Notes of Ch 5 Organising| Class 12th Business Studies

Summary and Notes of Ch 5 Organising| Class 12th Business Studies 

Definition of Organising (According to Haney)

"Organisation is harmonious adjustment of specialised parts for the accomplishment of some common purpose or purposes."

Steps in the process of organising

• Identification and division of work: This is first step in the process of organising involves identifying and dividing the work that has to be done in accordance with previously determined plans.

• Departmentalisation: When the work has been divided into small and manageable activities then those activities which are similar in nature are grouped together, this grouping process is called departmentalisation.

• Assignment of duties: Allocate the work to various department and employees and the work must be assigned to those who are best fitted to perform it well.

• Establishing reporting relationships: One individual should receive order from only one manager and answerable to only one department. The establishment of such clear relationships helps to create a hierarchal structure and helps in coordination amongst various departments.

Importance of Organising

• Benefits of Specialisation.

• Clarity in working relationship.

• Optimum utilisation of resources.

• Adaptation to change.

• Effective administration.

• Development of personnel.

• Expansion and growth.

Organisation structure

This is the framework within which managerial and operating tasks are performed. It can be Functional or divisional.

Types of Organisation Structures

There are two types of organisation Structures

• Functional Structure.

• Divisional Structure.

• Functional Structure: It refers to the division of the whole enterprise according to the major functions/activities to be performed by it. Under this, all the functions of similar nature are divided in different units which are called department.

Advantages of Functional structure

• A functional structure leads to occupational specialisation this promotes efficiency in utilisation of manpower.

• It promotes control and coordination within a department because of similarity in the tasks being performed.

• It helps in increasing managerial and operational efficiency and this result in increased profit.

• Minimal Duplication of efforts.

• It makes training of employees easier as the focus is only on a limited range of skills.

• It ensures that different functions get due attention.

Disadvantages of Functional structure

• Ignorance of organisational objectives.

• Difficulty in Interdepartmental Coordination.

• Conflicts of Interest.

• Hurdle in complete Development.

Suitability of functional organisation

• When size of organisation is large.

• Where specialisation is required.

• Where decentralisation of authority is needed.

• Where there is only one product that is sold.

Divisional Structure

Divisional organisation structure means division of the whole enterprise according to the major products to be manufactured by it.

Advantages of Divisional Structure

• Product specialisation helps in the development of varied skills in a divisional head and this prepares him for higher positions.

• Revenue and costs related to different department can be easily identified and assigned to them. This helps in performance measurement, fixation of responsibility in case of poor performance.

• It promotes flexibility and initiative.

• It facilitates expansion and growth as new divisions can be added without disturbing the other department and other function.

Disadvantages of Divisional structure

• Conflict between divisional head.

• Duplicity of function.

• Selfish Attitude.

Suitability of Divisional Organisation

Suitable where a large variety of products are manufactured using different productive resources, where the size of the concern is really large, where different manufacturing technology and marketing method are required.


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