Organising Class 12 Notes CBSE Business Studies Chapter 5 (Free PDF Download)

Organising

• Organising refers to the process of the identification, classification and coordination of work to be performed by establishing reporting relationships between the people, setting up their responsibilities and authorities so as to collectively integrate the human efforts for the successful achievement of organisational objectives.

• Hence, Organising is responsible for:

• Implementation of plans into action.

• It decides by whom, how and where a particular task will be performed.
  
  

Steps in The Process of Organising

1. Identification and division of work: Identifying and dividing work to be done into smaller and manageable tasks.

2. Departmentalization: Grouping of activities similar in nature as department.

3. Assignment of duties: Allocating work according to the skills and abilities of employees.

4. Establishing reporting relationship: Defines the authority, responsibility, relationship clearly stating for each employee from whom they have to take orders and to whom they are accountable.
   

Importance of Organising

• Benefits of specialization: Work is divided into smaller tasks and each task is performed by those employees who possess the required skills. Performing similar tasks leads to specialization.

• Clarity in working relationships: It removes ambiguity and miscommunication as working relationships are clearly stated.

• Optimum utilization of resources: It avoids duplication and overlapping of work which leads to minimum wastage of resources.

• Adaptation to change: It tries to incorporate the changes in the business environment by modifying organizational structures and revising interrelationship at managerial levels as and when required.

• Effective administration: Clarity in working relationships and proper execution of work brings effective administration.

• Development of personnel: Proper delegation reduces employer’s burden, stimulates creativity and motivates them to complete tasks efficiently.

• Expansion and growth: It helps in growth and expansion by incorporating changes in the business environment.
  
  

Organisational Structure

• Organisational structure refers to the structure or a framework within which various operational and managerial tasks are performed. 

• It aids in the proper coordination of human, physical and financial resources in the organization to successfully achieve the organisational objectives.

• It is an indispensable means without which an organisation cannot work.

• The organisational chart shows the organisational structure of an enterprise.

• Span of management is the number of subordinates that a superior can manage.

• Organizational structure ensures a smooth and efficient flow of operations within an enterprise.
  
  

Types of Organisational Structure

These are divided into two types:

1. Functional structure: 

• Organisational structure where business is managed in the form of a separate department created on the basis of function each department performs.
  Suitability

• Functional structure is suitable for large scale businesses providing specialised services or performing diversified activities.

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Advantages

• Specialisation: Employees perform similar tasks within a department and are able to improve performance which leads to occupational specialisation.

• Coordination: Similarity in the task being performed remote control and coordination.

• Operational efficiency: The managerial and operational efficiency reduces cost and results in higher profits. Division of work into smaller tasks leads to minimal duplication and lowers cost.

• Makes training easier: The range of skills are focused which makes training of employees easier.

• Higher Focus: Individuals performing similar and smaller tasks can focus better on the activities they are responsible for.
  
  

Disadvantages

• Deviation in interests: Department interest may be pursued at the cost of organisational interest to create a functional empire.

• Conflicts: Departmental interests may lead to conflicts of interest among departments and hinder interaction between them.

• Lack of Coordination: Conflicts of interest among departments may lead to problems in coordination.

• Rigidity: Employees performing similar tasks may not be open to ideas or newer methods resulting in lack of flexibility.
  
  

2. Divisional Structure: 

• Divisional structure is a type of organisational structure which works as separate units or divisions. 

• There are many units and divisions that deal with various products. 

• Each division is accountable for its own job and must consider its own profit and loss. 

• Each division has its own divisional manager who oversees and has power over the entire unit.
  Suitability

• Divisional structure is suitable for organisations producing a variety of products for performing diversified activities.

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Advantages: 

• Product Specialisation: Product specialisation contributes to the development of diverse abilities in a divisional head, preparing him for higher roles. This is due to the fact that he obtains experience in all functions relating to a specific product.

• Accountability: Divisional heads are held accountable for profits since revenues and costs associated with various departments are clearly identifiable and attributed to them. This gives a solid foundation for measuring performance. It also aids in the assignment of blame in times of poor division performance, allowing appropriate corrective action to be performed.

• Flexibility: It encourages flexibility and initiative because each division operates as an autonomous unit, resulting in faster decision making.

• Expansion: It allows for expansion and growth by allowing for the addition of new divisions without disrupting present operations by simply adding another divisional head and personnel for the new product line.

• Prepare for future positions: Experience in a variety of operations prepares managers for higher positions.

• Better Initiatives: Dependent and independent functioning of divisions encourages managers to take initiatives to find better means and ways to perform the best.
  
  

Disadvantages

• Conflicts: Conflicts may emerge between different divisions on the allocation of cash, and a specific division may aim to maximize its profits at the expense of other divisions.

• Duplication of efforts: It may result in cost increases due to duplication of efforts across products. Providing each division with its own set of equivalent functions raises costs.

• Misuse of power: It gives managers the authority to oversee all activities relating to a specific division. Over time, such a manager may develop influence and, in an attempt to establish his independence, may disregard organizational interests.
  
  

Difference between Functional Structure and Divisional Structure:

Formal and Informal Organizations

a. Formal organisations: 

• Formal organisation lays down job descriptions, rules and procedures for each task to be performed in an organisation.

• It coordinates, interlinks and integrates the efforts of various departments and different activities to achieve organisational goals.

• It clearly specifies the formal relationships between the employees, who has to report whom, the nature and extent of their relationship etc,

• It prioritizes work over interpersonal and informal relationships.
  
  

Advantages

• Easy to fix responsibility.

• No ambiguity in instructions.

• Maintains unity of command.

• Focus on organisational goals.

• Provide stability.
  
  

Disadvantages

• Procedural delays due to long formal chains of communication.

• No recognition for creativity, as everyone has to follow a certain specified structure.

• No understanding of human relationships.
  
  

b. Informal organisation

• Informal organisation is a structure formed as a result of a network of social relationships among employees.

• It allows employees to interact beyond officially defined roles.

• It originates within the formal organisation as frequent interaction among employees in formal organisation creates informal organisation.
  
  

Advantages

• Quick communication and faster feedback due to informal communications.

• Fulfills social needs of friendship and affinity.

• Makes up for inadequacies of formal organization.
  
  

Disadvantages

• Disrupts the formal setups.

• Resistance to change.

• Group interest may supersede organisational interest.

• Difference in opinion of people in an informal group may lead to conflicts and clashes.
  
  

Difference between Formal and Informal Organisation

Delegation

• Delegation refers to the downward transfer of authority from a superior to a subordinate to enable subordinates to perform their responsibilities effectively and efficiently.
  
  

Elements of Delegation

Delegation means assigning responsibility and authority to subordinates and creation of accountability for work.

• Authority:
  It refers to the right of an individual to command his or her subordinate and take action within the scope of his or her position. Authority flows in a downward direction, that is top to bottom, as the superior has authority over his subordinate. Also the level of authority increases as one moves higher in the management hierarchy.

• Responsibility:
  Responsibility is the obligation of a subordinate to properly perform the duties assigned by the superior. It always flows in upward direction, as the subordinate is responsible for his superior.

• Accountability:
  Accountability means being answerable for the outcome of the assigned work. It flows from bottom to top, that is in upward direction, as a subordinate is accountable for his work and performance to his superior.
  
  

Difference between Authority, Responsibility and Accountability

Importance of Delegation

• Effective management: Sharing responsibilities with subordinates allows managers to concentrate on important matters.

• Employee development: Provides opportunities for employees to develop their skills to handle complex tasks and to improve their career prospects.

• Motivation of employees: Receiving responsibilities and authority from superior builds confidence and motivates subordinates to perform well.

• Facilitation of growth: Receiving responsibilities from superior trains and prepares the subordinates for new projects or ventures.

• Basis of management hierarchy: The degree and flow of authority and responsibility provides the basis for management hierarchy.

• Better Coordination: Predetermined authority, responsibility and accountability of each position bring clarity and avoids duplication which leads to coordination.
  
  

Centralisation

• All powers and authority of decision-making is retained with the top level management in this concept. 

• All the decisions are taken by the higher level management in a centralised firm.

• Though an organisation cannot be completely centralised, as it may disrupt the production efficiency as well as discourage departments and employees to perform to the best of their abilities. Hence for this a balance between centralisation and decentralization is needed.
  
  

Decentralisation

• The power and decision-making authority are delegated or shared among all the levels of management and all departments.
  
  

Importance

• Initiative: Develops initiative among subordinates as they feel motivated to take decisions on their own. It gives lower management levels a sense of autonomy by allowing them to make their own decisions. Furthermore, it fosters a sense of self-confidence and self-reliance in them. When power is given to lower-level managers, they learn to face new difficulties and solve problems on their own. 

• Managerial Competence: Decentralisation allows them to demonstrate their abilities and prepare for higher-level positions, and develops managerial talent for the future, as the subordinates focus on developing their skills, and take decisions based on their knowledge. This helps in shaping their professional careers.

• Quick decision making: It facilitates quick decision making as no formal structure, or long formal chains of approval needs to be followers while taking decisions.

• Control: Decentralisation aids in better evaluating the organization's effectiveness. Decentralisation aids in the analysis and evaluation of each department's performance separately. As a result, the level of achievement of each department, as well as their contribution to the general objectives of the organization, can be clearly analyzed.

• Growth: Decentralisation helps to increase managerial efficiency to a considerable extent. Lower-level managers gain more authority as a result of decentralisation. It encourages healthy competition among managers from various departments. In a contest to exceed one another, they give it their all, increasing overall productivity and efficiency. The organization benefits from improved overall performance and so grows.

• Reduced Workload of Top Managers: Delegation of authority gives top-level managers more latitude. It assists them in delegating work to subordinates and allows them to focus on more critical and higher priority tasks, such as policy decisions. Furthermore, direct monitoring by top-level management is reduced as subordinates are given the authority to make their own judgments.
  
  

Difference between Delegation and Decentralisation

Difference between Centralisation and Decentralisation

Overview- Revision Notes Class 12 Business Studies Chapter 5

Class 12 Notes ‘Organising’

This chapter discusses the fundamentals of organisation, beginning with its definition. These Class 12 revision notes Chapter 5 have discussed the topic in a straightforward and methodical manner, allowing students to master every aspect of the subject. The specialists have divided the issue into sections, and each component is presented with pertinent labelled diagrams, flowcharts, and tables. Let's look through these editing notes in detail now.

Class 12 Business Studies Chapter 5 revision notes will explain in detail the term organising and the steps involved in organising. The steps have been explained by breaking them down into points that are easy to understand and memorise. Examples provided with the topics and sub-topics make it easier for the students to develop a conceptual understanding of the concepts effectively.

The method that leads to the establishment of an organisational structure with clearly defined duties for each member is known as organising. These responsibilities are then assigned or filled by persons who are well suited for them. An organisational structure also aids in establishing the link between these positions so that each employee is clear about his or her responsibilities. To learn more about this structure and its construction, consult the Class 12 Business Studies Organising revision notes.

Organisation is very important as it not only helps in defining the roles of individuals but it leads to an effective administration and utilisation of various resources also. These revision notes will explain clearly the other areas in which organisation plays a critical role. 

NCERT Solutions Chapter 5 Class 12 Business Studies revision notes will aid the students in understanding how an organisational structure provides the framework for managerial and operational responsibilities. Students can refer to the revision notes for understanding further in detail the different types of organisational structures and how they are formed.

Every kind of organisational structure has its distinct features, advantages, and disadvantages. Students will be able to get a comparative overview of functional and divisional structure along with the difference between formal and informal structure of organisations. 

Students will also comprehend the idea of delegation, which is the transfer of authority from seniors to subordinates, by referring to Class 12 Business Studies revision notes answer chapter 5. These revision notes will expand on the principles of organisational authority, responsibility, and accountability. The importance of delegation has been explained clearly in a comprehensive and easy to understand language.

Another important aspect of organisation covered under these revision notes is decentralisation. NCERT Class 12 revision notes Business Studies Chapter 5 solution will give the students a clear idea about the importance of organising and its importance along with detailed points of difference between delegation and decentralisation.

Some of the important topics or concepts discussed in this chapter are listed below:

• Meaning of organising

• Steps in the process of organising

• The importance of organising

• Organisational structure

• Types of organisational structures

• Difference between functional structure and divisional structure

• Formal and informal organisation

• Difference between the formal and informal organisation

• Delegation

• The importance of delegation

• Difference between authority, responsibility, and accountability

• Decentralisation

• The importance of decentralisation

• Difference between delegation and decentralisation

• Difference between centralisation and decentralisation

CBSE Class 12 Revision Notes and Key Points

CBSE Class 12 Revision Notes on Business Studies Chapter 5 is one of the best study materials for the students to revise the concepts related to organising. All the concepts of the chapter covered under Revision Notes of Chapter 5 are explained in a very simple manner so that the students can easily understand the deeper meaning of the concept. If you have finished reading the chapter from the textbook, then go through the revision notes to complete your preparation for the exam. 

You can access the free Pdf version of the Revision Notes on Chapter 5 Class 12 Business Studies by clicking on “Download PDF”. You can also download the other chapters of CBSE Class 12 Business Studies revision notes available in free pdf format from our website. Also, check out other important study materials such as NCERT Solutions of Class 12 Business Studies and Important Questions on Class 12 Business Studies from Vedantu’s website or download the app to access the best study materials.

Other Chapter Links On CBSE Class 12 Business Studies Revision Notes

• Chapter 1 - Nature and Significance of Management Notes

• Chapter 2 - Principles of Management Notes

• Chapter 3 - Business Environment Notes

• Chapter 4 - Planning Notes

• Chapter 5 - Organising Notes

• Chapter 6 - Staffing Notes

• Chapter 7 - Directing Notes

• Chapter 8 - Controlling Notes

• Chapter 9 - Financial Management Notes

• Chapter 10 - Financial Markets Notes

• Chapter 11 - Marketing Notes

• Chapter 12 - Consumer Protection Notes

• Chapter 13 - Entrepreneurship Development Notes