Revision: Principles and Functions of Management >> Organising Business Studies Commerce (English Medium) Class 12 CBSE

• Organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives. - Louis Allen
• Organising is the process of defining and grouping the activities of the enterprise and establishing authority relationships among them. - Theo Haimman

• The formal organisation is a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability. - Louis Allen
• Formal organisation is a system of consciously coordinated activities of two or more persons toward a common objective. - Chester Barnand

• An informal organisation is an aggregate of interpersonal relationships without any conscious purpose but which may contribute to joint results. - Chester Barnand
• Informal organisation is a network of personal and social relations not established or required by the formal organisation but arising spontaneously as people associate with one another. - Keith Davis

Delegation of authority merely means the granting of authority to subordinates to operate within prescribed limits. - Theo Haimman

Delegation is the process a manager follows in dividing the work assigned to him so that he performs that part which only he because of his unique organisational placement, can perform effectively and so that he can get others to help with what remains. - Louis Allen

• Decentralisation refers to systematic effort to delegate to the lowest level all authority except that which can be exercised at central points. - Louis Allen
• Everything which goes to increase the importance of a subordinate’s role is decentralisation, everything that goes to reduce it is centralisation. - Henri Fayol

Decentralisation refers to the dispersal of decision-making power among the middle-level and lower-level managers. The extent of decentralisation varies from one organisation to another.

• Wipro restructured into product-based subsidiaries to improve customer orientation and global competitiveness.
• Each subsidiary is self-sufficient and follows a decentralised management system.
• Wipro de-layered the organisation, empowered business leaders and modified management relationships to suit its goals.
• Organising follows planning and helps achieve objectives.
• It ensures optimum use of resources and translates plans into action.
• Organisational structure clearly defines roles, authority, responsibility and inter-relationships.

• Organising is one of the Functions of Management.
• It involves dividing work into groups and coordinating relationships among them.
• The core purpose is to help people work effectively together to accomplish objectives.
• It includes identifying, grouping, and delegating work, responsibility, and authority.
• It also involves establishing authority relationships among activities of the enterprise.
• Resources (human and material) are assembled and integrated into a unified whole.
• Effective organising ensures resources are deployed effectively to attain desired results.

• Organising involves a series of steps to achieve a goal.
• Work must first be identified, then divided into manageable activities to avoid duplication.
• Similar activities are grouped into departments - this is called departmentalisation.
• Duties are assigned based on the skills and competencies of employees.
• Clear authority and reporting relationships form a hierarchy and enable coordination.
• Without these steps, individuals working on their own cause confusion rather than results.

• Helps enterprise survive, grow and face challenges in a dynamic environment.
• Gives benefits of specialisation by systematic job allocation and repeated performance of the same task.
• Clarifies who reports to whom and removes ambiguity in communication.
• Ensures proper use of material, financial and human resources and avoids duplication of work.
• Helps organisation adapt to changes while providing stability.
• Makes administration effective through clear jobs and duties.
• Develops managers and subordinates through delegation and creativity.
• Supports expansion, new departments, new products and entry into new territories.

• Organisation structure is the outcome of the organising process.
• Effective structure increases profitability and helps handle growth and complexity.
• Wrong structure can impair or destroy business performance.
• Organisation structure provides a framework and coordinates resources.
• Span of management determines levels of management in the structure.
• Functional division of work (as in Sunita’s travel agency) creates clear lines of authority and responsibility.

• Functional structure arranges an organisation around major functions like production, purchase, marketing, accounts and personnel.
• It gives specialisation, better control and coordination inside each department and helps reduce cost.
• At the same time, it can create functional empires, coordination problems and conflicts between departments.
• It suits large, diversified organisations where specialised functional work is important.

• Divisional structure is used by large companies dealing in multiple products.
• Each division functions as an independent, multifunctional profit centre.
• The divisional head is accountable for the division's profits and losses.
• Key advantages: specialisation, flexibility, accountability, and easy expansion.
• Key disadvantages: duplication, inter-divisional conflict, and risk of over-autonomous managers.

• Formal organisation is a planned structure created by management to accomplish specific tasks.
• It is based on clear rules, procedures and defined jobs with authority and responsibility.
• Features include clear reporting, coordination, design by top management and focus on work.
• It provides clarity, unity of command, better goal achievement and stability.
• It may cause delays, restrict creativity and not show the full human side of the organisation.

• Informal organisation is a spontaneous network of social relationships among employees, not created by management.
• It originates within the formal organisation but has no written rules, fixed structure, or official channels.
• Behaviour is regulated by group norms, not formal rules.
• Key advantages: faster communication, fulfillment of social needs, and support to organisational goals.
• Key disadvantages: spread of rumours, resistance to change, and pressure to conform.
• Management can use informal networks to test employee reactions to proposed plans before formal implementation.

• Delegation = downward transfer of authority from superior to subordinate.
• Three elements: Authority (command), Responsibility (obligation), Accountability (answerability).
• Authority and responsibility flow in opposite directions - authority flows down, responsibility flows up.
• Accountability cannot be delegated - it always stays with the superior.
• Responsibility must be balanced with authority to be effective.
• Delegation is the basis of the management hierarchy - it defines how power is structured across levels.

• Decentralisation = delegating authority to the lowest possible level.
• Neither full centralisation nor full decentralisation is practical - organisations always use a mix.
• Key benefit: faster decisions as authority lies near the point of action.
• Builds future managers through independent decision-making experience.
• Frees top management for strategic and policy work.
• Must be balanced carefully to protect overall organisational interests.