1. Organising: meaning, steps and importance
Organising is the process of identifying and grouping the work to be done, assigning it to people, and establishing authority and reporting relationships so that plans can be carried out.
Steps:
- Identification and division of work — list the total work and split it into jobs.
- Departmentalisation — group similar or related jobs into departments.
- Assignment of duties — give each job to a person suited to it.
- Establishing reporting relationships — decide who reports to whom.
Importance: benefits of specialisation; clarity in working relationships; optimum use of resources; adaptation to change; effective administration; development of personnel; expansion and growth.
| Organising answers… | Imagined example: a fruit canner in Haldwani |
|---|---|
| What work must be done? | Washing, cooking, canning, labelling, selling |
| How is it grouped? | Production and Marketing units |
| Who does each job? | A food scientist heads Quality |
| Who reports to whom? | Line leaders to shift supervisor to works manager |
| Action for an imagined food stall at a college fest in Kolkata | Step |
|---|---|
| List jobs: buying, cooking, serving, billing, cleaning | Identify and divide the work |
| Group them into kitchen and counter teams | Departmentalise |
| Put the best cook in the kitchen and a quick counter in billing | Assign duties |
| Team leads report to the stall captain | Establish reporting relationships |
| Importance | In short |
|---|---|
| Benefits of specialisation | People repeat one kind of job and get better at it |
| Clarity in working relationships | Everyone knows whom to report to |
| Optimum use of resources | No duplication; no task left undone |
| Adaptation to change | Structure can be adjusted for new needs |
| Effective administration | Clear roles make control and coordination easier |
| Development of personnel | Delegation lets people learn and grow |
| Expansion and growth | New units fit into a clear structure |
Key terms
- Organising
Grouping work, assigning it and fixing authority and reporting lines.
- Departmentalisation
Grouping similar jobs into departments.
2. Functional and divisional structures
Functional structure: activities grouped by major function (purchase, production, finance, sales), each under a specialist. Suits a large firm with one main product. Merits: specialisation; economy, since functions are not duplicated; easy control within each function. Demerits: departments may put their own goals first and conflict; it is hard to fix responsibility for overall results; it gives managers narrow experience.
Divisional structure: activities grouped by product line, each division having its own functions. Suits a firm with several different products. Merits: each division is a profit centre, so results are measurable; division heads gain all-round skills; new products can be added easily. Demerits: duplication of resources raises cost; divisions may compete for funds.
| Basis | Functional | Divisional |
|---|---|---|
| Grouping | By function | By product line |
| Suits | One main product | Several different products |
| Specialisation | Functional | Product; all-round managers |
| Cost | Economical | Costlier: functions duplicated |
| Accountability | Hard to fix for results | Each division answers for profit |
| Main risk | Conflict between departments | Divisions compete for funds |
| Imagined firm | Structure | Why |
|---|---|---|
| A mill making only sago on a large scale | Functional | One product; specialists per function |
| A group making dairy, furniture and bags | Divisional | Very different products and markets |
| A rice mill that adds cattle feed and furniture | Divisional | New lines need their own units |
Key terms
- Functional structure
Grouping by major function.
- Divisional structure
Grouping by product line, each division with its own functions.
- Profit centre
A unit whose own profit can be measured.
3. Formal and informal organisation
Formal organisation: the structure deliberately designed by management, with written duties, an official chart and communication through the scalar chain. Merits: responsibility is easy to fix; duplication is avoided; it gives stability. Limits: delays; it ignores social needs; it may discourage initiative.
Informal organisation: the network of relationships that arises from social interaction, not planned by management and not on the chart; communication flows through the grapevine. Merits: fast communication; meets social needs; fills gaps in the formal system; managers can sense feelings. Limits: rumours; resistance to change; pressure to conform.
| Formal organisation | Points |
|---|---|
| Meaning | Structure of jobs and authority deliberately designed by management |
| Features | Written duties; official chart; follows the scalar chain |
| Merits | Easy to fix responsibility; avoids duplication; gives stability |
| Limits | Delays; ignores social needs; discourages initiative |
| Informal organisation | Points |
|---|---|
| Meaning | Network of relationships that grows from social interaction |
| Features | Not planned; not on the chart; communicates through the grapevine |
| Merits | Fast communication; meets social needs; fills gaps in rules |
| Limits | Rumours; may resist change; group pressure |
| Basis | Formal | Informal |
|---|---|---|
| Origin | Created by management | Arises on its own |
| Purpose | Organisational goals | Social and personal needs |
| Communication | Through the scalar chain | In any direction: grapevine |
| Shown on chart? | Yes | No |
| Nature | Stable and rigid | Flexible and changing |
| Imagined fact at an engineering works in Bokaro | Formal or informal? |
|---|---|
| Written job description for every post | Formal |
| Fitters who share a bus swap machine tips | Informal |
| Tool requests go through supervisor and shop manager | Formal |
| News of a bonus spreads in an hour | Informal: grapevine |
Key terms
- Grapevine
Informal communication passing quickly from person to person in any direction.
4. Delegation of authority
Delegation is the passing of authority by a superior to a subordinate to carry out an assigned task, while the superior stays answerable for the result.
Elements:
- Responsibility — the subordinate's obligation to do the task properly; it arises from the superior–subordinate relationship.
- Authority — the right to take decisions and give orders; it flows downward and should match responsibility.
- Accountability — answerability for the result; it flows upward and cannot be delegated.
Importance: effective management (managers are freed for important work); employee development; motivation; better coordination; a basis for growth and for the management hierarchy.
| Element | Meaning | Direction | Can it be delegated? |
|---|---|---|---|
| Responsibility | Obligation to do the task well | Upward | Assigned with the task |
| Authority | Right to decide and command | Downward | Yes |
| Accountability | Answerability for results | Upward | No |
| Importance of delegation | Imagined example |
|---|---|
| Effective management | An owner hands over daily ice orders and meets export buyers |
| Employee development | A cashier learns to approve refunds |
| Motivation | Trusted supervisors feel valued |
| Better coordination | Clear authority shows who handles what |
| Basis for growth | New managers are ready when outlets open |
Key terms
- Authority
The right to decide and command.
- Responsibility
The obligation to perform an assigned task.
- Accountability
Answerability for results; never delegated.
5. Centralisation and decentralisation
Centralisation: decision-making authority is kept at the top. Suits small firms and key policy matters; slows decisions in large firms; gives lower managers little chance to learn.
Decentralisation: authority is spread systematically to lower levels, within limits. Merits: quick local decisions; develops managers; relieves top management; allows better control through measurable units. Complete decentralisation is not desirable: key decisions such as overall policy and finance stay central. A balance is best.
Delegation vs decentralisation: delegation is compulsory, narrow (superior to subordinate) and done to lighten a manager's load; decentralisation is an optional policy, wide (all levels) and done to give lower levels more freedom. Decentralisation is delegation extended throughout the organisation.
| Basis | Centralisation | Decentralisation |
|---|---|---|
| Where decisions are taken | Kept at the top | Spread to lower levels |
| Speed | Slow in a large firm | Quick local decisions |
| Suits | Small firms; key policy matters | Large, spread-out firms |
| Managers below | Little chance to learn | Develop decision skills |
| Basis | Delegation | Decentralisation |
|---|---|---|
| Nature | Compulsory | Optional policy decision |
| Scope | Between a superior and a subordinate | Across all levels |
| Purpose | To lighten one manager's load | To give more freedom to lower levels |
| Freedom | Under the superior's close control | More freedom within limits |
| Imagined fact at a turmeric trader in Erode | Concept |
|---|---|
| Owner alone decided prices and hiring, before depots | Centralisation |
| Depots fix buying prices within limits | Decentralisation |
| A supervisor lets a clerk sign delivery notes | Delegation |
| Head office keeps export pricing and loans | Key decisions kept central |
Key terms
- Centralisation
Keeping decision making at the top.
- Decentralisation
Systematically spreading authority to all levels.
Exam tips
Common mistakes
- Saying accountability can be delegated.
- Calling decentralisation compulsory.
- Listing duplication as a limit of the functional structure (it belongs to the divisional one).
- Treating informal organisation as always harmful.
How marks are usually awarded
- 1 mark: the correct step, structure, element or concept.
- 2–3 marks: each point named, explained and linked to the case.
- 5 marks: steps in order with examples; differences on clear bases; a recommendation with reasons.
- Case questions: quote the line, name the concept, explain the link.