Business Studies Class 12 Notes Organizing

1. Meaning of Organizing

once the goals and plans are laid down, administration has to pick out and set up productive relationships between a variety of things to do and assets for enforcing plans.

In accepted phrases organizing refers to arranging the entirety in orderly shape and making the most environment friendly use of resources.

The goal of organizing is to allow humans to work collectively for a frequent purpose.

‘Organizing is the procedure of figuring out and grouping the work to be performed,

defining and delegating duty and authority and setting up relationships for the motive of enabling human beings to work most efficaciously together in conducting objectives.

2. Steps Involved in the Process of Organizing

Process of Organizing
Fig: Process of Organizing

I. Identification & Division of Work

The whole work to be carried out must be divided into precise jobs as in accordance to predetermined plans. –

Job = a set of associated duties that can be carried out through an individual.

It has to have precise and precise duties to be performed. As some distance as possible,

it needs to outline anticipated effects alongside with the job.

– Division of work → specialization of efforts and competencies + avoids duplication of work.

– Management have to make sure that all the things to do required to reap organizational targets are identified.

II Departmentalization

Grouping comparable and associated jobs into large gadgets known as departments,

divisions or sections and putting them beneath a department head.

It helps specialization.

– The departments are linked collectively and are interdependent.

– Aims at attaining co-ordination and facilitate solidarity of action. Departmentation can be accomplished on the groundwork of:

– Functions: marketing, personnel, finance etc.

– Products: Textiles, chemical, energy division etc.

– Territories: Western, northern, central, Japanese etc.

III Assignment of Duties

– Define the work of one-of-a-kind job positions and allocate work accordingly.

– Once departments are formed, the dept is positioned below the cost of an individual.

– Jobs are assigned to acharacter first-class acceptable to operate it.

– Qualifications, experience, capacity and aptitudes of humans must be matched with duties.

– E.g. things to do of finance ought to be assigned to people having skills and ride in finance e.g. C.A‘s.

IV Establishing Reporting Relationships

– Granting requisite authority to allow personnel to function the job satisfactorily.

– Superior subordinate family members between one of a kind human beings and job positions created,

so that each person is aware of from whom he is to take orders and to whom he can trouble orders.

– Creates administration hierarchy = a chain of command from the pinnacle supervisor to the character at the lowest level.

– This helps in coordination.

3 Importance of Organizing

I Benefits of specialization

In organizing each man or woman is assigned aside of whole work and no longer the total task.

This division of work into smaller devices and repetitive overall performance leads to specialization.

Thus, organizing promotes specialization which in flip leads to environment friendly & rapid overall performance of tasks.

II Clarity in relationship of working

It helps in nicely developingdescribed jobs and additionally clarifying the limits of authority and accountability of every job.

The superior-subordinate relationship is certainly described in organizing.

III Effective Administration

It gives a clear description of jobs and associated responsibilities which helps to keep away from confusion and duplication.

Clarity in working relationships permits ideal execution of work which outcomes ineffective administration.

IV Optimum utilization of resources

The ideal venture of jobs avoids overlapping/duplication of work.

This helps in stopping confusion and minimizing the wastage of assets and efforts.

V Adoption to Change

A correct designed organizational shape is bendy which allows adjustment to modifications in workload precipitated by

way of exchange in exterior surroundings associated to technology, products, assets and markets.

VI Development of Personnel

Sound company encourages initiative and relative wondering on section of the employees.

When managers delegate their authority, it reduces their workload so they can center of attention on greater vital problems associated to increase & innovation.

This additionally develops the subordinates’ capacity and helps him to understand his full potential.

VII Expansion and growth

It help in increase & diversification of an employer through including extra job positions,

departments, merchandise lines, new geographical territories etc.

4 Meaning of Organizational Structure

It seeks to set up family members amongst all the men and women working in the organization.

Under the organizational structure, more than a few posts are created to function one-of-a-kind things to do for the attainment of the targets of the enterprise.

Relations amongst humans working on distinct posts are determined.

The shape presents a foundation or framework for managers and different employers for performing their functions.

The business enterprise structure can be described as the body work inside which managerial and running duties are performed.

business structure
Fig: Business Structure

Relation between Organization structure and Span of Management

Span of administration refers to the quantity of subordinates that can be efficaciously managed through a superior.

The Span of administration to a massive extent offers structure to the agency structure.

This determines the stages of administration in the structure.

Arrow span of administration consequences in tall shape whereas wider span of administration outcomes in flat structure.

I Functional Structure

In practical shape things to do are grouped and departments are created on the groundwork of unique features to be performed.

For example, all the jobs associated to manufacturing are grouped below manufacturing department, income departments etc.


  • Large agencies producing one line of product.
  • Organizations which require excessive diploma of purposeful specialization with assorted activities.


A) Specialization: Better choice of labour takes area which consequences in specialization of features and its consequent benefits.

B) Coordination is established: All the people working inside a departmental are experts of their respective jobs.

It makes the co-ordination simpler at departmental level.

C) Helps in growing managerial efficiency: Managers of one branch are performing equal kind of characteristic

once more and once more which makes them specialized and improves their efficiency.

D) Minimizes cost: It leads to minimal duplication of effort which outcomes in economies of scale and therefore lowers cost.


A. Ignorance of organizational objectives: Each departmental head works in accordance to his personal wishes.

They continually supply more weight to their departmental objectives. Hence average organizational goals suffer.

B. Difficulty in Inter-departmental Coordination: All departmental heads work as per their personal needs which leads to coordination inside the branch less complicated

however it makes inter-departmental coordination difficult.

C. Hurdle in entire improvement – due to the fact every worker specializes solely in a small section of the complete job.


Dividing the total organization in accordance to the foremost merchandise to be manufactured (like metal, plastic, cosmetics etc.) is regarded as divisional agency structure.

Suitability: This shape is appropriate in agencies producing multi product or distinctive strains of merchandise requiring product specialization.

Also developing organizations which intend to add greater traces of merchandise in future undertake this structure.


A) Quick decision-making: Divisional supervisor can take any selection involving his division independently which makes selections rapid and effective.

B) Divisional outcomes can be assessed: Division consequences (profit/loss) can be assessed easily. On this groundwork any unprofitable division can be closed.

C) Growth and Expansion: It enables boom and growth as new divisions can be delivered besides stressful current departments.


1. Conflicts amongst specific divisions on allocation of resources.

2. Duplicity of Functions: Entire set of features is required for all divisions. It offers upward jostle to duplicity of efforts amongst divisions & Itwill increase cost.

3. Selfish Attitude: Every division tries to show higher performance and from time to time even at the price of different divisions. This indicates their egocentric attitude.


– Refers to the org. shape that is designed through the administration to accomplish organizational objectives.

– It specifies actually the boundaries of authority & duty and there is a systematic coordination amongst a variety of things to do to gain organizational goals.

– Louis Allen – System of properly described jobs, every bearing a particular measure of authority, duty & accountability.


A) It is intentionally created by way of the pinnacle management.

B) It is primarily based on regulations and techniques which are in written form.

C) It is impersonal i.e. does no longer takes into consideration emotional aspect.

D) It genuinely defines the authority and duty of each individual.

E) It is created to reap organizational objectives.


A) Easier to repair duty on the grounds that mutual relationships are truly defined.

B) No overlapping of work – due to the fact matters go in accordance to a specific plan.

C) Unity of command via a mounted chain of command.

D) Easy to reap goals – due to the fact coordination and most appropriate use of human and fabric resources.

E) Stability in the company – due to the fact conduct of personnel can be pretty anticipated for the reason that there are particular regulations to information them.


1. The Work is primarily based on regulations which motives needless delays.

2. Lack of initiative: The personnel have to do what they are informed to do and they have no chance of thinking.

3. Limited in scope: It is challenging to recognize all human relationships in a company as its location’s greater emphasis on shape and work.


A casual enterprise is that company which is no longer set up intentionally

however comes into existence due to the fact of frequent interests, tastes and spiritual and communal relations.

The essential reason of this organization, shape is getting psychological satisfaction.

For example, personnel with comparable activity in sports, films, faith etc.

May additionally structure their very own casual groups.


A) It originates from inside the formal organisation as a end result of non-public interaction amongst employees.

B) It has no written guidelines and procedures.

C) It does now not have constant traces of communication.

D) It is no longer intentionally created through the management.

E) It is non-public capability the emotions of folks are stored in mind.


A) Speed: Prescribed strains of verbal exchange are now not observed which leads to quicker unfold of information.

B) Fulfillment of social wants – enhances job pride which offers them an experience of belongingness in the organization.

C) Quick answer of the issues – due to the fact the subordinates can communicate barring hesitation earlier than the officers,

it helps the officers to apprehend the issues of their subordinates.


A) It creates rumors: All the people in a casual company speak careless and on occasion an incorrect element is conveyed to the different persons.

B) It resists trade and lays stress on adopting the ancient techniques.

C) Priority to crew interests: Pressurizes individuals to conform to crew expectations.

7 Difference between Formal and Informal Organization

Formal organization

Informal organization

1.Formal organization is established with the explicit aim of achieving well-defined goals.

1. Informal organization spring on its own. Its goals are ill defined and intangible.

2. Formal organization is bound together by authority relationships among members. A hierarchical structure is created, constituting top management, middle management and supervisory management.

2. Informal organization is characterized by a generalized sort of power relationships. Power in informal organization has bases other than rational legal right.

3. Formal organization recognizes certain tasks which are to be carried out to achieve its goals.

3. Informal organization does not have any well-defined tasks.

4.The roles and relationships of people in formal organization are impersonally defined.

4. In informal organization the relationships among people are interpersonal.

5.In formal organization, much emphasis is placed on efficiency, discipline, conformity, consistency and control.

5. Informal organization is characterized by relative freedom, spontaneity, by relative freedom, spontaneity, homeliness and warmth.

6. In formal organization, the social and psychological needs and interests of members of the organization get little attention.

6. In informal organization the sociopsychological needs, interests and aspirations of members get priority.

7. The communication system in formal organization follows certain pre-determined patterns and paths.

7. In informal organization, the communication pattern is Haphazard, intricate and natural.

8. Formal organization is relatively slow to respond and adapt to changing situations and realities.

8. Informal organization is dynamic and very vigilant. It is sensitive to its surroundings.

8 Delegation of Authority

Meaning: Its capability the granting of authority to subordinates to function inside the prescribed limits.

The supervisor who delegates authority holds his subordinates accountable for suitable overall performance of the assigned tasks.

To make certain that his subordinates function all the works efficiently and correctly in anticipated manner the supervisor creates accountability.

9 Process/Elements of Delegation

A) Authority: The electricity of taking choices in order to information the things to do of others.

Authority is that electricity which influences the habits of others.

B) Responsibility: It is the duty of a subordinate to top function the assigned duty.

When a highest quality problems orders, it turns into the accountability of the subordinate to raise it out.

C) Accountability: When a most reliable assigns some work to a subordinate, he is answerable to his most reliable for its success or failure.

10 Principle of Absoluteness of Accountability

Authority can be delegated however responsibility/accountability can’t be delegated by means of a manager.

The authority granted to a subordinate can be taken lower back and re-delegated to some other person.

The supervisor can’t get away from the accountability for any default or mistake on the phase of his subordinates.

For example, If the chief govt asks advertising and marketing supervisor to acquire an income goal of sale of a hundred units/day.

The advertising supervisor delegates this project to deputy income manager, who fails to attain the target.

Then advertising supervisor will be answerable for the work overall performance of his subordinates.

Thus, accountability is continually of the man or woman who delegates authority.

11 Difference between Authority, Responsibility and Accountability






It means right to command

It is the obligation to perform an assigned task.

It means the answerability for outcome of the assigned task.


It can be delegated.

It cannot be entirely delegated.

It cannot be delegated at all.


It arises from formal position.

It arises from delegated authority.

It arises from responsibility.


It flows downward from superior to subordinate.

It flows upward from subordinate to superior.

It flows upward from subordinate to superior.

12 Importance of the Delegation of Authority

a) Reduction of Executives’ work load: It reduces the work load of officers.

They can as a result make use of their time in extra necessary and innovative works rather of works of day by day routine.

b) Employee development: Employees get greater possibilities to make use of their Genius which lets in them to boost these capabilities which will allow them to operate complicated tasks.

c) Quick and better choice are possible: The subordinate is granted adequate authority so they want no longer to go to their superiors for taking selections regarding the pursuits matters.

d) High Morale of subordinates: Because of delegation of authority to the subordinates they get a possibility to show their effectivity and capacity.

e) Better coordination: The factors of delegation – authority, duty and accountability assist to outline the powers,

obligations and reply potential associated to quite a number job positions which outcomes in creating and preserving nice coordination.

13 Decentralization

Decentralization of authority capacity dispersal of authority to take selections all through the organization, up to the decrease levels.

• It implies reservation of some authority with the pinnacle stage administration and transferring relaxation of the authority to the decrease tiers of the organization.

This empowers decrease tiers to take selections related to issues confronted through them besides having to go to the higher levels.

According to Allen, ‘Decentralization refers to systematic efforts to delegate to the lowest level,

all authority barring the one which can be exercised at central points. ‟

Centralization = authority retained at pinnacle degree and Decentralization = Systematic delegation of authority at all stages and in all departments of a firm. Firm desires to stability the two.

• In case of a decentralized firm, Top stage retains authority for:

o Policies and selections w.r.t the complete firm

o Overall manage and coordination

• Middle and decrease tiers have authority to take choices w.r.t duties allotted to them

Centralization and Decentralization

represents the sample of authority amongst managers at one-of-a-kind levels.

Centralization of authority skill attention of energy of choice making in a few hands.

In such an enterprise very little authority is delegated to managers at center and decrease levels.

No company can be absolutely centralized or decentralized. They exist collectively and there is a want for a stability between the two.

As the enterprise grows in size, there is tendency to pass in the direction of decentralization. Thus, each employer is characterized by using both.

14 Importance of Decentralization

a) Develops initiative amongst subordinates: It helps to promote self assurance due to the fact the subordinates are given freedom to take their personal decisions.

b) Quick and higher decisions: The burden of managerial choices does no longer lie in the fingers of few humans however receives divided amongst a range of humans which helps them to take higher and speedy decisions.

c) Relieves the pinnacle executives from extra workload: Each day managerial works is assigned to the subordinates which leaves ample time with the superiors which they can make use of in growing new strategies.

d) Managerial Development: Its capacity giving authority to the subordinates up to the decrease stage to take choices involving their work. In this way the probability to take choices helps in the improvement of the organization.

e) Better Control: It makes it viable to consider overall performance at every degree which consequences in entire manage over all the activities.

Short Answer Type Questions

A) Define ‘Organizing?

Ans: Organizing is described as a method that initiates implementation of plans by means of clarifying jobs,

working relationships and correctly deploying resources for attainment of recognized and favored results.

B) What are the steps in the procedure of organizing?

Ans: Organizing includes following steps that want to be taken in series

(i) Identification and Division of Work Organizing procedure starts with figuring out and division of whole work into small units.

(ii) Departmentalization After dividing the work, associated and comparable jobs are grouped collectively and put below one department.

(iii) Assignment of Duties After departmentalization, the work is assigned in accordance to the capability of individuals.

(iv) Establishing Reporting Relationship Assigning responsibilities is now not enough.

Each person has to additionally know, who he has to take orders and to whom he is accountable.

Thus, reporting relationship helps in co-ordination amongst more than a few departments.

C) Discuss the factors of delegation.

Ans: The factors of delegation are as follows

(i) Authority It refers to the proper of a character to command his subordinates and to take motion inside the scope of his position.

The thought of authority arises from the mounted scalar chain, which hyperlinks a number of job positions and stages of an organization.

It has to be cited that authority is confined through legal guidelines and the guidelines and rules of the organization. Authority flows downward.

(ii) Responsibility is the duty of a subordinate to correct operate the assigned duty.

It arises from a superior-subordinate relationship due to the fact the subordinate is certain to function the obligation assigned to him by means of his superior.

Responsibility flows upward.

(iii) Accountability implies being answerable for the remaining outcome.

Once authority has been delegated and accountability accepted, one can’t deny accountability.

It can’t be delegated and flows upwards i.e.;

a subordinate will be responsible to a top-quality for pleasant overall performance of work.

4. What does the time period ‘Span of management’ refer to?

Ans: Is the variety of subordinates underneath a gold standard or we can say,

its ability how many personnel can be successfully managed by using a superior.

The span of management, to a massive extent offers form to the organizational structure, e.g.,

if the variety of subordinates below a most advantageous maintain growing when we go downward then the form of the organizational shape will be as follows.

Span of management

5. Under what occasions would purposeful shape show to be a fabulous choice?

Ans: Functional shape would show to be most appropriate when the measurement of the enterprise is large,

has different things to do and operations require a excessive diploma of specialization.

It promotes manipulate and co-ordination inside a department,

improved managerial and operational efficiency, outcomes in multiplied profits.

6) Can a massive sized enterprise be completely centralized or decentralized? Give your opinion.

Ans: No massive organization can no longer be completely centralized or decentralized.

Complete centralization would mean conceptualization of all choice making features at the apex of the administration hierarchy.

Such a situation would obviate the want for a administration hierarchy.

On the different hand, whole decentralization would suggest the delegation of all selection making features to the decrease degree of the hierarchy and this would end of the want for higher,

managerial positions. Both the conditions are unrealistic.

As a business enterprise grows in measurement and complexity, there is a tendency to go in the direction of decentralized selection making.

This is because, in giant organizations these employees, who are immediately and carefully concerned with positive operations

have a tendency to have extra information about them than the pinnacle management,

which may additionally solely be circuitously related with man or woman operations.

Hence, there is a want for stability between these co-existing forces.

7)Decentralization is expanding delegation to its lower level. Comment.

Ans: Decentralization is expanding delegation to its lower level.

decentralization explains the manner in which selection making duties are divided amongst hierarchical levels.

Decentralization refers to delegation of authority in the course of all the tiers of the organization.

Decision making authority is shared with decrease stages and is hence positioned nearest to the factor of action.

In different words, selection making authority is pushed down the chain of command.

Delegation is the technique and decentralization is the stop result,

e.g., If the director provides the accountability to manufacturing head to whole the goal of 20,000 devices and authorize him to appoint the workers,

manufacturing head similarly shares his duty with supervisor to choose the worker.

Manager shares his duty with supervisors, who are dealing with workers, authorize him to pick out workers.

Here, the accountability dispensed at each and every level.

Long Answer Type Questions

1. Why is delegation regarded indispensable for tremendous organizing?

Ans: Effective delegation leads to the following benefits

(i) Effective Management By empowering the employees,

the managers are in a position to feature extra effectively as they get extra time to pay attention on essential matters.

This makes the working of all the tiers high quality and efficient.

(ii) Employee Development As an end result of delegation,

personnel get extra possibilities to utilize their brain and this can also supply upward jab to intelligence competencies in them.

It makes them higher leaders and choice makers.

Delegation empowers the employees via imparting them with the danger to use their skills, achieve trip and increase themselves for greater positions.

(iii) Motivation of Employees Delegation helps in growing the abilities of the employees.

It additionally has psychological benefits. Responsibility for work builds the shallowness of a worker and improves his confidence.

He feels influenced and tries to enhance his overall performance further.

(iv) Facilitation of Growth Delegation helps in the growth of an employer by using offering a equipped group of workers to take up main positions in new ventures.

Trained and skilled personnel are in a position to play great roles in the launch of new projects.

(v) Basis of Management Hierarchy Delegation of authority establishes superior-subordinate,

which are the groundwork of hierarchy of management.

The extent of delegated authority additionally decides the strength that every job function enjoys in the organization.

(vi) Better Co-ordination Due to delegation work, duties, energy all turns into very clear.

This helps to keep away from overlapping of obligations and duplication of effort as it offers a clear image of the work being executed at a number level.

Such readability in reporting relationships assist in growing and retaining high quality coordination amongst the departments, stages and features of management.

2. What is a divisional structure? Discuss its blessings and limitations.

Ans: A divisional shape contains of separate commercial enterprise gadgets or divisions.

Each unit has a divisional supervisor accountable for overall performance and who has authority over the unit.

Generally, manpower is grouped on the groundwork of distinct merchandise manufactured.


(i) Skill Development Product specializations helps in the improvement of various capabilities in a divisional head and this prepares him for greater positions as he good points journey in all functions.

(ii) Accountability Divisional heads are to blame for profits, as revenues and expenses associated to exceptional departments, can be without difficulty recognized and assigned to them.

This affords applicable groundwork for overall performance measurement.

(iii) Quick Decision Making It promotes flexibility and initiative due to the fact every division feature as a self-sustaining unit which leads to quicker selection making.

(iv) Facilitates Expansion It helps boom as new divisions can be delivered besides interrupting the current operations,

with the aid of purely including any other divisional head and group of workers for the new product line.


The divisional shape has positive disadvantages

(i) Conflicts might also occur amongst one-of-a-kind divisions with reference to allocation of funds.

(ii) Higher Cost Providing every division with separate set of comparable features will increase expenditure.

(iii) Ignoring Organizational Goals, it affords managers with the authority to supervise all things to do associated to a precise division.

In route of time, such a supervisor may additionally reap energy and in a bid to assert his independence may additionally pass by organizational interests.

3. Decentralization is a non-obligatory policy. Explain why an organization would pick out to be decentralized.

Ans: Decentralization is a great deal greater than mere switch of authority to the decrease stages of administration hierarchy.

Its importance can be understood with the help of following points

(i) Develops Initiative Among Subordinates When decrease managerial degrees are given freedom to take their personal selections they examine to rely on their judgement.

A decentralized coverage helps to become aware of these executives, who have the essential practicable to end up dynamic leaders.

(ii) Develops Managerial Talent for the Future Formal education performs an essential phase in equipping subordinates

with capabilities that assist them upward thrust in the organization,

however equally essential is the ride won by using coping with assignments independently.

It offers them a threat to show their competencies and creates a reservoir of certified manpower.

(iii) Quick Decision Making In a decentralized organization, however,

on the grounds that selections are taken at levels, which are nearest to the factors of motion and there is no requirement for approval from many degrees the method is plenty faster.

(iv) Relief to Top Management Decentralization leaves the pinnacle administration with extra time,

which they can dedicate to essential coverage choices alternatively than occupying their time with each coverage as nicely as operational decisions.

(v) Facilitates Growth Decentralization awards increased autonomy to the decrease ranges of administration as properly as divisional or departmental heads.

This permits them to function in a manner pleasant appropriate to their branch and develops a feel of opposition amongst the departments,

consequently, the productiveness tiers extend and the agency is in a position to generate greater returns,

which can be used for enlargement purposes.

(vi) Better Control Decentralization makes it viable to consider overall performance at every degree and the departments can be in my view held guilty for their results.

The extent of success of organizational goals as nicely as the contribution of every branch in meeting, the overall targets can be ascertained

4. How does casual organization help the formal organization?

Ans: The casual corporation presents many benefits. Important amongst them are given as follows

(i) Quick Feedback Prescribed strains of verbal exchange are no longer followed.

Thus, the casual company leads to quicker unfold of facts as properly as rapid feedback.

(ii) Social Needs It helps to fulfill social desires of the participants and lets in them to locate like-minded people.

This enhances their job satisfaction, considering the fact that it offers them a experience of belongingness in the organization.

(iii) Organizational Objectives It contributes toward fulfilment of organizational targets via compensating for inadequacies in the formal corporation e.g.,

feedbacks on new insurance policies and many others can be examined via casual network.