Chapter 5 (Part 1) Organising, CBSE, Class 12, Business Studies PDF Download

Chapter 5 (Part 1) Organising 

Once the plans have been laid down and objectives specified there in, the next step is • to organise resources in a manner which • leads to the accomplishment of objectives. o A critical issue is structuring the work of an organisation o to adapt to the dynamic business environment. • The activities must be organised in such a manner o that plans can be successfully implemented.
Meaning Organising essentially implies a process which: • coordinates human efforts, • assembles resources and • integrates both into a unified whole to be utilised • for achieving specified objectives.
as a process that: • initiates implementation of plans • by clarifying jobs • working relationships • effectively deploying resources • for attainment of o identified and o desired results (goals).

STEPS IN THE PROCESSES OF ORGANISING
• Identification and division of work: o Work has to be done in accordance with ▪ previously determined plans. o The work is divided into manageable activities ▪ so that duplication can be avoided and ▪ the burden of work can be shared among the employees. • Departmentalisation: o those activities which are similar in nature are grouped together. o Such sets facilitate specialisation. o This grouping process is called departmentalisation. o

Departments can be created using several criteria as a basis. ▪ Examples: • Territory: north, south, west etc. • Products: appliances, clothes, cosmetics etc. • Assignment of duties: o define the work of different job positions and accordingly allocate work to various employees. o Once departments have been formed, each of them is placed under the charge of an individual. o Jobs are then allocated to the members of each department • In accordance to their skills and competencies. o for effective performance a proper match is made between ▪ the nature of a job and ▪ the ability of an individual. o The work must be assigned to those who are best fitted to perform it well. • Establishing reporting relationships: o Merely allocating work is not enough. o Each individual should also know: ▪ who he has to take orders from and ▪ to whom he is accountable. o helps to create a hierarchal structure and o helps in coordination amongst various departments.

IMPORTANCE OF ORGANISING
In order for any business enterprise to perform tasks and successfully meet goals, the organising function must be properly performed. • Benefits of specialisation: o a systematic allocation of jobs amongst the work force. o This reduces ▪ the workload as well as ▪ enhances productivity • because of the specific workers performing a specific job • on a regular basis. o Repetitive performance of a particular task ▪ allows a worker to gain experience in that area and ▪ leads to specialisation. • Clarity in working relationships: o Clarifies lines of communication and o specifies who is to report to whom. o This removes ambiguity in transfer of ▪ Information and ▪ instructions. o creating a hierarchical order o the fixation of responsibility and o specification of the extent of authority to be exercised. • Optimum utilization of resources: o Organising leads to the proper usage of ▪ all material, ▪ financial and ▪ human resources. o The proper assignment of jobs ▪ avoids overlapping of work and ▪ also makes possible the best use of resources. o Avoidance of duplication of work helps in ▪ preventing confusion and ▪ minimising the wastage of • resources and • efforts. • Adaptation to change: o Organising allows a business enterprise ▪ to accommodate changes in the business environment. o It allows the organisation structure ▪ to be suitably modified and ▪ the revision of inter-relationships amongst • managerial levels to pave the way for a smooth transition. o It also provides much needed stability to the enterprise as ▪ it can then continue to survive and ▪ grow inspite of changes. • Effective administration: o Organising provides ▪ a clear description of jobs and ▪ related duties. o This helps to avoid ▪ Confusion and ▪ duplication. o Clarity in working relationships enables ▪ Proper execution of work. o Management of an enterprise thereby becomes ▪ easy and ▪ this brings effectiveness in administration. • Development of personnel: o Organising stimulates creativity amongst the managers. 

o Effective delegation allows the managers ▪ to reduce their workload • by assigning routine jobs to their subordinates. o The reduction in workload by delegation is not just necessary ▪ because of limited capacity of an individual ▪ but also allows the manager • to develop new methods and • ways of performing tasks. o It gives them the time ▪ To explore areas for growth and ▪ The opportunity to innovate • Thereby strengthening the company’s competitive position. o Delegation also develops in the subordinate ▪ the ability to deal effectively with challenges and ▪ helps them to realise their full potential. • Expansion and growth: o Organising helps ▪ in the growth and ▪ diversification of an enterprise • by enabling it o to deviate from existing norms and o taking up new challenges. o It allows a business enterprise ▪ To add more job positions, departments and ▪ even diversify their product lines. o New geographical territories can be added to current areas of operation and ▪ this will help to increase • customer base, • sales and • profit. o Thus, organising is a process by which the manager brings order out of chaos, remove s conflict among people over work or responsibility sharing and creates an environment suitable for teamwork.
 

ORGANISATION STRUCTURE
Organisation structure is the outcome of the organising process. • An effective structure will result in increased profitability of the enterprise. • The need for an adequate organisation structure is felt by o an enterprise whenever it grows in ▪ size or ▪ complexity. • As an organisation grows, coordination becomes difficult due to o The emergence of new functions and o increase in structural hierarchies. • Thus, for an organisation to function o smoothly and o face environmental changes, ▪ it becomes necessary to pay attention to its structure.

Peter Drucker, “organisation structure is an indispensable means; and the wrong structure will seriously impair business performance and even destroy it.” The organisation structure can be defined as the framework within which • managerial and • operating tasks o are performed. It specifies the relationships between • people, • work and • resources. 

It allows • correlation and • coordination among o human, o physical and o financial resources and ▪ this enables a business enterprise to accomplish desired goals. The organisation structure of a firm is shown in an organisation chart.
The span of management, gives shape to the organizational structure. • the number of subordinates that can be effectively managed by a superior . • This determines the levels of management in the structure.
A proper organisation structure is essential to ensure • a smooth flow of communication and • better control over the operations of a business enterprise.
An organisation structure provides the framework which enables the enterprise to function • as an integrated unit by o regulating and o coordinating ▪ the responsibilities of • individuals and • departments. 
 

For example: Smita opened her own travel agency, sometime back. She assigned work to her three employees in the following manner • Neha, you are in charge of air plane, train and bus reservations.’ • Karan, you will take care of accommodation booking’ • Sahil, you will keep track of online queries and credit card payments’. I want regular reports from the three of you. Thus, in a few sentences an organisation structure has been created specifying • lines of authority and • areas of responsibility.
 

TYPES OF ORGANISATION STRUCTURES
• Functional structure and • Divisional structure
 

FUNCTIONAL STRUCTURE
o Grouping of jobs of similar nature under functional and o Organising these major functions as separate departments. o All departments report to a coordinating head. For example: In a manufacturing concern division of work into key functions will include ▪ production, ▪ purchase, ▪ marketing, ▪ accounts and ▪ personnel. ▪ These departments may be further divided into sections. Thus, a functional structure is an organisational design that groups o similar or related jobs together.
 

Advantages: • occupational specialisation since emphasis is placed on specific functions. o promotes efficiency in utilisation of manpower ▪ as employees perform similar tasks within a department and ▪ are able to improve performance.

• promotes control and coordination within a department o because of similarity in the tasks being performed. • increasing managerial and operational efficiency o this results in increased profit. • minimal duplication of effort o results in economies of scale and o lowers cost. • training of employees o the focus is only on a limited range of skills. • It ensures that different functions get due attention.
 

Disadvantages: • Less emphasis on overall enterprise objectives o than the objectives pursued by a functional head. o Pursuing departmental interests at the cost of organisational interests ▪ can also hinder the interaction between two or more departments. • problems in coordination o as information exchanged across functionally differentiated departments. • A conflict of interests o when the interests of two or more departments are not compatible.
For example:, the sales department insisting on a customer friendly design may cause difficulties in production. Such dissension can prove to be harmful in terms of fulfilment of organisational interest.
Inter-departmental conflicts can also arise in the absence of clear separation of responsibility. • inflexibility o as people with same skills and knowledgebase o have difficulty in appreciating any other point of view. o Functional heads do not get training for top management positions because ▪ they are unable to gather experience in diverse areas.
 

Suitability: • when the size of the organisation is large, • has a diversified activities and • operations require a high degree of specialisation.
 

DIVISIONAL STRUCTURE
Many large organisations with diversified activities have reorganized themselves away from the simpler and basic functional structure towards a divisional structure which is more suited to their activities. o Enterprises which have more than one category of products to offer. o every organisation performs a set of homogenous functions, o as it diversifies into varied product categories, o need for an emerging complexity. o The organisation structure comprises of separate business units or divisions. o Each unit has a divisional manager o responsible for performance and o has authority over the unit. o manpower is grouped on the basis of different products manufactured. o Each division is multifunctional o because within each division functions like ▪ production, ▪ marketing, ▪ finance, ▪ purchase etc, • are performed together to achieve a common goal. o Each division is self-contained as o It develops expertise in all functions related to a product line. o the functional structure tends to be adopted. o functions may vary across divisions 

▪ in a particular product line. o Each division works as a profit center ▪ Where the divisional head is responsible • For the profit or loss of his division. 
For example: A large company may have divisions like cosmetics, clothing etc.

Advantages: o Product specialisation o helps in the development of varied skills in a divisional head and o this prepares him for higher positions. o gains experience in all functions ▪ related to a particular product. o Divisional heads are accountable for profits, o revenues and costs ▪ related to different departments can be • easily identified and • assigned to them. o This provides a proper basis for performance measurement. o It also helps in fixation of responsibility in cases of poor performance of the division and appropriate remedial action can be taken. o promotes flexibility and initiative o each division functions as an autonomous unit o which leads to faster decision making. o facilitates expansion and growth o as new divisions can be added ▪ without interrupting the existing operations ▪ by adding another divisional head and staff • for the new product line.

Disadvantages: o Conflict may arise o among different divisions o with reference to allocation of funds to a particular division ▪ maximise division profits • at the cost of other divisions. o lead to increase in costs o duplication of activities across products. o each division with separate set of similar functions increases expenditure. o ignore organisational interests o It provides managers with the authority ▪ to supervise all activities related to a particular division. o In course of time, such a manager may gain power and ▪ May ignore organisational interests.
 

Suitability: o where a large variety of products are manufactured o using different productive resources. o When an organisation grows and needs to add o more employees, o create more departments and o introduce new levels of management, ▪ it will decide to adopt a divisional structure. o Business operates in a dynamic environment o those enterprises which fail to adapt to change are unable to survive. o Management must continuously review its o Plans and o objectives and ▪ accordingly the organisation structure should also review to determine if modification is required.