Previous Year: Short Questions with Answers - Organising Commerce Notes | EduRev

Business Studies (BST) Class 12

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The document Previous Year: Short Questions with Answers - Organising Commerce Notes | EduRev is a part of the Commerce Course Business Studies (BST) Class 12.
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Q. 1. Progress Ltd. is facing difficulties in introduction of machinery of latest technology as they are facing resistance from the information groups who are pressurising the members to work against organisational interests. As the Human Resource manager of the company, would you advise the management of the company to confront them or give them some other suggestion to deal with the informal group.[SQP 2017-18]
Ans. 
(i) It would be in the best interest of the organisation if the existence of such groups is recognised and the roles that their members play are identified.
(ii) The knowledge of such groups can be used to gather their support and consequently lead to improved organisational performance. Such groups can also provide useful communication channels.
(iii) Instead of confronting them, the management should skillfully take advantage of both formal and informal organisation so that work continues smoothly.

Q. 2. A.V.M.Ltd. set-up its electric appliances manufacturing factory in a backward area of Himachal Pradesh where subsidies are provided by the government and labour is available at cheaper rates. A.V.M Ltd. was able to produce its products at low cost thereby generating enough profits in the first year itself. It was because of the fact that the limits of authority and responsibility of the employees were clearly defined and the activities of various departments were coordinated and integrated. The Production Manager of the company also came to know about the availability of raw material at cheaper rates from a vendor. For this, he wrote a letter to the Managing Director of the company for getting sanction. But because of procedural delays in getting this sanction and procuring funds from the Finance Manger, the order could not be placed.
(i) Identify the type of organization that led to procedural delays and because of which the company could not get the advantage of procuring raw material at cheaper rates.
(ii) State an advantage of the type of organization identified in above other than those discussed in the above case.[Comptt. Delhi Set-I, II, III 2018]

Ans.
(i) Formal organisation.
(ii) Advantage of formal organisation :
(a) It helps to maintain unity of command through an established chain of command.
(b) It leads to effective accomplishment of goals by ensuring that each employee knows the role he has to play.
(c) It provides stability to the organization as behaviour of employees can be fairly predicted.

Q. 3. What is meant by ‘Divisional Structure’ of an organisation ? State any two advantages.

Ans. Divisional structure refers to an organisational design which consists of separate business units or divisions. All the divisions have to report to a Divisional Head. Manpower is generally grouped on the basis of different products manufactured.
Advantages of Divisional Structure :
(i) Product Specialisation : Divisional structure leads to product specialisations as the Divisional head is able to gain experience in all the functions related to a particular product. This helps in preparing the divisional heads for higher position.
(ii) Greater Accountability : Divisional heads can be held accountable for the profits as the revenues and costs related to different departments can be easily identified and assigned to them. This provides a proper basis for performance measurement.

Q. 4. State any three limitations of ‘Divisional Structure’ of an organisation.
Ans. Limitations of Divisional Structure :
(i) Conflicts may arise among different divisions with reference to allocation of funds at the cost of other divisions.
(ii) It may lead to the increase in cost due to the duplication of activities across products.
(iii) Manager may misuse his power and ignore organisational interests.

Q. 5. Bhuvan and Co. are running a shoe manufacturing company successfully. So they planned to expand their business activities by adding more line of products i.e., leather bags, belts and garments. Which type of structure would you recommend after expansion and why ?
Ans. Presently the company has a functional structure since it is a uni-product company but now it will go for divisional structure since it is suitable for a multi-product company.

Q. 6. Aradhana and Gandharv are heads of two different departments in ‘Yumco Ltd.’ They are efficient managers and are able to motivate the employees of their respective departments to improve performance. However, their drive to excel in their own sphere of activity instead of giving emphasis on objectives of the enterprise has hindered the interaction between the departments that Aradhana and Gandharv are heading. Often there are inter-departmental conflicts and they have become incompatible. This has proved to be harmful in the fulfilment of the organisational objectives. The situation has deteriorated to such an extent that the CEO of ‘Yumco Ltd.’ has hired a consultant, Rashmi, to resolve the problem. After studying the situation closely, Rashmi found that the problem has arisen due to inflexibility and a narrow perspective on the part of both Aradhana and Gandharv. She is of the view that this situation is a result of the type of organisational structure ‘Yumco Ltd.’ has adopted. From the above information, identify the organisational structure adopted by Yumco Ltd.’ and state any three advantages of the structure so identified.[Delhi, OD 2018]
Ans. Functional Structure is the organisational structure adopted by ‘Yumco Ltd.’.
Advantages of Functional Structure :
(i) It leads to occupational specialisation since emphasis is placed on specific functions.
(ii) It promotes control and coordination within a department because of similarity in the tasks being performed.
(iii) It increases managerial and operational efficiency.
(iv) It lowers cost as it reduces duplication of effort.
(v) It makes training of employees easier as it focuses on a limited range of skills.
(vi) It ensures that different functions get due attention.

Q. 7. Kiran Industries is a company manufacturing office furniture. The company chose to diversify its operations to improve its growth potential and increase market share. As the project was important, many alternatives were generated for the purpose and were thoroughly discussed amongst the members of the organisation. After evaluating the various alternatives Sukhvinder, the Managing Director of the company decided that they should add ‘Home Interiors and Furnishings’ as a new line of business activity.
(i) Name the framework, which the diversified organisation should adopt, to enable it to cope with the emerging complexity ? Give one reason in support of your answer.
(ii) State any two limitations of this framework.

Ans. Divisional Structure :
Reason in support of the answer :
(a) Product Specialisation helps in the development of varied skills in a divisional head and this prepares him for higher positions.
(b) Divisional heads are accountable for profits, as revenues and costs related to different departments can be easily identified and assigned to them.
(c) It promotes flexibility and initiative because each division functions as an autonomous unit which leads to faster decision making.
(d) It facilitates expansion and growth as new divisions can be added without interrupting existing operations by merely adding another divisional head and staff for the new product line.

Q. 8. Explain how : (i) Adaptation to change
(ii) Effective administration makes organising important?
Ans. (i) Adaptation to Change : 
The process of organising allows a business enterprise to adapt itself according to the changes in the business environment.
(ii) Effective Administration : 
In organisation structure, the jobs of managers and non-managers are clearly defined, clarity in working relationship enables the proper execution of work. This brings effectiveness in administration.

Q. 9. What is meant by ‘Formal Organisation’?
Ans. Formal organisation is a consciously and deliberately designed organisational structure by the management to accomplish a particular task.

Q. 10. State any three advantages of Formal Organisation.
OR
State any three advantages of Formal Organisation to a large scale enterprise.

Ans. Advantages of Formal Organisation :
(i) It is easier to fix responsibility since mutual relationships are clearly defined.
(ii) It avoids duplication of efforts since there is no ambiguity in the role that each member has to play.
(iii) It maintains unity of command through an established chain of command.
(iv) It leads to the accomplishment of goals by providing a framework for the operations to be performed.
(v) It provides stability to the organisation because there are specific rules to guide behaviour of the employees.

Q. 11. What is meant by ‘Informal Organisation’?
Ans. Informal Organisation : It is a network of social relationships that arises out of personal interaction among the employees of organisation beyond their officially defined roles.

Q. 12. State any three features of ‘Informal Organisation’.
Ans. Features of informal organisation :
(i) It originates from within the formal organisation due to personal interaction.
(ii) It emerges spontaneously and is not deliberately created by the management.
(iii) The standards of behaviour evolve from group norms rather than official norms.
(iv) Independent channels of communication are developed by group members.
(v) It has no definite structure or form.
(vi) Authority arises out of personal qualities.

Q. 13. State any two advantages and two limitations of informal organisation.
Ans. Advantages of informal organisation :
(i) It leads to faster spread of information as well a quick feedback.
(ii) It fulfils the social needs of the members.
(iii) It contributes towards fulfilment of organisational objectives by compensating for inadequacies in the formal organisation.
Limitations of informal organisation :
(i) it leads to spread of rumours.
(ii) It may lead to resistance to change.

Q. 14. State any four advantages of formal organisation.[Outside Delhi Comptt. Set I, II, 2017]
Ans. Advantages of formal organisation :
(i) It is easier to fix responsibility since mutual relationships are clearly defined.
(ii) It avoids duplication of effort since there is on ambiguity in the role that each member has to play.
(iii) It maintains unity of command through an established chain of command.
(iv) It leads to accomplishment of goals by providing a framework for the operation to be performed.
(v) If provides stability to the organisation because there are specific rules to guide behaviour of employees.

Q. 15. The employees of Manik Ltd, a software company have formed a drama group for their recreation. Name the type of organisation so formed and state its three features.
Ans.
The type of organisation formed by employees of Manik Ltd. is an Informal Organisation.

Q. 16. Rajeev, the owner of Pathways constructions decided to start a campaign to create awareness among people for developing clean surroundings in their area. He formed a team of 10 members to list the different ways for cleaning the surroundings. One suggested to take the help of local residents, another suggestion was to take the help of unemployed youth. After evaluating all options, it was decided to take the help of local residents. To achieve the desired goal various activities were identified like :
(i) Purchase of necessary items like dustbins, garbage bags, brooms, etc.
(ii) Collection of garbage.
(iii) Disposal of garbage, etc.
After identification of different activities the work was allocated to different members. Identify the concepts of management involved in the above situation and quote the lines which help in their identification.
Ans. 
Concepts involved : Planning and Organising Lines for planning :
‘One suggested ……… unemployed youth’
‘After evaluating ……… local residents’
‘Campaign to create awareness …. surroundings’ Lines for organising :
‘To achieve ……… disposal of garbage, etc.’
‘after identification of different activities ……… different members’

Q. 17. It helps a manager to extend his area of operations, as without it, his activities would be restricted to only what he himself can do.
Identify the activity referred to, in the above statement and state its elements.
Ans.
Delegation.
Elements of delegation are :
(i) Authority : Authority refers to the right of an individual to command his subordinates and to take action within the scope of his position. It flows from top to bottom.
(ii) Responsibility : Responsibility refers to the obligation of a subordinate to properly perform the assigned duty. It flows upwards.
(iii) Accountability : Accountability refers to answer ability to the outcome of the assigned task.

Q. 18. Samir Gupta started a telecommunication company, ‘Donira Ltd.’ to manufacture economical mobile phones for the Indian rural market with 15 employees. The company did very well in its initial years. As the products were good and marketed well, the demand of its products went up. To increase the production, the company decided to recruit additional employees. Samir Gupta, who was earlier taking all decisions for the company had to selectively disperse the authority. He believed that subordinates are competent, capable and resourceful and can assume responsibility for effective implementation of their decisions. This paid off and the company was not only able to increase its production but also expanded its product range.
(i) Identify the concept used by Samir Gupta through which he was able to steer his company to greater heights.
(ii) Also explain any three points of importance of this concept.

Ans. (i) Decentralisation.
(ii) Importance :
(a) Develops managerial talent for the future : Even lower level managers learn the art of exercising decision making authority. This prepares them for promotion to higher levels.
(b) Quick decision making : Since decisions are taken at levels which are nearest to the point of action without seeking approval from many levels, the process is much faster.
(c) Facilitates growth : It provides greater autonomy to the middle and lower levels of management. It leads to more productivity, higher return, growth and expansion.
(d) Better control : It makes evaluation of performance at each level better. The departments can be individually held accountable for their results.

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