Organizing is the process of defining and grouping the activities of the enterprise and establishing authority relationships among them. Here are the organizing class 12 notes.
In other words, organizing refers to arranging everything in an orderly form and making the most efficient use of resources.
Topics Discussed
Organizing Process
There are four steps in the organizing process, which you can learn by the word ‘IDEA‘.
I – Identification and Division of Work
D – Departmentalization
A – Assignment of Duties
E – Establishing Reporting Relationships
Identification and Division of Work
The first step in the process of organizing involves identifying and dividing the work that has to be done in accordance with previously determined plans.
The division of work makes sure there is no duplication of work and there is no burden of work on one person. The manager divides the work into smaller units and each unit of work is called a job.
Departmentalization
After dividing the work into smaller jobs, related and similar jobs are grouped and put under one department.
The grouping of jobs can be done by the organization in different ways but the most common two ways are:
- Functional Departmentation: Under this method, jobs related to common functions are grouped under one department. e.g. Production Department, Sales Department, etc.
- Divisional Department: When an organization is producing more than one type of product then they prefer divisional departmentation. e.g. Maggie Department, Coffee Department, etc.
Assignment of Duties
After dividing the organization into specialized departments each individual working in different departments is assigned a duty matching to his skill and qualifications.
The work is assigned according to the ability of individuals. Employees are assigned duties by giving them a document called a job description.
Establishing Reporting Relationship
In the fourth step of the organizing process, all the individuals are assigned some authority matching to the job they have to perform.
The managers with maximum authority are considered top-level management and managers with minimum authority are grouped into lower-level management.
So with the establishment of the authority, the individuals can perform their jobs and everyone knows who will report to whom.
Importance of Organizing
1) Benefits of Specialisation
In organizing, every individual is assigned a part of the total work and not the whole task. Due to this, the division of work into smaller units and the assignment of units according to the qualification leads to specialization.
2) Role Clarity
In the organizing function, the employees are assigned different jobs and the managers clearly define the jobs.
The jobs are defined on the written document called the jobs description which clearly spells out what exactly has to be done in every job.
3) Clarity in Working Relationship
It is clearly defined what all and how much power and authority is enjoyed by different individuals or managers.
Each manager knows very clearly to whom he can give the order and from whom he has to receive the order.
4) Effective Administration
Organizing provides a clear description of jobs and related duties. This helps to avoid confusion and duplication.
Clarity in working relationships enables proper execution of work.
5) Adaption to Change
The process of organizing allows the organization structure to be suitably modified according to changes in a business environment.
It also provides stability to the enterprise as it can continue to survive and grow despite changes.
6) Development of Personnel
Organizing helps in the development of personnel by the delegation of work to subordinates. Effective delegation allows managers to reduce their workload by assigning routine jobs to their subordinates.
It allows the manager to develop new methods and ways of performing tasks.
7) Expansion and Growth
Organizing helps in the growth and diversification of an enterprise by enabling it to deviate from existing norms and take up new challenges.
It allows a business enterprise to add more job positions, and departments and even diversify their product lines.
Organization Structure
The organization structure can be defined as the framework within which managerial and operating tasks are performed.
It specifies the relationships between people, work, and resources in an organization.
Span of Management: It refers to the number of subordinates that can be effectively managed by a superior.
Types of Organization Structure
1) Functional Structure
Functional structure is an organizational structure formed by grouping of jobs of similar nature according to functions and organizing these major functions as separate departments.
For Example: Production department, Marketing department, etc.
| Advantages | Disadvantages |
| 1) Specialization When the activities are grouped according to the type of function then all the activities are related to one type only which leads to specialization. | 1) Difficulty in Achieving Organizational Goals The departments become specialized in their own way only. They fail to see the prospects of the whole organization. |
| 2) Helps in Increasing Managerial and Operational Efficiency Managers of one department are performing the same type of function again and again which makes them specialized and improves their efficiency. | 2) Inflexibility Employees get training in one function only, i.e., the department to which they belong so they cannot be shifted to other departments. |
| 3) Easy Coordination The departments formed in the functional structure are interdependent on each other which means the activities of one department depend upon the performance of other departments. | 3) Conflict of Interest A conflict of interest may arise when the interests of two or more departments are not compatible. |
| 4) Effective Training It makes training of the employees more easy as they are trained in limited types of skill, i.e., employees of the production department are given training in production techniques only. | 4) Problems in Coordination It may lead to problems in coordination as information has to be exchanged across functionally differentiated departments. |
2) Divisional Structure
When the organization is large in size and is producing more than one type of product then activities related to one product are grouped under one department.
For Example: a large company may have divisions like footwear, garments, etc.
| Advantages | Disadvantages |
| 1) Product Specialization All the activities related to one type of product are grouped under one department only which brings integration and coordination in the activities. | 1) More Resources Required Each department will require all the resources as every division will be working as an independent unit which increases expenditure. |
| 2) Expansion and Growth It facilitates expansion and growth as new divisions can be added without interrupting the existing operations by merely adding another divisional head and staff for the new product line. | 2) Conflicts Conflicts may arise among different divisions with reference to the allocation of funds. |
| 3) Flexibility and Initiative It promotes flexibility and initiative because each division functions as an autonomous unit which leads to faster decision making. | 3) Ignoring Organizational Interests A manager in this structure may gain power and in a bid to assert his independence may ignore organizational interests. |
Differences between Functional and Divisional Structure
| Basis | Functional Structure | Divisional Structure |
| Formation | The formation is based on functions. | The formation is based on product lines and is supported by functions. |
| Specialization | Functional specialization | Product specialization |
| Managerial Development | Difficult, as each functional manager has to report to the top management. | Easier, autonomy as well as the chance to perform multiple functions helps in managerial development. |
| Cost | Functions are not duplicated, hence economical. | Duplication of resources in various departments, hence costly. |
| Responsibility | Difficult to fix on a department. | Easy to fix responsibility for performance. |
Marketing Management Class 12 Notes Busienss Studies
3) Formal Organization
Formal organization refers to the organization structure which is designed by the management to accomplish a particular task.
It specifies the boundaries of authority and responsibility and there is a systematic coordination among the various activities to achieve organizational goals.
| Advantages | Disadvantages |
| 1) Systematic Warning Formal organizational structure results in the systematic and smooth functioning of an organization. | 1) Delay in Action While following a scalar chain and chain of command actions get delayed in the formal structure. |
| 2) Coordination Formal organization structure results in coordinating the activities of various departments. | 2) Emphasis on Work Only Formal organizational structure gives importance to work only, it ignores human relations, creativity, talents, etc. |
| 3) Achievements of Organizational Objectives A formal organizational structure is established to achieve organizational objectives. | 3) Inadequate Recognition of Creativity Poor organization practices may not provide adequate recognition to creative talent, since it does not allow any deviations from the laid down policies. |
4) Informal Organization
Interaction among people at work gives rise to a network of social relationships among employees called the informal organization.
| Advantages | Disadvantages |
| 1) Fast Communication Informal structure does not follow a scalar chain so there can be a faster spread of communication and quick feedback. | 1) Spread Rumours 70% of information spread through informal organization structures are rumors which may mislead the employees. |
| 2) Fulfills Social Needs Informal communication gives importance to the psychological and social needs of employees which motivates the employees and enhances job satisfaction. | 2) No Systematic Warning An informal structure does not form a structure for the smooth working of an organization. |
Differences between Formal and Informal Organization
| Basis | Formal Organization | Informal Organization |
| Meaning | It is a system of well-defined jobs, each bearing a definite measure of authority, responsibility, and accountability. | It is a network of personal and social relationships, not established by a formal organization, but arising spontaneously as people associate with one another. |
| Origin | It originates as a result of the company’s rules and policies. | It originates as a result of interaction among people at work. |
| Authority | It arises by position in the management. | It arises out of the personal qualities of individuals. |
| Behvior | Behavior is guided by rules and policies. | Behavior is not guided by any rules. It has no set of patterns. |
| Flow of Communication | Communication takes place through a scalar chain. | It can take place in any direction. |
| Nature | It is rigid in nature. | It is flexible in nature. |
| Leadership | Managers are leaders. | Leaders are chosen by the group. |
Delegation of Authority
Delegation of authority merely means the granting of authority to subordinates to operate within prescribed limits.
Elements of Delegation
1) Responsibility
Responsibility means the work assigned to an individual. It includes all the physical and mental activities to be performed by the employees at a particular job position.
2) Authority
Authority means the power to make decisions. To carry on the responsibilities every employee needs to have some authority.
So, when managers pass their responsibility to their subordinates, they also pass some of the authority to the subordinates.
3) Accountability
Accountability implies being answerable for the outcome of the assigned task. Once responsibility for the performance of an assigned task is accepted, one cannot deny accountability.
Accountability arises from responsibility. Accountability flows upwards i.e., a subordinate will be accountable to a superior for satisfactory performance of work.
Difference between Authority, Responsibility, and Accountability
| Basis | Authority | Responsibility | Accountability |
| Meaning | Right to command | Obligation to perform an assigned task | Answerability for the outcome of the assigned task |
| Delegation | Can be delegated | Cannot be entirely delegated | Cannot be delegated to all |
| Origin | Arises from a formal position | Arises from delegated authority | Arises from responsibility |
| Flow | Flows downward from superior to subordinate | Flows upward from subordinate to superior | Flows upward from subordinate to superior |
Importance of Delegation
1) Effective Management
By empowering the employees, the managers can function more efficiently as they get more time to concentrate on important matters.
2) Employee Development
Delegation makes them better leaders and decision-makers. Thus, delegation helps prepare better future managers.
3) Motivating Employees
Responsibility for work builds the self-esteem of an employee and improves his confidence.
4) Facilitates Organizational Growth
Delegation leads to the division of work and specialization which is very important for organizational growth.
5) Better Co-ordination
Delegation helps to avoid overlapping duties and duplication of effort as it gives a clear picture of the work being done at various levels, thus helping in better coordination.
6) Basis of Management Hierarchy
Delegation of authority established superior-subordinate relationships, which are the basis of the hierarchy of management.
Decentralization
Decentralization can be defined as an even and systematic distribution of authority at every level of management.
Those organizations in which decision-making authorities lie with the top management are termed as ‘centralized organizations’ whereas those in which such authority is shared with lower levels are ‘decentralized organizations’.
Importance of Decentralization
1) Develops initiative among subordinates
Passing authority at middle and lower levels shows the trust and faith of the top level in their subordinates. It helps to promote self-reliance and confidence amongst the subordinates.
2) Develop managerial talent for the future
Decentralization gives subordinates a chance to prove their abilities and create a reservoir of qualified manpower who can be considered to fill up more challenging positions through promotions.
3) Quick decision making
In the decentralization process, decision-making is not restricted to a few hands only but decision-making is entrusted to all managers who are taking actions or performing the activities.
4) Facilitates growth
Decentralization grants more freedom to lower levels. This helps the subordinates to do the work in the manner best suited for their department.
5) Better control
In decentralization, employees working at different levels make their own decisions and they are personally accountable for their decisions, they cannot pass the blame to their superiors.
6) Relief to top management
Decentralization diminishes the amount of direct supervision exercised by a superior over the activities of a subordinate because they are given the freedom to act and decide within the prescribed limits.
Difference between Delegation and Decentralization
| Basis | Delegation | Decentralization |
| Nature | A delegation is a compulsory act. | Decentralization is an optional policy. |
| Freedom of Action | There is less freedom to make won decisions as there is more control by superiors. | There is greater freedom of action as there is less control over executives. |
| Status | It is a process followed to share tasks. | It is the result of the policy decision of the top management. |
| Scope | It has a narrow scope as it involves the superior and his immediate subordinate only. | It has wide scope as it involves all levels of management. |
| Purpose | The main purpose is to lessen the burden on the manager. | The main purpose of decentralization is to increase the role of the subordinates in the organization by giving them the authority to take decisions. |
Thank u so much sir. Or baaki chapters ke bhi upload krdijiee jo-jo ch pending hai bst kee class 12
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Staffing ch notes
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Sir, these notes are enough for board exam ??
These are just notes, these are important but apart from it case studies and previous year questions are equally important to score full marks in business studies.