Class 12 business studies chapter 5 ncert solutions: Organising class 12 questions and answers
| Textbook | Ncert |
| Class | Class 12 |
| Subject | Business Studies |
| Chapter | Chapter 5 |
| Chapter Name | Organising class 12 ncert solutions |
| Category | Ncert Solutions |
| Medium | English |
Are you looking for business studies class 12 chapter 5 questions and answers? Now you can download Organising class 12 questions and answers pdf from here.
Very Short Answer Type:
Question 1: Identify the network of social relationships which arises spontaneously due to interaction at work.
Answer 1: Informal organisation is referred to as the social relationship network that arises naturally as a result of interaction at work. The emergence of an informal organisation is a from social interaction and free flow of communication between the employees of the organisation.
Question 2: What does the term ‘Span of management’ refer to?
Answer 2: The term “Span of Management” refers to the number of subordinates or employees that a manager can effectively oversee or supervise. It determines the structure of an organization in terms of levels of management and impacts the efficiency and effectiveness of managerial control. A wide span means a manager oversees many subordinates, while a narrow span implies fewer subordinates under direct supervision.
Question 3: State any two circumstances under which the functional structure will prove to be an appropriate choice.
Answer 3: Functional structure would proved to be an appropriate choice if:
(i) The organisation is large in size, it can function smoothly. Large organisation can follow departmentalisation to improve managerial efficiency and the degree of control.
(ii) There is a clear division of activities in various departments. Then a functional structure promotes coordination and ensures smooth functioning.
Question 4: Draw a diagram depicting a functional structure.
Answer 4:
Question 5: company has its registered office in Delhi, manufacturing unit at Gurgaon and marketing and sales department at Faridabad. The company manufactures the consumer products. Which type of organisational structure should it adopt to achieve its target?
Answer 5: In this scenario, the company should adopt a functional organizational structure to achieve its target.
This structure groups activities based on functions, such as production, marketing, sales, and administration. Since the company has distinct departments located in different places (registered office in Delhi, manufacturing in Gurgaon, and marketing/sales in Faridabad), a functional structure ensures specialization, clear roles, and smooth coordination within each functional area. This approach allows the company to focus on optimizing operations in each department, enhancing efficiency and productivity in achieving its overall goals.
Short Answer Type:
Question 1: What are the steps in the process of organising?
Answer 1: The following steps are involved in the process of organising:
1. The first step that is involved in organising is identifying the number of activities and accordingly dividing them as per the plan. Actions are taken as per the defined objectives. Having a clear division of work keeps duplicity at bay.
2. Actions that were fixed earlier are now arranged in groups based on similarity. This ensures that the department specialising in the work has access to it.
3. The next step in organising is assigning the roles and responsibilities to the person best suited for the job. Work is allocated as per the skills of the members.
4. The next part of organising is the presence of a hierarchy in an organisation. It is very helpful when a person is aware of his immediate superior. A defined organisation structure helps in ensuring the successful functioning of the activities of the organisation.
Question 2: Discuss the elements of delegation.
Answer 2: The elements of delegation are as follows:
Authority: Authority refers to the right of a person to command his subordinates and take action within his scope of position. It also refers to take a decision inherent in his position and tell people what to do and expect them to do it.
Responsibility: It is the obligation of a subordinate to perform the assigned job given to him effectively. The subordinate is always bound to perform the duties assigned by the superior. He is always responsible to his superior.
Accountability: It implies being answerable to the final outcome. A subordinate is always accountable to his superior.
Question 3: How does informal organisation support the formal organisation?
Answer 3: The informal organisation offers many benefits. Important among them are given as follows:
(i) Quick Feedback: Fixed lines of communi-cation are not followed. Thus, the informal organisation leads to faster spread of information among subordinates as well as quick feedback.
(ii) Social Needs: It aids to fulfil social needs of the members and grants them to find minded people. This enhances their job satisfaction, since it gives them a sense of belongingness in the organisation.
(iii) Organisational Objectives: It contributes towards attainment of organisational objectives by compensating for flaws in the formal organisation e.g., feedbacks on new policies etc, can be tested through informal network.
Question 4: Can a large sized organisation be totally centralised of decentralised? Give your opinion.
Answer 4: No large organisation can not be totally centralised or decentralised. Complete centralisation would imply concentralisation of all decision making functions at the apex of the management hierarchy. Such a scenario would obviate the need for a management hierarchy. On the other hand, complete decentralisation would imply the delegation of all decision making functions to the lower level of the hierarchy and this would finish off the need for higher, managerial positions. Both the situations are unrealistic.
As an organisation grows in size and complexity, there is a tendency to move towards decentralised decision making. This is because, in large organisations those employees, who are directly and closely involved with certain operations tend to have more knowledge about them than the top management, which may only be indirectly associated with individual operations. Hence, there is a need for balance between these co-existing forces.
Question 5: Decentralisation is extending delegation to the lowest level. Comment.
Answer 5: Decentralisation and delegation are similar in nature. Both are about transferring responsibility and authority. In the case of delegation, authority is shared among two individuals, i.e., superior delegating authority to subordinate, whereas in decentralisation, the authority is shared at multiple levels. Therefore, it can be said that the act of delegating authority at each level of management promotes decentralisation, while the act of decentralisation helps promote delegation at the lowest level.
Question 6: Neha runs a factory wherein she manufactures shoes. The business has been doing well and she intends to expand by diversifying into leather bags as well as western formal wear thereby making her company a complete provider of corporate wear. This will enable her to market her business unit as the one stop for working women. Which type of structure would you recommend for her expanded organisation and why?
Answer 6: Neha should adopt a divisional organizational structure for her expanded business.
This structure is ideal because it groups activities based on products, allowing each division (shoes, leather bags, and formal wear) to operate as a self-contained unit with its own resources and management. It ensures better focus on each product line, easier performance evaluation, and flexibility to adapt to market demands while supporting her vision of a one-stop solution for working women.
Question 7: The production manager asked the foreman to achieve a target production of 200 units per day, but he doesn’t give him the authority to requisition tools and materials from the stores department. Can the production manager blame the foreman if he is not able to achieve the desired target? Give reasons.
Answer 7: Not at all. The production manager did not give him the authority to requisition tools and materials so he should not held the foreman responsible for not achieving the desired target. There should be a balance between authority and responsibility. If he had given the authority, then the foreman must have the responsibility to achieve the set target.
Long Answer Type:
Question 1: Why delegation is considered essential for effective organising?
Answer 1: Effective delegation leads to the following benefits:
(i) Effective Management By empowering the employees, the managers are able to function more efficiently as they get more time to concentrate on important matters. This makes the working of all the levels effective and efficient.
(ii) Employee Development As a result of delegation, employees get more opportunities to utilise their talent and this may give rise to talent abilities in them. It makes them better leaders and decision makers. Delegation empowers the employees by providing them with the chance to use their skills, gain experience and develop themselves for higher positions.
(iii) Motivation of Employees Delegation helps in developing the talents of the employees. It also has psychological benefits. Responsibility for work builds the self-esteem of an employee and improves his confidence. He feels encouraged and tries to improve his performance further.
(iv) Facilitation of Growth Delegation helps in the expansion of an organisation by providing a ready workforce to take up leading positions in new ventures. Trained and experienced employees are able to play significant roles in the launch of new projects.
(v) Basis of Management Hierarchy Delegation of authority establishes superior-subordinate, which are the basis of hierarchy of management. The extent of delegated authority also decides the power that each job position enjoys in the organisation.
(vi) Better Co-ordination Due to delegation work, duties, power all becomes very clear. This helps to avoid overlapping of duties and duplication of effort as it gives a clear picture of the work being done at various levels. Such clarity in reporting relationships help in developing and maintaining effective coordination amongst the departments, levels and functions of management.
Question 2: What is a divisional structure? Discuss its advantages and limitations.
Answer 2: A divisional structure is an organizational framework in which the company is divided into separate units or divisions based on products, services, geographic locations, or markets. Each division operates as a self-contained unit with its own resources, such as production, marketing, and finance, and is managed independently.
Advantages of Divisional Structure:
- Product Focus: Each division specializes in a specific product or service, improving efficiency and expertise.
- Accountability: Performance of each division can be easily assessed and held accountable for profits or losses.
- Flexibility: Divisions can quickly adapt to changes in market demands or customer preferences.
- Managerial Development: Managers in each division gain experience and decision-making skills, fostering leadership growth.
- Customer Orientation: Helps better address customer needs as divisions focus on specific markets or products.
Limitations of Divisional Structure:
- Resource Duplication: Divisions may duplicate resources like finance, marketing, and HR, leading to higher costs.
- Coordination Issues: Lack of synergy and communication between divisions can hinder organizational goals.
- Conflict of Interests: Divisions may prioritize their objectives over the overall company goals, causing conflicts.
- Limited Economies of Scale: Independent functioning of divisions may reduce the benefits of centralized operations.
Question 3: Decentralisation is an optional policy. Explain why an organisation would choose to be decentralised.
Answer 3: Decentralisation is an optional policy because whether or not an organisation should be decentralised is upto the top order management to decide it. An organisation should be de decentralised because of the following reasons:
Develops initiative among subordinates: Decentralisation helps to promote self reliance and confidence among the subordinates. It gives them the power to judge and accordingly take a decision during a problem. They don’t have to depend on the higher authority and take their best judgement. This improves their confidence and prepares them to become leaders.
Develops managerial talent for the future: Along with the training, it is the experience which makes a person fully job fit. Decentralisation gives them the chance to prove their worth and their talents create a reservoir of qualified manpower who can solve more challenging problems through promotions.
Quick Decision making: In Decentralised organisations, the time taken to solve the problem is fast as it doesn’t depend on the advice of the superior authority. There is no requirement of any approval or any long channels which takes sufficient amount of time.
Relief to the top management: Since decentralisation gives the power to the subordinates to tackle a situation on their own; it doesn’t involve the higher authority to approve or see to solve every problem. By this way, they could save a lot of time and utilise it in making other business policies or expanding the business.
Facilitates growth: As decentralisation gives the authority to the subordinates to tackle and solve the problem on their own, it enables the whole unit to function efficiently. Consequently there are high returns and the business can be expanded fruitfully.
Better Control: Decentralisation enables to evaluate the progress of a unit at a time and the members can be held accountable for the results. It enables the management to take necessary actions so that a unit can become more efficient.
Question 4: Distinguish between centralisation and decentralisation.
Answer 4: Distinction Between Centralization and Decentralization:
| Basis | Centralization | Decentralization |
|---|---|---|
| Definition | The concentration of decision-making authority at the top levels of management. | The systematic delegation of decision-making authority to lower levels of management. |
| Decision-Making Power | Retained at the top level of the organization. | Delegated to managers and employees at various levels. |
| Authority | Authority is centralized, with limited delegation. | Authority is widely distributed across various levels. |
| Speed of Decision-Making | Slower, as all decisions require approval from top management. | Faster, as decisions can be made at the point of action. |
| Suitability | Best for smaller organizations or when uniformity is critical. | Best for large organizations requiring flexibility and quick decision-making. |
| Managerial Burden | High burden on top management due to concentrated authority. | Shared responsibility reduces the workload of top management. |
| Adaptability | Less adaptable to local or specific conditions. | Highly adaptable to local or specific needs and conditions. |
| Cost | Lower, as it reduces duplication of efforts. | Higher, due to potential duplication of resources. |
| Example | Military organizations or tightly controlled enterprises. | Large multinational corporations with diverse operations. |
Question 5: How is a functional structure different from a divisional structure?
Answer 5: Difference Between Functional Structure and Divisional Structure
| Basis | Functional Structure | Divisional Structure |
|---|---|---|
| Definition | Groups activities based on functions, such as production, marketing, and finance. | Groups activities based on products, services, markets, or regions. |
| Focus | Specialization in specific functions. | Specialization in specific products or markets. |
| Accountability | Difficult to fix accountability for overall performance as departments are interdependent. | Easier to fix accountability as each division operates as a separate unit. |
| Coordination | Coordination between functional departments may be challenging. | Coordination within divisions is easier but may be difficult across divisions. |
| Resource Duplication | Minimal, as resources are shared among functions. | High, as each division may duplicate resources like HR, marketing, etc. |
| Cost | Lower operational costs due to shared services. | Higher operational costs due to duplication of resources. |
| Flexibility | Less flexible, as decisions often require approval across functions. | More flexible, as divisions can operate independently. |
| Suitability | Best for organizations with a single product line or limited product diversification. | Best for organizations with multiple product lines or diversified markets. |
| Examples | A company manufacturing only shoes with departments like production, marketing, and finance. | A company dealing in shoes, bags, and apparel with separate divisions for each product. |
Question 6: A company, which manufactures a popular brand of toys, has been enjoying good market reputation. It has a functional organisational structure with separate departments for Production, Marketing, Finance, Human Resources and Research and Development. Lately to use its brand name and also to cash on to new business opportunities it is thinking to diversify into manufacture of new range of electronic toys for which a new market is emerging. Which organisation should be adopted in this situation? Give concrete reasons with regard to benefits the company will derive from the steps it should take.
Answer 6: In the situation given above, organisation should shift from a functional structure to a divisional structure as the company wants to diversify; by adding a new product line.
The reasons and benefits are:
(i) Every unit’s performance is assessed.
(ii) New product lines can be added easily without bothering the existing units.
(iii) Decision making is faster.
(iv) Divisional structure controls short line of communication with customers and provide better services to them.
Question 7: A company manufacturing sewing machines set up in 1945 by the British promoters follows formal organisation culture in totality. It is facing lot of problems in delays in decision making. As the result it is not able to adapt to changing business environment. The work force is also not motivated since they cannot vent their grievances except through formal channels, which involve red tape. Employee turnover is high. Its market share is also declining due to changed circumstances and business environment. You are to advise the company with regard to change it should bring about in its organisation structure to overcome the problems faced by it. Give reasons in terms of benefits it will derive from the changes suggested by you.
Answer 7: The change that can be suggested in this situation is adopting some space for informal structure by making changes in its current formal organisation structure.
An informal structure would offer the following benefits:
- 1. Information will move faster, as there is no definite channel of communication that needs to be followed.
- 2. It will offer a sense of belongingness to the employees as the rules of communication are beyond official roles. Employees feel more secure in the organisation and work towards the betterment of the organisation.
- 3. It supports the working of a formal organisation, as it helps in fulfilling the organisational objectives in a manner beneficial for the organisation.
- 4. The company can also diversify their product range by venturing into sewing products, such as producing machinery with embroidery features.
Question 8: A company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, new liberalised environment has seen entry of many MNC’s in the sector. With the result the market share of X limited has declined. The company had followed a very centralized business model with Directors and divisional heads making even minor decisions. Before 1991 this business model had served the company very well as consumers had no choice. But now the company is under pressure to reform. What organisation structure changes should the company bring about in order to retain its market share? How will the changes suggested by you help the firm? Keep in mind that the sector in which the company is FMCG.
Answer 8: A major change that needs to be adopted is a move towards decentralisation. As the organisation is growing it cannot maintain complete centralisation. The employees must be given some authority and responsibility to ensure smooth and efficient functioning of the organisation. Moreover, it would enable quick decision making in the organisation.
Decentralisation would benefit the organisation in the following manner.
1. With decentralisation the lower level managers would get freedom and autonomy to take initiatives.
2. Decentralisation would help in developing managerial competence which would prove useful in the process of growth.
3. With decentralisation the decisions are taken quickly and in a timely manner. This is useful in finding solutions to the problems easily.