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II Year_Business Studies_Chapter5, CHAPTER 5, , ORGANISING, The management function of organising ensures that efforts are directed towards the, achievement of goals laid down by the planning function in such a manner that resources are used, optimally and people are able to work collectively and effectively for a common purpose., Organising creates an organisational structure which defines the role of each persons in the, organisation and defines inter relationship between them in order to eliminate the confusion in, performing their duties., Organising can be defined as a process that initiates implementation of plans by clarifying, jobs and working relationships and effectively deploying resources for attainment of identified and, desired results (goals)., Importance of Organising:, (i) Benefits of specialisation: Systematic allocation of jobs among the workers are done through, the organising. It reduces work load and increase the productivity because a worker doing a, particular job continuously make him specialised in his job., (ii) Clarity in working relationships: Organising creates a working relationship among the, employees, which clarifies line of communication. It helps to establish a hierarchical relation and, fix the authority and responsibility of each employees in the organisation., (iii) Optimum utilization of resources: Organising leads to the proper usage of all material,, financial and human resources. Proper allocation job avoid overlapping of work and reduces, wastage of resources and efforts., (iv) Adaptation to change: Organising helps the business to adapt the changes in the environment., It allows the modification of organisation structure and revision in inter relation between, management levels to adjust with the changes in the environment., (v) E f f e c t i v e a d m i n i s t r a t i o n : Organising clearly specifies the duties of each job., Clarity in working relationships enables proper execution of work., (vi) Development of personnel: Effective allocation of work reduces the workload of managers by, assigning routine works to their subordinates. It gives more time to the managers for innovative, areas of development. Delegation also develops the subordinate’s ability to deal effectively with, challenges and helps them to realise their efficiency., (vii) Expansion and growth: Organising allows the enterprise to deviate from the existing, conditions and to take new jobs according to changes in the environment. It helps to diversify their, area of operations and products., Organisation Structure: Organisation structure can be defined as the framework within which, managerial and operating tasks are performed. It defines the relationships between people, work and, resources. It allows coordination among human, physical and financial resources and helps, business organisation to accomplish desired goals. It can be shown through an organisation chart., Span of management determines the shape of organisation structure. Span of management refers to, the number of subordinates that can be effectively managed by a superior. Organisation structure, helps the business enterprise to function within the frame work by coordinating the efforts of, individuals and departments for the attainment of its goals., Types of Organisation Structure:, (i) Functional structure: Jobs of similar nature are grouped in separate departments. Functional, , Prepared by Dr.K.R.Rajesh Babu, GHSS, Thottada,Kannur (9447793940, 8848951808)

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II Year_Business Studies_Chapter5, structure is an organisational design that groups similar or related jobs together. Eg. In a, manufacturing concern, the works are divided into different departments like production, purchase,, marketing, personnel, etc. All departments has to report a coordinating head like Managing, Director., Managing Director, , Production, , Purchase, , Marketing, , Finance, , Personnel, , Advantages:, a) Promotes efficiency in manpower as employees perform similar tasks in a department., b) Similarity in tasks promote control and coordination within a department., c) Increasing managerial and operational efficiency results to increased profits., d) It helps to eliminate duplication of work and reduces cost., e) Training of employees become easier as it focuses on a particular task., Disadvantages:, a) Functional heads give more importance to department objectives than to the overall, objectives of the organisation., b) Exchange of information across the functionally differentiated departments creates problems, c) Inter departmental conflicts causes difficulties in the fulfilment of organisational objectives., d) Employees in a particular department lacks experience in diverse areas. So they have no, chance to get training at top level management., Suitability: Suitable for large scale organisation with diversified activities and operations require, a high degree of specialisation., (ii) Divisional Structure: This structure is used by the enterprises with more than one category of, products. In this structure, employees are grouped on the basis of different products manufactured., It consists of different units or divisions for each products and has separate divisional managers., Each division is multifunctional including purchase, production, finance, marketing, etc. are, performed to achieve the common goal. Within each division, functional structure is adopted., Divisional head is responsible for the performance of his division., Managing Director, , Cosmetics, , Production, , Foot wear, , Garments, , Purchase, , Marketing, , Finance, , Skin Care, , Personnel, , Advantages:, 1. Divisional structure helps the divisional head to develop skill in various areas related to a, particular product., , Prepared by Dr.K.R.Rajesh Babu, GHSS, Thottada,Kannur (9447793940, 8848951808)

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II Year_Business Studies_Chapter5, 2. It helps to fix responsibility and forms the basis for performance measurement., 3. Each division functions as an autonomous unit which leads to faster decision making., 4. Facilitates expansion by adding new divisional head and staff for the new product line., Disadvantages:, 1. Conflict may arise among different departments in relation to fund allotments. Some, department may earn more profits at the cost other departments., 2. Increase the cost due to duplication of same works with different departments., 3. Increased power of divisional managers may leads to ignorance of organisational interest, due to his personal interest., Suitability: Divisional structure is suitable for those business organisations where a large variety of, products are manufactured using different productive resources., Formal and Informal Organisation, Formal Organisation: Formal organisation refers to the organisation structure which is designed, by the management to accomplish a particular task. It clearly specifies the boundaries of authority, and responsibility of the employees. It facilitates a systematic coordination among the various, activities to achieve organisational goals. The structure in a formal organisation can be functional or, divisional., Features of Formal Organisation:, • It specifies the relationships between various jobs and their nature of relationships., • It lays down the rules and procedures essential for the achievement of objectives specified in, the plans., • Activities of various departments are coordinated through the formal organisation., • It is designed by the top management for the smooth functioning of the organisation., • It gives more importance to the work to be done than personal relationships., Advantages:, a) It helps to fix the responsibility as mutual relationships are clearly defined., b) It clearly specifies the duties of each member and avoids duplication of work., c) Unity of command is maintained by establishing chain of command., d) Frame work of operations specifies the role to be played by each employee and it helps to, achieve the organisational goal., e) The specific rules to guide the employees provides stability to the organisation., Limitations:, a) The established chain of command in formal organisation takes time for decision making., b) It does not provide adequate recognition to creative talent, because it does not allow any, deviations from the laid down polices., c) Formal organisation gives more importance to structure and work and not consider human, relations., Informal Organisation:, Interaction among people at work gives rise to a ‘network of social, relationships among employees’ called the informal organisation. Informal organisation emerges, from the personal interactions of employees within the formal organisation. It has no fixed rules and, line of communication. Eg. Recreation club., Features of Informal Organisation:, • It is a result of personal interactions among the employees within the formal organisation., • The standard of rules and regulations are developed from the group norms rather than the, official one., , Prepared by Dr.K.R.Rajesh Babu, GHSS, Thottada,Kannur (9447793940, 8848951808)

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II Year_Business Studies_Chapter5, Independent channels of communication without specified direction are developed by group, members., • It developed spontaneously and not deliberately by the management., • It has no definite structure as it is formed through social relationship., Advantages:, a) Faster spread of information because there is no prescribed line of communication., b) Increases the job satisfaction among the workers as it gives them a sense of belongingness., c) Helps to achieve organisational objectives by giving the employees mental satisfaction, through informal communication., Disadvantages:, a) The rumours spread through informal organisation works against the formal organisation., b) Opposition of informal organisation against changes may restrict the growth of the, organisation., c) Informal organisation pressurises the members to comply with group interests. This may be, harmful to the organisational objectives., Delegation:, Delegation refers to the downward transfer of authority from a superior to a, subordinate. It is necessary for the efficient functioning of an organisation, because it gives, managers more time to spend on priority areas. It also satisfies the subordinate’s need for, recognition and provides them with opportunities to develop and exercise initiative. The manager, shall be responsible for the assigned work of subordinates., Elements of Delegation:, 1. Authority: Authority refers to the right of a person to command his subordinates and to, take action within the scope of his position. Authority arises from the scalar chain which, connects various job positions in an organisation. Authority also refers to the right to take, decisions at a managerial position. It is highest at the top level and reduces at lower levels., It flows from top to bottom. Authority determines the superior subordinate relationship in, an organisation. Authority is restricted by laws and the rules and regulation of the, organisation., 2. Responsibility: Responsibility is the obligation of an employee to perform the assigned, duty properly. It is the result of superior – subordinate relationship, because the subordinate, is bound to perform his assigned duties. When an employee is given responsibility for a job, he must also be given the degree of authority necessary to carry it out. Authority assigned to, an employee should be accompanied by required responsibility., 3. Accountability:, Accountability implies being answerable for the final outcome. Once, authority has been delegated and responsibility accepted, one cannot deny accountability. A, subordinate is accountable to his superior for the performance of work assigned to him., Overview of the Elements of Delegation, Basis, Authority, Responsibility, Accountability, •, , Meaning, , Right to command, , Obligation to perform an Answerability for outcome, assigned task., of the assigned task., , Delegation, , Can be delegated., , Cannot be entirely, delegated., , Origin, , Arises from formal, position ., , Arises from delegated Arises from responsibility., authority., , Cannot be delegated, at all., , Prepared by Dr.K.R.Rajesh Babu, GHSS, Thottada,Kannur (9447793940, 8848951808)

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II Year_Business Studies_Chapter5, Flow, , Flows, downward from Flows upward from Flows, upward, from, superior to subordinate., subordinate to superior. subordinate to superior, , Decentralisation: Decentralisation divides the decision making responsibilities with various levels, of management. Decentralisation refers to delegation of authority throughout all the levels of the, organisation. Decision making authorities are shared with lower levels of management., Importance of Decentralisation:, (i) Develops initiative among subordinates: Decentralisation promotes self-reliance and, confidence amongst the subordinates. When lower levels of management are given the authority to, take decisions, they learn to depend on their own judgments., (ii) Develops managerial talent for the future: Decentralisation gives the employees a chance to, prove their abilities and helps to develop their managerial talents. It is a means of management, education as well as an opportunity for trained employees to use their talent in real life situations., (iii) Quick decision making: In a decentralised organisation, decisions are taken at levels which, are nearest to the points of action and there is no requirement for approval from top levels, the, process is much faster., (iv) Relief to top management: Decentralisation reduces the supervision exercised by superior, over the subordinates because the subordinates are given freedom to work. Decentralisation leaves, the top management with more time for policy making rather than operational decisions., (v) Facilitates growth: Decentralisation allows more autonomy to lower levels of management. It, helps them to work in a manner which are best for their department. This leads to increase in, productivity of each department, which facilitates growth of the organisation., (vi) Better control: Decentralisation facilitates self evaluation by each department and make them, accountable for their results. It also give chances to evaluate the importance of each department in, the achievement of organisational objectives., Delegation and Decentralisation:, Basis, Delegation, Decentralisation, Nature, , Delegation is a compulsory act. No one Decentralisation is optional act. It is, can do all activities., done at the discretion of top, management., , Freedom, , More control from superiors. Less Less control from superiors. More, freedom to take own decisions., freedom to take own decisions., , Status, , It is process to share tasks., , Scope, , Narrow scope. Limited to superior and Wide scope. Extent to delegation at, his subordinates., lower levels of management., , Purpose, , Reduce the burden of top management., , It is a result of policy decisions of top, management., , Increase the role of subordinates, , ############################, , Prepared by Dr.K.R.Rajesh Babu, GHSS, Thottada,Kannur (9447793940, 8848951808)