed.

Authority is assumed, responsibility is delegated, accountability is imposed.

Correct Answer: A

Solution:

In delegation, authority is transferred from superior to subordinate, responsibility is assumed by the subordinate, and accountability is imposed on the subordinate for the outcome.

To ensure flexibility in operations.

To maintain order and ensure compliance.

To encourage informal communication.

To reduce the need for supervision.

Correct Answer: B

Solution:

Establishing authority and reporting relationships in a formal organisation helps maintain order by clearly defining who has the right to make decisions and who is accountable for specific tasks.

To increase the number of managers

To ensure clarity in authority and accountability

To create more departments

To reduce the workload of employees

Correct Answer: B

Solution:

Establishing reporting relationships ensures clarity in authority and accountability, which is crucial for effective management.

It leads to a chaotic work environment.

It reduces the need for employee training.

It enhances clarity in reporting relationships and optimises resource use.

It eliminates the need for departmentalisation.

Correct Answer: C

Solution:

Organising enhances clarity in reporting relationships, optimises resource use, and establishes a structured framework for achieving business goals efficiently.

It enhances flexibility and quick decision-making.

It promotes specialisation and managerial efficiency.

It reduces the need for coordination among departments.

It fosters innovation by encouraging cross-functional collaboration.

Correct Answer: B

Solution:

A functional organisational structure groups activities based on functions, which promotes specialisation and enhances managerial efficiency by allowing employees to focus on their specific areas of expertise.

It is a compulsory act.

It implies extension of delegation to the lowest level of management.

It results in more control by superiors.

It has a narrow scope limited to a superior and his immediate subordinate.

Correct Answer: B

Solution:

Decentralisation involves distributing decision-making authority to lower levels of management, extending the concept of delegation throughout the organization, and providing greater autonomy to subordinates.

The process of assigning duties to employees

The creation of departments based on specific criteria

The establishment of authority and reporting relationships

The transfer of authority from superior to subordinate

Correct Answer: B

Solution:

Departmentalisation involves creating departments using criteria such as territory or product lines.

Authority is derived from responsibility.

Responsibility is derived from authority.

Authority and responsibility are unrelated.

Responsibility can be delegated, but authority cannot.

Correct Answer: B

Solution:

Responsibility arises from delegated authority, meaning that when authority is given, responsibility for the task follows.

Right to command

Obligation to perform an assigned task

Freedom to make decisions

Ability to delegate further

Correct Answer: B

Solution:

Responsibility is the obligation of a subordinate to properly perform the assigned duty.

Creating a new organisational structure

Defining work for different job positions and allocating work accordingly

Hiring new employees

Reducing the number of departments

Correct Answer: B

Solution:

Assignment of duties involves defining the work of different job positions and allocating work to various employees based on their skills and competencies.

It leads to a lack of specialisation.

It can result in duplication of resources across divisions.

It restricts managerial development.

It limits accountability within divisions.

Correct Answer: B

Solution:

A divisional structure can lead to duplication of resources across different divisions as each division may require its own resources and functions, leading to inefficiencies.

To lessen the burden of the manager

To increase the workload of subordinates

To centralise decision-making

To create more hierarchical levels

Correct Answer: A

Solution:

Delegation is primarily used to lessen the manager's burden by assigning tasks to subordinates.

Increased flexibility

Higher costs due to duplication of resources

Limited scope for employee creativity

Reduced specialisation

Correct Answer: B

Solution:

A divisional structure often leads to higher costs because each division operates as a self-sufficient unit, leading to duplication of resources across divisions.

The obligation to perform an assigned task

The right to command and exact obedience

The answerability for the outcome of an assigned task

The network of social relationships among employees

Correct Answer: B

Solution:

Authority in delegation refers to the right to command and exact obedience from subordinates.

Rigid structure

Slow communication

Resistance to change

Lack of social interaction

Correct Answer: C

Solution:

Informal organisations can resist change, which can delay or restrict growth.

Increased workload.

Greater autonomy in decision-making.

Reduced accountability.

More direct supervision from top management.

Correct Answer: B

Solution:

Decentralization provides greater autonomy to subordinates by allowing them to make decisions relevant to their tasks, which can lead to increased initiative and faster decision-making.

Decisions are made solely by top management

Decisions are delayed due to multiple approvals

Decisions are made quickly at various levels

Decisions are made based on a centralised policy

Correct Answer: C

Solution:

Decentralisation allows decision-making authority to be distributed throughout the organisation, enabling quicker decisions at various levels.

Centralised decision-making

Dispersal of decision-making authority

Strict hierarchical control

Focus on a single product line

Correct Answer: B

Solution:

Decentralisation involves the dispersal of decision-making authority to lower levels in the organisational hierarchy, allowing for greater autonomy and faster decision-making.

To increase the role of subordinates by giving them more autonomy.

To ensure that the top management retains all decision-making authority.

To centralise decision-making processes.

To limit the scope of delegation to immediate subordinates.

Correct Answer: A

Solution:

Decentralisation aims to increase the role of subordinates by providing them with more autonomy, allowing for quicker decision-making and development of managerial talent.

It flows downward from superior to subordinate.

It is completely delegated along with authority.

It remains with the superior even after delegation.

It is not a concern in informal organizations.

Correct Answer: C

Solution:

In delegation, while authority can be delegated, accountability remains with the superior, who is ultimately responsible for the actions of the subordinate.

Specialisation in products

Increased flexibility

Better coordination

All of the above

Correct Answer: D

Solution:

A divisional structure groups activities based on products, which leads to specialisation, increased flexibility, and better coordination.

Departmentalisation

Delegation

Division of Work

Centralisation

Correct Answer: C

Solution:

Division of work involves assigning specific tasks to individuals or groups to enhance efficiency and productivity by reducing workload and increasing specialization.

It limits the development of managerial talent by concentrating decision-making at the top.

It fosters the development of managerial talent by allowing more autonomy at lower levels.

It has no impact on managerial talent as it primarily affects operational efficiency.

It reduces the need for managerial talent by automating decision-making processes.

Correct Answer: B

Solution:

Decentralisation allows decision-making authority to be distributed throughout the organisation, which encourages managers at lower levels to develop their decision-making skills and leadership abilities, thus fostering the development of managerial talent.

Increased flexibility

Functional empires

Greater accountability

Ease of coordination

Correct Answer: B

Solution:

A functional structure can lead to the creation of 'functional empires' where departments may prioritize their own goals over the organization's overall objectives, leading to conflicts and reduced flexibility.

Authority can be entirely delegated.

Responsibility can be entirely delegated.

Accountability flows downward.

Authority is derived from responsibility.

Correct Answer: A

Solution:

Authority refers to the right to command and can be delegated from a superior to a subordinate. However, responsibility and accountability cannot be entirely delegated.

To increase the workload of employees

To define clear reporting relationships

To ensure a proper match between job and individual skills

To create informal communication networks

Correct Answer: C

Solution:

Assigning duties ensures that tasks are allocated to individuals best suited to perform them, based on their skills and competencies.

To create an organisational structure for effective management

To increase the workload of employees

To ensure all employees have the same tasks

To eliminate the need for management

Correct Answer: A

Solution:

Organising creates an organisational structure that defines roles and relationships, ensuring effective management and coordination.

To increase the workload of subordinates

To lessen the burden of the manager

To centralise decision-making

To eliminate accountability

Correct Answer: B

Solution:

Delegation is primarily aimed at reducing the manager's workload by transferring authority and responsibility to subordinates, allowing the manager to focus on more critical tasks.

True or False

Correct Answer: True

Solution:

Organising is crucial as it helps in the survival and growth of an enterprise by equipping it to meet various challenges.

Correct Answer: False

Solution:

Informal organisation is flexible and does not follow a strict set of rules; it arises from social interactions.

Correct Answer: True

Solution:

Decentralisation involves distributing decision-making authority to lower levels in the organisation.

Correct Answer: True

Solution:

Wipro shifted from a centralised to decentralised management system, allowing each subsidiary to be self-sufficient and responsible for its own growth.

Correct Answer: True

Solution:

Informal organisation emerges from social interactions among employees and is not a management-designed structure.

Correct Answer: False

Solution:

In a formal organisation, authority relationships are created by the management through a structured framework, not by social interactions.

Correct Answer: True

Solution:

The informal organisation does not follow prescribed lines of communication, leading to faster spread of information and quick feedback.

Correct Answer: True

Solution:

Formal organisation refers to the structure designed by management to accomplish specific tasks.

Correct Answer: True

Solution:

Wipro Technologies restructured by decentralising its management system, allowing each subsidiary to be self-sufficient and responsible for its own growth, which improved customer orientation.

Correct Answer: False

Solution:

While authority can be delegated, accountability cannot be delegated and remains with the superior.

Correct Answer: False

Solution:

Accountability flows upward from subordinate to superior, as the subordinate is answerable for the outcome of the assigned task.

Correct Answer: False

Solution:

Organising involves not only the allocation of resources but also establishing authority relationships among roles to ensure clarity and coordination.

Correct Answer: False

Solution:

Decentralisation is an optional policy decision made at the discretion of top management, unlike delegation which is compulsory.

Correct Answer: True

Solution:

Wipro separated itself into several subsidiaries by product line, such as telecommunications and engineering, each with its own accounting, personnel, and administrative functions.

Correct Answer: False

Solution:

Delegation is a compulsory act because no individual can perform all tasks on their own, whereas decentralisation is an optional policy decision.

Correct Answer: True

Solution:

Wipro separated itself into several subsidiaries by product line, such as telecommunications and engineering, to enhance customer orientation.

Correct Answer: True

Solution:

The excerpt defines the span of management as the number of subordinates under a superior.

Correct Answer: False

Solution:

While authority is delegated, accountability cannot be delegated and is always retained by the superior.

Correct Answer: False

Solution:

Even though authority is delegated, the superior remains accountable for the final outcome.

Correct Answer: True

Solution:

Organising involves defining and grouping activities, establishing authority relationships, and is important for division of work and clarity in reporting relationships.

Correct Answer: True

Solution:

By systematically allocating jobs, organising reduces workload and increases productivity through specialization.

Correct Answer: True

Solution:

The excerpt highlights that organising helps in the smooth transition of the enterprise in accordance with the dynamic business environment.

Correct Answer: True

Solution:

Decentralisation involves extending the delegation of authority to lower levels of management, allowing for greater autonomy.

Correct Answer: True

Solution:

Organising involves creating an organisational structure that designs roles and defines interrelationships to eliminate ambiguity in performance.

Correct Answer: False

Solution:

In a functional organisational structure, activities are grouped on the basis of functions, not products.

Correct Answer: False

Solution:

Delegation involves the transfer of authority from superior to subordinate, not the transfer of responsibility.

Correct Answer: True

Solution:

Decentralisation provides less control over executives, hence greater freedom of action compared to delegation.

Correct Answer: True

Solution:

In a formal organisation, communication is directed by rules and typically follows the scalar chain, ensuring a planned route of communication.

Correct Answer: True

Solution:

Decentralisation is the delegation of authority throughout the organisation, allowing for more autonomy at various levels.

Correct Answer: False

Solution:

While authority can be delegated, accountability remains with the manager, as they are ultimately responsible for the outcomes.

Correct Answer: True

Solution:

Organising involves defining roles, grouping activities, and establishing authority relationships to achieve organisational goals.

Correct Answer: False

Solution:

Decentralisation is an optional policy decision made at the discretion of top management, unlike delegation which is compulsory.

Correct Answer: False

Solution:

Delegation involves transferring both authority and responsibility from a superior to a subordinate.

Correct Answer: True

Solution:

The excerpt states that Wipro separated itself into several subsidiaries by product line to improve customer orientation.

Correct Answer: False

Solution:

Delegation is compulsory because no individual can perform all tasks on their own, while decentralisation is an optional policy decision made by top management.

Correct Answer: False

Solution:

The excerpt describes formal organisation as designed by management, whereas informal organisation arises spontaneously from social interactions.

Correct Answer: False

Solution:

The excerpt explains that while authority can be delegated, accountability cannot be entirely delegated and remains with the superior.

Correct Answer: False

Solution:

In a divisional structure, activities are grouped based on products, not functions.

Correct Answer: True

Solution:

Delegation is necessary as it allows tasks to be shared and managed efficiently, ensuring that no single individual is overwhelmed.

Correct Answer: True

Solution:

The organising function involves designing roles and defining the interrelationship between them to eliminate ambiguity in performance.

Correct Answer: True

Solution:

The informal organisation may resist changes, which can delay or restrict growth, as it operates based on social interactions and may not align with formal changes.

Correct Answer: False

Solution:

Decentralisation is an optional policy decision made at the discretion of top management, unlike delegation which is compulsory.

Correct Answer: True

Solution:

Authority is delegated from superior to subordinate, but accountability remains with the superior and cannot be delegated.

Correct Answer: False

Solution:

An informal organisation arises out of social interactions among employees, not from the formal structure created by management.

Correct Answer: True

Solution:

Organising enables a business to expand by adding new roles and diversifying its offerings.

Correct Answer: True

Solution:

While authority can be delegated, responsibility is assumed and cannot be entirely delegated.

Correct Answer: False

Solution:

While delegation involves transferring authority, accountability cannot be delegated and remains with the superior.

Correct Answer: False

Solution:

Functional structure groups activities based on functions, not products. Divisional structure groups activities based on products.

Correct Answer: False

Solution:

A functional organisational structure groups activities based on functions, not products.

Correct Answer: False

Solution:

The excerpt explains that decentralisation is an optional policy decision, not a compulsory act.

Correct Answer: True

Solution:

Decentralisation is indeed a policy decision that extends delegation to the lowest level of management.

Correct Answer: True

Solution:

Organising involves defining and grouping activities and establishing authority relationships, as stated in the summary of the organising process.

Correct Answer: False

Solution:

Decentralisation extends the scope of delegation to the lowest levels of management, providing greater autonomy and decision-making power.

Correct Answer: True

Solution:

Delegation is necessary because it is not possible for an individual to perform all tasks alone, making it a compulsory act.

Correct Answer: False

Solution:

The informal organisation arises spontaneously from social interactions among employees and is not designed by management.

Correct Answer: True

Solution:

The organising function is crucial as it helps in the survival and growth of an enterprise, enabling it to meet various challenges.

Correct Answer: False

Solution:

In a divisional organisational structure, activities are grouped based on products, not functions.

Correct Answer: True

Solution:

A formal organisation is designed by the management to accomplish specific tasks, and it specifies the boundaries of authority and responsibility.

Correct Answer: True

Solution:

Wipro Technologies separated itself into several subsidiaries by product line, such as telecommunications, engineering, and financial services, making each subsidiary self-sufficient.

Correct Answer: False

Solution:

Even though authority is delegated, the manager remains accountable for the outcomes.

Correct Answer: True

Solution:

Organising is crucial as it helps in the survival and growth of an enterprise by equipping it to meet various challenges.

Correct Answer: True

Solution:

The excerpt highlights that organising structures the work of an organisation to adapt to a dynamic business environment.

Correct Answer: False

Solution:

In an informal organisation, communication does not follow a planned route and can take place in any direction.

Correct Answer: True

Solution:

Formal organisation refers to the structure designed by management to accomplish tasks, specifying authority and responsibility.

Correct Answer: True

Solution:

An effective organisational structure facilitates coordination and resource allocation, which can lead to increased profitability.

Correct Answer: True

Solution:

Informal organisation arises from social interactions and relationships among employees.

Correct Answer: True

Solution:

Organising involves creating an organisational structure by designing roles and defining inter-relationships to eliminate ambiguity in duties.

Correct Answer: True

Solution:

The informal organisation can spread rumors and resist changes, which can act as a disruptive force against the interests of the formal organisation.

Correct Answer: False

Solution:

In an informal organisation, communication does not follow the scalar chain and can take place in any direction, making it more flexible.

Organising

AI Learning Assistant

Summary

Organising

Summary

Functional Structure

Divisional Structure

Formal Organisation

Informal Organisation

Delegation

Decentralisation

Learning Objectives

Learning Objectives

Detailed Notes

Organising

Definition of Organising

Steps in the Process of Organising

Importance of Organising

Organisational Structure

Types of Organisation

Functional Organisation

Divisional Organisation

Formal Organisation

Informal Organisation

Delegation and Decentralisation

Delegation

Decentralisation

Key Terms

Exam Tips & Common Mistakes

Common Mistakes and Exam Tips

Common Pitfalls

Exam Tips

Practice & Assessment

Multiple Choice Questions

Q1.Which of the following best describes the flow of accountability in an organisational hierarchy?

Correct Answer: C

Q2.How does an informal organization complement a formal organization?

Correct Answer: C

Q3.In the context of organisational structure, which of the following best describes the concept of 'span of management'?

Correct Answer: A

Q4.Which of the following best describes the concept of 'span of management'?

Correct Answer: A

Q5.Which of the following is NOT a characteristic of informal organisation?

Correct Answer: B

Q6.What is the main advantage of organising in a business enterprise?

Correct Answer: C

Q7.Which of the following is NOT a characteristic of a formal organisation?

Correct Answer: B

Q8.In the context of an organisation, what is the primary advantage of decentralisation?

Correct Answer: A

Q9.What is a primary advantage of a functional organisational structure?

Correct Answer: B

Q10.In a functional organisational structure, what is a potential disadvantage?

Correct Answer: C

Q11.Which of the following best describes the relationship between authority and responsibility in an organisation?

Correct Answer: C

Q12.In a decentralised organisation, decision-making authority is primarily:

Correct Answer: B

Q13.What is a key characteristic of informal organisation?

Correct Answer: B

Q14.Which of the following is a key benefit of decentralisation in an organisation?

Correct Answer: A

Q15.How does the informal organisation support the formal organisation?

Correct Answer: B

Q16.What is a potential disadvantage of an informal organisation?

Correct Answer: B

Q17.Which of the following best describes the role of informal organisation within a formal organisation?

Correct Answer: C

Q18.Which of the following is NOT a characteristic of a formal organisation?

Correct Answer: B

Q19.Which of the following is a characteristic of a formal organisation?

Correct Answer: C

Q20.Which of the following is a benefit of organising within a business enterprise?

Correct Answer: B

Q21.What is the main advantage of organising a business into departments?

Correct Answer: B

Q22.In the context of organisational structures, which of the following best describes the main advantage of a divisional structure?

Correct Answer: B

Q23.What is a key disadvantage of the informal organisation?

Correct Answer: B