Management Principles and Application Unit 3 Organising

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Management Principles and Application Unit 3 Organising

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(A) Fill up the blanks:

1. Organization is derived from the word ____________.

Ans: organism.

2. Organization is the process of identifying and ____________ work to be performed.

Ans: grouping.

3. Line organization is also called ____________ organization.

Ans: scalar.

4. In the organization the line of authority is ____________ in its flow.

Ans: vertical.

5. In functional organization the line of authority is ____________ or ____________.

Ans: functional, diagonal.

6. In ____________ organization there is unity of command.

Ans: line.

7. In ____________ organization the functional specialists are added to the line, thus giving the line advantages of specialists.

Ans: line and staff.

8. Project is an organization within the ____________.

Ans: organization.

9. ____________ organization is suitable for jobs of temporary character.

Ans: Project.

10. Matrix structure is often referred to as ____________ command system.

Ans: multiple.

(B) Multiple choice:

1. Organization is the process of:

(a) Arranging various inputs.

(b) Defining authority and responsibility.

(c) Increasing managerial efficiency.

Ans: (a) Arranging various inputs.

2. Organization deals with.

(a) Centralization of activities.

(b) Decentrationtion of activities.

(c) Division of work.

Ans: (c) Division of work.

3. Formal organization is the.

(a) Conscious co-ordination of activities.

(b) Relationship among people outside the organization.

(c) Relationship based on personal likes and dislikes.

Ans: (a) Conscious coordination of activities.

4. A business should have

(a) Multiplicity of objectives.

(b) Centralization of work.

(c) Decentralization of work.

Ans: (a) Multiplicity of objectives.

5. An organization involves:

(a) Division of work.

(b) Concentration of work.

(c) Distribution of work.

Ans: (a) Division of work.

6. Which of the following is not a characteristics of authority

(a) Legal and legitimate.

(b) Right to decide.

(c) Key to managerial job.

(d) flow upwards.

Ans: (d) flow upwards.

7. Which of the following is not an advantage of delegation.

(a) Quick decision.

(b) motivational factor.

(c) Increase manager’s burden.

(d) Provide training ground.

Ans: (c) Increase manager’s burden.

8. Which of the following form of organisation structure is the oldest

(a) Line organisation.

(b) Line and staff organisation.

(c) Functional organisation.

(d) Project organisation.

Ans: (a) Line organisation.

9. Who recommended the functionalization at the shop level

(a) Henry Fay.

(b) F. W. Taylor.

(c) Max Weber.

(d) P. F. Drucker.

Ans: (b) F. W. Taylor.

10. Which of the following organisation is suitable for small scale operation

(a) Line organisation.

(b) Line and staff organisation.

(c) Project organisation.

(d) Functional organisation.

Ans: (a) Line organisation.

C. Say True or False:

1. Organization involves division of work.

Ans: True.

2. A good organization helps in achieving individual goals.

Ans: False.

3. An organization is a soft science.

Ans: True.

4. Classical writers viewed organization as a machine.

Ans: False.

5. New classical organization theory laid more emphasis on external factors.

Ans: False.

6. Modern organization theory was developed in 1947.

Ans: False.

7. An organization manual provides information about organization.

Ans: True.

8. Organisation is derived from the word Organ.

Ans: False.

9. Organisation is the process of identifying and grouping work to be performed.

Ans: True.

10. Line organisation is also called scalar organisation.

Ans: True.


1. What is organization?

Ans: Organisation is a structural framework of duties and responsibilities to be performed by the people working in the various departments, thus attaining the predetermined business goals through organization.

2. What is the span of control?

Ans: The concept of span of control refers to the number of subordinates who are directly reporting to a superior. It also refers to the number of subordinates who can be effectively and efficiently supervised directly by a manager or superior.

3. What is authority?

Ans: Responsibility without authority is meaningless. Authority is the right vested in a managerial position, which enables the manager occupying that managerial position to command subordinates, to take decisions and to use organizational resources all for the purpose of facilitating and ensuring the attainment of enterprise objectives.

4. What is Responsibility?

Ans: Responsibility is the reverse of authority. It is the obligation or duty or liability owed by a subordinate to the superior for the proper and efficient discharge of the job; for which authority has been granted to the former i.e. the subordinate.

5. What is Accountability?

Ans: Accountability is the obligation of a subordinate to report back to his superior that the job entrusted to him has been completed. When an individual gets authority from his superior, he becomes obliged to render an account of how he has used his authority.

6. What is formal organization?

Ans: An organisation, by definition, is always formal i.e. deliberate. The group of individuals without being moulded into an organization is merely a mob or a crowd-incapable of attaining anything useful. An organization is not assumed by any individual of his/her own accord; but is carefully and deliberately assigned to the individual by the management matching the abilities and skills of the individual with requirements of the job.

7. What is informal organisation?

Ans: Informal organisation refers to the relationship between people in an organisation based not on planned structure for taking up the activity. It is generally based on personal attitudes, prejudices likes and so on. People works here not on the basis of procedures and regulations but on some taste, culture etc. Informal organisation not created but they appear at their own in a natural way in the formal organisation.

8. What do you mean by organisation structure?

Ans: An organisation structure is a framework of authority and responsibility relationships between various positions in the organisation and also clarifies who reports to whom. It is generally shown on an organisation chart. It is a set of planned relationships between groups of related functions and between physical factors and personnel required for the achievement of organizational goals.

9. What is delegation?

Ans. According to O.S. Hiner, ‘Delegation takes place when one person gives another the right to perform work on his behalf and in his name and the second person accepts a corresponding duty or obligation to do what is required of him.

10. What is centralisation?

Ans. Centralisation is the kind of delegation of power where power to take decision vests in one person at the top.

According to H. Fayol, ‘Everything that goes to increase the importance of subordinate’s role is decentralization, everything which goes to reduce it is centralisation.

11. What is scalar principle?

Ans: The chain of command or line of authority from the top to the bottom of the organizational hierarchy should be such that every subordinate knows who has delegated authority to him and to whom matters beyond his authority must be referred. Decision-making should follow the established chain of authority. The limits of authority within which subordinates can exercise initiative should be clarified.

12. What is organisation chart?

Ans. Organisation chart is a diagrammatic presentation of relationship in an enterprise.

According to Terry, ‘Organisation chart is a diagrammatical form which shows important aspects of an organization including major functions and their respective relationships, the channel of supervision and relative authority of each employer who is in charge of each respective function.

13. What is decentralisation of authority?

Ans: Decentralisation of authority means the dispersal of decision making power at lower levels of management. The aim of decentralisation is to grant all the authority to make a particular division or department autonomous. It enables each department to decide on all matters concerning the department expect those matters which need to be left to the top management.

In the words of Louis Allen, “Decentralisation refers to the systematic efforts to delegate to the lowest levels of authority except that which can only be exercised at the central point.”

14. Define functional organisation.

Ans. Functional organisation was developed by F.W. Taylor.

In functional organisation, the task of management and direction of subordinates should be divided according to the type of work involved. All activities are grouped according to certain functions like production, marketing, finance etc. and are put under the charge of different persons.

15. Define and explain organisation as a process.

Ans: Organisation as a process because organisation is concerned with arranging in a logical and orderly manner the activities of all the employees. It specifies how the duties are to be divided among the departments and the employees. It creates relationship of one job to another and lays down the scope or limits of authority and responsibility of each job. It also provides for achieving coordination between the activities of various individuals, and department.

Organising involves the following steps:

(i) Identifying and division of work.

(ii) Creation of departmentation.

(iii) Assignment of duties.

(iv) Establishing authority – Responsibility relationships.

16. Explain organisation as a structure.

Ans: An organisation structure is a framework of authority and responsibility relationships between various positions in the organisation and also clarifies who reports to whom. It is generally shown on an organisation chart. It is a set of planned relationships between groups of related functions and between physical factors and personnel required for the achievement of organisational goals.

17. Define organisation as a group activity.

Ans: Organisation is a process of identifying and grouping the activities of the enterprise. The total work of the organisation is grouped into major functional activities and each such functional activity is further subdivided into different jobs. Grouping of activities is essential because entire work cannot be done by one individual. Each job consist of certain related tasks to be carried out by the job holder. Grouping of activities is carried out to do all work systematically and to facilitate specialisation in the organisation. This would also increase the efficiency of the firm.

18. What is centralisation of authority?

Ans: Centralisation refers to the systematic reservation of authority at the top level in the organisation. It refers to concentration of decision making authority. In centralised organisation top management has the absolute authority for making almost all the decision. It is generally successful in small-scale enterprises where proprietor is able to devote proper time for every activity. With the expansion of business the control becomes difficult and the need for decentralisation arises.

19. Give five guidelines for effective organization.

Ans: Five guidelines for effective organisation are namely-

(i) Plan the structure (of organisation).

(ii) Improve members’ understanding through charts and manuals.

(iii) Balance centralization and decentralization.

(iv) Avoid granting of authority without responsibility and vice-versa.

(v) Avoid line-staff conflicts, at all costs.

20. What are the four important types of organisation?

Ans: The four important types of organisation are:

(i) Line organisation.

(ii) Functional organisation.

(iii) Line and staff organisation.

(iv) Committee form of organisation.

21. What are the three basic elements of delegation?

Ans: The three basic elements of delegation are:

(i) Designment of responsibility.

(ii) Grant of authority.

(iii) Creation of accountability.

22. Write six factors responsible for the emergence of informal organisation.

Ans: Six factors responsible for the emergence of informal organisation are:

(i) Desire to socialize with others.

(ii) Necessity for exchanging information.

(iii) To release boredom caused by modern specialization.

(iv) Need for collective action against the high-handedness of management.

(v) Inborn leadership.

(vi) Mutual protection under emergency situation.

23. Mention five advantages of informal organisation.

Ans: Advantages of informal organisation are:

(i) Results in more productivity and production.

(ii) Communication feedback.

(iii) Innovation and creativity encouraged.

(iv) A more humanistic formal organisation.

(v) But work against management.

24. Give five limitation of informal organisation.

Ans: Five limitation of informal organisation are:

(i) Spread of rumours.

(ii) Resistance to change.

(iii) Less than optimum production.

(iv) Reduces predictability of human behavior.

(v) Problem of indiscipline.

25. Mention five suggestions for handling informal groups in a constructive manner?

Ans: Some of the steps suggested to management for handling informal groups in a constructive manner could be stated as under-

(i) Recognise the existence of informal groups.

(ii) Whenever and wherever possible, some dominating informal leaders might be assigned suitable managerial positions within the formal organizational setting.

(iii) There must be devised system for arranging social get-togethers with informal leaders and their groups.

(iv) Committees consisting of leader of formal and informal organisation must be constituted for discussing changes.

(v) Management must incorporate the ideas and suggestion of informal groups into its own schemes, whenever such ideas/suggestions are practical and fruitful.

26. Write the difference between line and staff.

Ans: The difference between line and staff are:

(i) Staff thinks, lines do.

(ii) Staff advises, lines perform.

(iii) Staff tells the line what to do.

On the other hand lines tell where to go.

(iv) Staff has the authority of line, but lines have the authority to command.

(v) Staff has no fixed responsibility, but lines have fixed responsibility.

(vi) Staff has no authority over the line and has only power to recommend.

One the other hand line is responsible for actual execution of work.

27. Write a note on Advantages of Span of control.

Ans: Advantages of adequate span of control can be pointed out as it increases efficiency; facilitates effective supervision and control; increases goodwill; develops professional morale and team spirit; better communication and coordination; facilitates quick action; less labour absenteeism and turnover; develops discipline and mutual trust and superiors can concentrate on important work.

28. State the criticism of Graicunas theory.

Ans: Graicunas theory has been criticised on the following counts:

(i) It is based on the false assumption that all relationship arise with equal frequency. It is not so in real life situations.

(ii) It is based on yet another false assumptions that all relationships occur with equal intensity.

(iii) It doesn’t determine the exact number of relationship that exists but indicates the possible number of relationship.

(iv) It doesnot indicate the relationships that arise due to the sideways interactions such as with service departments.

29. State any three benefits of formal organisation.

Ans: The three benefits of formal organisation are given below –

(i) Formal organisation helps in determining the objectives of various departments and units. It facilitates the attainment of organisational goals through the fulfillment of objectives of various department.

(ii) It facilitates optimum use of resources and new technological developments.

(iii) It clarifies authority and responsibility relationships which lead to better communication.

30. “Authority can be delegated but responsibility can’t.” Explain the statement.

Ans: Delegation is an administrative process of getting things done by others by giving them responsibility. Authority is the power to give orders and make sure that the orders are obeyed. In a business enterprise, authority vests in top management and from there it trickles down to lower levels of management for accomplishing the assigned task. Responsibility on the other hand flows from lower to top level. A person can delegate authority to his subordinate for performing a particular task but her remains accountable to his superiors for that work. In case the work is not performed as per the requirements, the delegator cannot escape responsibility. So authority can be delegated but not the responsibility.

31. “The concept of decentralisation is related to the concept of delegation.” Explain the statement in brief.

Ans: To some extent decentralisation is related to delegation because both decentralisation and delegation means dispersal of authority to take decisions to the lower levels of the organisation where the problem arise. Both purpose is to lesson the burden and to give greater autonomy to the superior or the lower levels. With the help of decentralisation and delegation quick decision are taken at the level where problems are faced. This speeds up the process of decision-making and also reduce the workload of higher level executive, since authority is delegated to the lower levels, the top management is relieved of taking operational decisions. Again one of the important relation between decentralisation and delegation is that both motivates the subordinate.

32. What are the factors bringing about decentralisation?

Ans. Decentralisation is necessitated by the following factors:

(i) When there is a need to take quick decisions on the spot to take advantage of the situation then power is delegated to the level where it is needed.

(ii) When top management wants to reduce communication work then decentralisation is undertaken.

(iii) The company’s product or market may require decentralisation of decision-making to give emphasis to product or market.

(iv) When growth and diversification takes place then decentraliation is necessary for bringing flexibility in operations and reducing burden on top executives.

33. Write six differences between formal and informal organisation.


1. Meaning relationshipsConsciously coordinatedSpontaneous personal relation ships.
2. BasisDelegation of Authority functions, procedures and RegulationsPersonal needs, attitudes, whims and prejudices.
3. NatureStable and predictableUnstable and unpredictable.
4. FormDefinite structure and well defined jobsStructureless and full of discretions.
5. Sources of AuthorityFormal positionInformal, without position.
6. EmphasisOfficePeople

34. What are complaints of staff personnel against line?

Ans: Staff personnel have the following complains:

(a) Line officers do not make proper use of expert knowledge of the staff. They do not consult staff personnel at the planning level where they can make practical suggestions. Staff people are consulted only as a last resort.

(b) Staff people feel that the line personnel do not properly implement their advice. Line officers do not consult staff while implementing the advice. When staff officers try to guide line persons in implementing the programmes then they are accused of interference.

(c) Line officers are not generally enthusiastic about the new ideas suggested by the staff. They resist new things and insist on following the traditions.

(d) Staff officers do not have authority to implement their ideas. They should be given authority like line officers in supervising the implementation of their suggestions.

35. What are the Characteristics of Span of Control?

Ans: The Characteristics of Span of Control are:

(i) The span of control most often refers to the number of workers assigned to a manager.

(ii) The concept however extends outward with detailed analysis based on how the management interacts with the staff under their control.

(iii) A narrow span of control means each manager has a small number of employees.

(iv) A wide span of control means each manager is responsible for a large number employees.

(v) The determination is subjective and is ultimately based on the upper management and their style.

(vi) The span of control is determined, based on the belief that it will improve productivity and output while increasing revenue.

36. Give four points of difference between delegation and decentralisation.

Ans: The differences between delegation and decentralisation are given below:

1. NatureDelegation is individualis-tic. It involves two persons, superiors and subordinatesDecentralisaton is totalistic in nature. It involves delegation from top to bottom.
2. ControlControl rests with the delegator or superiorIn this system top management exercises minimum control.
3. Scope or partiesIt has a narrow scope as it is restricted from one person to another.It takes place when delegation is made to all the employees at a particular level.
4. PurposeIts purpose is to lessen the burden of the superiorIts purpose is to give greater autonomy (or freedom of action) to the lower levels.

1. What are the different complaints of line managers against staff?

Ans: Line managers have the following complaints against staff:

(a) Staff officers claim credit for programmes which are successful but do not want to share responsibility for their future. The blame for unsuccessful tasks is thrust on line managers even though they act on the advice of the staff.

(b) Staff officers are more theoretical than practical. They tend to give advice, which has not been tested earlier. They emphasize their field of specialization without giving much thought to the overall interest of the company.

(c) Staff officers do not remain contended by giving advice only. They try to persuade the line for implementing whatever they have suggested. They trespass their field of activity and enter the area meant for line people.

(d) Though staff officers are well qualified and have good knowledge of their field but try to dominate line officers. They feel themselves superior to line officers. This type of tendency creates conflicts and friction between line and staff officials

2. What are the differences between centralisation and decentralization? Distinguish between centralisation and decentralization of authority. 

Ans. The differences between centralisation and decentralisation are as follows:

(i) Size and complexity of organisation: In case of bigger concerns, there is a need to decentralise authority to lower levels in the organisation. When concern is small then centralisation will be useful.

(ii) Communication system: When communication system is good, then top management can control the operations and centralisation is preferred.

While, if communication system is slow and ineffective then decentralisation should be used.

(iii) Competence of personnel: When competent personnel are available in the organisation, then power should be delegated to various levels.

In case of incompetent persons, decision making should be retained at higher level.

(iv) Spread of activities: If a business has different plants or units situated at different places then decentralisation will be essential.

While finance function should be centralised in such a business to ensure effective control over assets and capital expenditure.

Following are the distinguish between centralization and decentralization of authority:

(i) Centralisation means that the authority for most decisions are concentrated at the top of the managerial hierarchy. But decentralization requires such authority to be dispersed by extension and delegation through are levels of management.

(ii) Centralisation is possible only in case of small organisation. On the other hand decentralization is essential in large big organization.

(iii) Under centralisation, middle and lower level managers are not empowered, so in these level decision can be taken. But under decentralization system, middle and lower level managers can taken necessary decision.

(iv) Under centralisation system, almost control power is reserved by the top management. But in case of decentralization system necessary powers and authorities are granted to the middle and lower level managers.

(v) Under centralisation, creativity and innovative power among middle and lower level managers are not emerged. But the decentralization system can increase the creativity and innovation power among the middle and lower level managers.

3. What are the steps or elements in the process of delegation?

Ans: The following elements are involved in delegation:

(i) Determining the result expected: The first step in delegation process is the determination of results expected from a position or subordinate. Assignment of task will be meaningful only when the subordinate clearly understands the results that he has to achieve.

(ii) Assignment of duty: People in the organisation are assigned jobs and duties. It means that superior asks to subordinate to perform a particular work within a given period of time. Duties can be described in terms of functions or in terms of goals and results.

(iii) Grant of authority: In order to enable the subordinate to discharge their duties effectively, he must be granted proper authority. The subordinate can only perform the work when he has authority required for accomplishing task.

(iv) Creation of accountability: Accountability is the obligation to carry out responsibility and exercise authority in terms of performance standard established. It means holding an individual answerable for final results. The subordinates is held accountable to the superior.

4. Explain in brief any six points which highlight the importance of decentralisation in an organisation.

Ans: The importance of decentralisation would be clear by examining its advantages to an organisation:

The advantages of decentralisation are as follows:

(i) Reduction of workload of higher level executives: Since authority is delegated to the lower levels, the top management is relieved of taking operational decision. It needs to concentrate on corporate planning and control and coordination of the activities of different departments.

(ii) Quick decision-making: In decentralisation, decisions are taken at the level where problems are faced. This speeds up the process of decision making.

(iii) Motivation of personnel: Decentralisation is a means of empowerment of the lower levels. The employees at the lower level who have power to take decisions enjoy psychological satisfaction and feel motivated.

(iv) Growth and diversification: Decentralisation facilities diversification of business activities. The business firm can create new departments or divisions to handle new products and services.

(v) Initiative and creativity: When employees are given greater degree of authority or authority, they get an opportunity to take initiative. They come out with innovative ideas for the benefit of the organisation.

(vi) Better coordination: The top management can give sufficient attention to the coordination of the activities of different divisions. Coordination within each division is the responsibility of the respective divisional managers who are granted sufficient autonomy.

5. Write six differences between Authority and Power?


Basis of DistinctionAuthorityPower
1. MeaningAuthority is the right to command subordinates and influence their behaviorfavourably.Power is the capacity to command subordinates and influence their behaviorfavourably.
2. LocationAuthority lies in managerial positions; and not in mana-gers in their personal capa-cities.Power rests with persons, in their individual capacities. It is the outcome of the personality and competence of a person.
3. NatureIt is formal.It is informal.
4. SystemIt is hierarchical in nature. Authority goes on declining as we come down the manage-ment hierarchy.It does not have any system. A manager at a lower level might have more power over his subordinates than a management at a higher level.
5. EnforcementAuthority is enforced either by holding out threat to subordinates or promising them rewards.Power is exercised and yields results through the process of personal Charisma and persuasion.
6. DelegationAuthority can be delegated.Power, being a personalized attribute cannot be delegated.

6. Write about the Types of span of control. Explain the various factors affecting span of management.

Ans: The span of control can be of two types i.e. wide span of control and narrow span of control:

(a) Wide span of control: Wide span of control means a manager can supervise and control effectively a large number of persons at a time. It is because shorter span of control leads to rise in number of steps or levels in vertical chain of command which leads to tall organization. Wide span of control has features as it leads to maximized communication; better supervision; better coordination; suitable for routine and easy jobs; prompt response from employees; less overhead cost of supervision and greater ability to respond to environmental changes. A wide span of control results in an organization that has relatively few levels or steps of management which can be termed as flat or horizontal organization. Wide span of control is suitable when people are competent, prefer low supervision and tasks are similar and standardized. Simon pleads for wider span of control. It is because shorter span of control leads to rise in number of steps or levels in vertical chain of command which leads to tall organization. This makes vertical communication difficult and indirect. Wider span of control leads to maximized communication.

(b) Narrow span of control: When the work and authority is divided amongst many subordinates and a manager supervises and controls a small group of people, then narrow span of control exists. It adds more layers or levels of management and so leads to tall organization. Main features of narrow span of control are as specialization work can be achieved; work which is complex and requires tight control and supervision, there narrow span of control is helpful; messages can be distorted, coordination is difficult to achieve; communication gaps can come; more overhead cost of supervision and no quick response to environmental changes. When the span of control is narrow then the structure of the organization is tall and there may be ineffective, inaccurate and incomplete communication which could lead to decreased morale, increased executive payroll and red-tapism.

Various factors affecting span of control are discussed below–

(a) Superior Related Factors: The number of subordinates that a manager can supervise effectively is significantly determined by his own personal qualities.

Important among them are:

(i) has abilities and competence.

(ii) supervisory style. and 

(iii) delegation of authority.

(i) Abilities and competence: The number of subordinates a manager can effectively supervise depends on his own abilities and competence.

(ii) Supervisory Style: If a manager supervises closely, he can handle a relatively fewer subordinates. On the other hand, if he defines his subordinates tasks and responsibilities clearly, supervises by the ‘exception principle’ and hold them responsible for results, he can have a wider span of management.

(iii) Delegation of Authority: This is yet another superior related factor that influences span of management. A manager can supervise a relatively larger number of subordinates if he delegates them adequate authority to make their job-related decisions, provides them scope to take initiative and motivates them to take responsibility.

(b) Subordinate Related Factors: The number of subordinates a manager can effectively supervise also depends on the kind of subordinates he has.

These subordinate related qualities are their:

(i) abilities and competence.

(ii) motivation and commitment. and 

(iii) need for autonomy.

(i) Abilities and competence: The abilities and competence of subordinates are a significant factor in influencing the span of management. Subordinates, who are well trained in their job and possess abilities and competence to perform their tasks, need less of their superior’s time in problem solving and supervision. This permits a manager to have a wider span of management.

(ii) Motivation and Commitment: Subordinates who are motivated to take initiative and responsibility and to utilize and develop their abilities, need less to their superiors’ time.

(iii) Need for Autonomy: Subordinates with high need for autonomy prefer to make most of their decisions themselves, whereas the dependent type take their problems to their superior for decision making and consequently put more demand on his time.

(c) Organizational Factors: A number of organizational factors also influence the span of management.

Major among these factors are:

(i) nature of tasks.

(ii) geographical location.

(iii) plans and policies. and 

(iv) objective criteria of performance evaluation. and 

(v) rate of change.

(i) Nature of Tasks: If tasks are simple, repetitive and programmed, it will need less of the supervisor’s time to plan, direct and control their Performance. Complex and variable tasks need more supervisory time in consultations and decision-making. Moreover, if all or most subordinates of a manager are engaged in the performance of similar or identical tasks, he will have to devote less of his time to their coordination and control.

(ii) Geographical Location: If all or most subordinates are located in the same place or in the same building rather than dispersed in different geographical areas, a manager can have a wider span of control.

(iii) Plan and policies: The availability of definite plans and policies provides a framework of decision making as well as criteria of validating decisions. Organizations with well-defined plans and policies make it possible for their managers to supervise effectively large number of subordinates.

(iv) Objectives Criteria of Performance Evaluation: Availability of objective criteria of performance evaluation, as in the case of production and sales, renders it possible for a manager to have a wider span. On the other hand, if such criteria have not been developed or where performance cannot be measured quantitatively, span tends to be narrower.

(v) Rate of change: Enterprises which have products that are subject to rapid changes in technology, or operate in markets characterized by frequent changes in consumer tastes and preferences, need to make frequent changes in plans, policies, tasks etc. In such organizations, span of management tends to be narrower as compared to that in stable industries such as utilities, banking, insurance etc. The above factors enter into a manager’s consideration while deciding his span of management.

7. What are the characteristics of organization? What are the importance of organization?

Ans: Following are the main characteristics of organization:

(a) Two or More persons: An organization is a system of co-operative relationships of two or more persons.

The group may be large or small. An organization may be formal or informal but it must consist of at least two persons or more.

(b) Common Objectives: An organization exists to achieve some common objectives. It is not an end in itself but a means to attain common objective. The group of people contributes their efforts towards the attainment of the objectives. The success and failure of an organisation is measured in terms of attainment of its objectives.

(c) Division of Work: The total work of the organization is divided among different persons to improve the efficiency of work. When work is divided and assigned to individuals, they need to be organized in groups and bound by authority relationships.

(d) Communication: People who form the organization are in a position to communicate each other through set communication network. Without proper communication network, there will be delay in exchanging their views, thoughts and facts that may cause wastage of time, money and material as well as inefficiency.

(e) Co-operative Efforts: The members of an organization must have willingness to cooperate objectives. Managers establish co-operative relationships both horizontally and vertically among the members of the organization. The success of an organization depends on the co-operation of the members.

(f) Rules and Regulations: Rules and regulations lay down authority and responsibility among the members. These rules and regulations ensure systematic working of the organization.

(g) An on going process: Organizing is a process, which involves a series of sequential steps to be performed from determination of objectives to the accomplishment of objective. It is not a one-time process undertaken by members, rather it is a continuous or an ongoing process, which requires the management to keep bringing about changes in the way, an organization works

(h) Chain of command or Hierarchy of Authority: Authority always passes to the lowest level of management from the top level. Consequently all the subordinate managers become responsible to their respective superior managers. Thus in every organisation, there exists authority-responsibility relationship.

(i) Dynamic Environment: The environment of any organization keeps on changing to adjust with changing situations. As it possesses threats and provides opportunities to the organisation.

(j) Rational Behavior: Every organization has some norms or standard of behavior. Every member of it is expected to behave according to these norms. The members behaving rationally are usually rewarded and otherwise penalized.

The importance of organization are discussed below–

(a) Organization Increases Managerial Efficiency in a Number of Ways: An organization helps the individuals to build upon the accomplishment of others. It results in making greater outputs than the sum of their inputs. It avoids delay, duplication or confusion in performance and removes friction or rivalry among personnel.

(b) Organisation Ensures an Optimum use of Human Efforts Through Specialization: Because of the detailed job specifications, right persons are placed in the right position on the basis of their knowledge, skill and experience. Men with outstanding abilities are not allowed to waste their time and energy over a minor job. By matching jobs with individual and vice versa, organization enlists both the benefits of functional and occupational specialization.

(c) Organization places a Proportionate and Balanced emphasis on various activities: By dividing activities into departments, sections and jobs, a greater attention can be focused on more important activities. Money and effort can be spent proportionately with the importance of activities.

(d) It facilitates coordination in the Enterprise: Different departments and sections, positions and jobs, functions and activities are welded together by structural relationships of the organization. Empire building in any segment of the enterprise is made difficult by sound organizing. Common interests and enterprise objectives are kept at the forefront of each segment or area of the business.

(e) It provides scope for Training and Developing Managers: Management personnel are trained to acquire a wide and varied experience in diverse activities by their placement in different jobs through job relation and thus, they are prepared for top jobs which require generalists rather than specialists in a narrow sphere.

(f) It helps to consolidate Growth Expansion of the Enterprise: It is the unique organizing practice that has encouraged business enterprises to expand their sizes to an ever-increasing level. With hundreds of employees and extensive ramifications of operations the giant enterprises are the direct outcome of the organizing function of management.

(g) Organization prevents the growth of Laggard, Wirepullers, Intriguers or other forms of corrupters: Corruption can only thrive in those enterprises, which have failed to set up a sound organization structure. Unsound organization becomes the breeding ground of dishonesty, whether in matters of efforts or of money. As organization is subject to many internal and external changes, there arises the need for continuous organization planning for keeping the structure in tune with successful operations.

(h) Ensures flow of Activities: Organization structures are developed on scientific management basis (i.e. time, motion and fatigue study) to ensure logical flow of activities. It is so because in organizing activities, assignments are made in such a manner that it facilitates their performance in easy and comfortable manner.

(i) Ensures Better Communication: Organization structure provides a network of relationships. This makes interaction and communication among the members and departments of the organization more effective.

(j) Stimulates Creative and Innovative Thinking: Good organization provides a climate for creative and innovative thinking among the members of the organization. Well-defined areas of work and delegation of proper amount of authority promotes creative thinking among the members.

(k) Facilitates Adoption of Technological Innovations: A sound organization is always full of sufficient skilled, dynamic and updated employees; the organization can adopt any work easily.

(l) Provides Growth and Diversification: A sound organization is always flexible and keeps sufficient scope to exploit opportunities for growth and diversification. Flexibility increases capacity of the organization to undertake diversified and new activities.

(m) An organisation helps in the Smooth Delegation of Authority: Executive can delegate the authority downwards so that he can get the things done smoothly. It also helps in fixing up the responsibility for the tasks. A good organization will clearly define the authority-responsibility relationship.

(n) Establishment of Accountability: Unless each employee knows the scopes, within which he need to function i.e. who is his boss, to whom he is accountable and who are his subordinates, from whom he has to get the work done, an organization cannot function efficiently. The establishment of the limitations of the area of operations helps in establishing each person’s accountability to his immediate boss.

(o) Security and support: A sound organization structure is a source of security, support and satisfaction to employees. It provides a definite status to every member of the organization.

(p) Specialization: In organizing, work is divided into compact and convenient job and similar jobs are grouped together into departments. Well-defined jobs with clear-cut authority and responsibility provide the benefits of specialization. It becomes easier to recruit right persons for every job.

8. What are the differences between line and functional organization?

Ans: Difference between Line organisation and Function organization:

Line OrganisationFunctional Organisation
(i) Doing of actual work both physical and mental.(i) Perform only specialised functions, advisory in nature.
(ii) Centralised authority.(ii) Decentralised authority.
(iii) One supervisor-one sub-ordinate.(iii) Several advisors to one subor-dinate.
(iv) Responsibility is always fixed.(iv) No fixed responsibility.
(v) Less expensive.(v) More expensive.
(vi) Suitable for small business.(vi) Suitable for big business.
(vii) More flexible.(vii) Less flexible.
(viii) Have authority of command that flows downwards.(viii) Have authority of ideas and knowledge.

9. Write six differences between authority and responsibility.


Basis of DistinctionAuthorityResponsibility
1. MeaningAuthority is a right vested in a managerial position which enable the managerto command subordinates, for furthering enterprise objectives.Responsibility is a duty or obligation owed by a subordinate to the superior, from whom the former derives authority for the proper dis-charge of the assigned job.
2. Basis subordinateIt normally exist arises from legal provisions & formal Contract.It arises from superior relationship.
3. FlowAuthority flows from top to bottom via the manage-ment hierarchy.Responsibility follows a reverse course. It proceeds in an anti-hierarchical man-ner from subordinates to superior.
4. Location inAuthority is formal and im-personal. It is vested in managerial positions, and not in managers in their personal capacities.Responsibility is personal nature. It is owed by persons to their superiors. It is not vested in managerial posi-tions.
5. DelegationAuthority is and can be dele-gated by superiors to their subordinates for organisational purpose.Responsibility is something; which is fixed or absolute. In no case and to any extent can it be delegated by any manager to any subordinate.
6. Termi-nationAuthority granted to a manager can be terminated by the superior.Responsibility cannot be terminateds, at least for the acts for which a person is already responsible to his superior.

10. What are the different principles of organizations?Explain the different steps of the organization process.

Ans: Different principles of organization are discussed below–

(a) Consideration of unity of objectives: The objective of the undertaking influences the organization structure. The organization is a mechanism to achieve our goals. Objectives must be clearly defined for the entire enterprise, for each department and even for each position in the organization structure.

(b) Specialization: Greatest output can be obtained when each person concentrates on doing the thing for which he/she is best qualified. Effective organization must include specialization. Precise division of work facilitates specialization. However, each area of specialization must be inter-related to the total integrated system by means of coordination of all departments and activities.

(c) Coordination: Organization involves division of work among people whose efforts must be coordinated to achieve common goals. Coordination expresses the principles of organization in toto; nothing less. Coordination is the orderly arrangement of group effort to provide unity of action in the pursuit of common purpose. Coordination aims at higher efficiency and effectiveness.

(d) Scalar Principle: It points out clear unbroken line of authority. It is also called chain of command. The line of authority flows from the highest executive to the lowest managerial level and the chain of command should be broken. It should be short i.e. we should have few levels of management.

(e) Responsibility: Authority should be equal to responsibility i.e. each manager should have enough authority to accomplish the task. Similarly, the responsibility of the superior for the acts of his subordinate is absolute.

(f) Efficiency: The organization structure should enable the enterprise to attain objectives with the lowest possible cost-money cost as well as human cost. An efficient organisation structure operates without wanting its scarce resources. It permits maximum use of its human resources and talents.

(g) Delegation: Decision making power should be placed near the scene of action. Decision should be made at the lowest competent level. Authority and responsibility should be delegated as far as down in the organization as possible.

(h) Unity of command: Each person should be accountable to a single superior or one boss and one subordinate e.g. A is the boss of B. B is accountable to A. B is the boss of C; C is accountable to B. Thus, no one in the organisation should have more than one boss.

(i) Span of control or span of management: There is a limit to which a manager can manage effectively the number of subordinates. No superior at a higher level should have more than six immediate subordinates. Average human brain can effectively direct three to six brains (i.e. subordinates). Grouping must ensure that each supervisor and manager is not overburdened with subordinates.

(j) Balance: There should be reasonable balance in the size of various departments, between standardization of procedures and flexibility, between centralization and decentralization. Similarly, there should be balance between the principle of span of control and the short chain of command. If the chain of command is shortened, span of control will be increasing and vice versa.

(k) Communication: A good communication subsystem is essential for smooth flow of information and understanding and for effective business performance. The line of authority offers a standing channel for downward and upward communication.

(l) Personal Ability: People constitute an organization. Proper selection, placement and training need not be over emphasized. Organization structure must encourage management development programme and ensure optimum use of human resources.

(m) Exception principle: Under the exception principle, the lower level manager should handle recurring decisions in a routine manner, whereas problems involving unusual matters should be referred to the higher level. The executives at the higher level of an organization have limited time and capacity. They should not be bothered by routine problems, which can well be managed by subordinates.

(n) Flexibility: The organization is expected to provide built-in-devices to facilitate growth and expansion without dislocation. It should be adaptable to changing circumstances. It should not be rigid or inelastic.

(o) Departmentation: It enables the division of activities into specialized group to attain organizational objectives. A good organisation involves precise and systematic distribution of work and responsibilities between managerial group and administrative group. Departmentation maintains balance and harmony in the working of the organisation.

(p) Definiteness: Each activity must contribute to the primary or basic goals of an enterprise with minimum of effort and maximum of efficiency on the part of the employees.

(q) Simplicity: The organisation should be kept as simple as possible.

(r) Separation of line and staff function: Line function should be separated from the staff function.

(s) Continuity: Reorganization is a continuous process in every undertaking; specific proposition should be made for it.

(t) Leadership: Organisation structure should create a favorable environment or situation in which the manager can most effectively lead and motivate his subordinates.

The process of organizing involves the following sequence or steps:

(a) Determination of Objectives: An organization is established for the purpose of attainment of some objective or goal. For the achievement of this goal, it is necessary to first determine the overall tasks of the organisation. The determination, of total workload of an organisation is the first step in the process of organizing.

(b) Determining Activities: The first step in organizing is to identify and define the activities to be performed, to achieve predetermined objectives. The activities required will depend upon the nature and size of the enterprise.

(c) Grouping Activities: Once activity is defined, the next step is to classify them into manageable units so that these can be assigned to individuals. Grouping of activities is called departmentation. Related or similar activities are grouped in the same department or division. Each division or department may be subdivided into sections. While grouping activities, the following factors should be kept in mind:

(i) There should be maximum possible ‘specialization’ so that work is performed efficiently.

(ii) Grouping of activities should facilitate ‘Coordination’ among different department.

(iii) There should be ‘economy’ in the administrative expenditure.

(iv) It should be easy to exercise ‘control’ over the performance of individuals.

(v) Adequate ‘attention’ should be paid to each and every activity.

(vi) The ‘nature of activities’ should be considered.

(vii) The number, needs, preferences and limitations of employees should be taken into account.

(d) Assigning Duties: The various groups of activities are allotted to different individuals. While assigning activities, their abilities and aptitudes should be duly considered. Each person should be given a specific job best suited to him and he should be made responsible for its performance.

(e) Delegating Authority: Mere assignment of duties is not enough unless each individual is given the authority to perform the assigned task. An individual cannot perform his duty without getting the rights and powers to do it.

(f) Determining Relationships: It is also necessary to determine the relationships between the individuals. Therefore, organizers should determine who is the boss and who are his subordinates, who is accountable to whom etc. This will create chain of command or managerial hierarchy in the organization.

(g) Allocating Resources: An organization cannot work effectively without adequate resources. The next logical step therefore, is to allocate resources needed at all the levels of the organization.

(h) Setting coordinate system: The ultimate step in the process is to set coordination mechanism in the organisation. Coordination mechanism is essential because in enables organization members to keep sight on the goals and reduce inefficiency and harmful conflicts.

(i) Review and Re-organizing: There must be a continuous evaluation of the above mentioned steps so that necessary changes in the organization structure can be brought about, consequent to changes in the internal on external environmental factors. Continuous evaluation and accordingly, re-organization is, thus an integral part of the organizing process.

11. Difference between delegation and decentralization.


(i) DefinitionDelegation means handing over authority from a higher level to a lower level.Decentralization is achieved when authority is delegated systematically and repeatedly to the lowest level.
(ii) ResponsibilitySuperiors are responsible for the tasks done by their subordinates.Department heads are responsible for the tasks done by the department.
(iii) RequirementYes, for every organization, the delegation of authority is absolutely necessary.No, it is an optional philosophy that may or may not be adopted by the organization.
(iv) Freedom of workSubordinates do not have full freedom.A substantial amount of freedom is there that subordinates can enjoy.
(v) Control Ultimate control is in the hands of superiors.Overall control is vested in top management and delegated authority for day-to-day control to department heads.
(vi) RelationshipCreate a superior-subordinate relationship.A step towards the creation of semi-autonomous units.

12. Discuss various nature of organization.

Ans: Various nature of organization is discussed below:

(a) It is static concept: Organization refers to the structure of relationships among positions and jobs, which are created for the realization of the set objectives. In this, the static sense of the term organisation is concerned with the building, developing and maintaining a structure of working relationships so as to achieve the objectives of an enterprise.

(b) It is a Dynamic Process: Organization 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.

(c) Structure of Relationships: Organization is a system of well defined tasks and duties assigned to different people along with the delegation of formalized authority, responsibility and accountability. This results in a system of formal structure of organization. Constant interaction amongst individuals give rise to social interrelationships also and subsequently there arises a structure of informal organization.

(d) Encourages teamwork: Since the early times, people always lived in groups. With increase in the size of these groups, it was not possible for one person to accomplish the organizational task alone. The work, therefore, got divided among different individuals and each individual co-ordinated his activity with that of the other. This required the organization of the group to work towards the achievement of goals.

(e) Foundation of Management: The success of any business organization is based upon its sound organisation. The validity of soundness of any business organization is not open to any kind of questioning. In fact, clear definition of jobs of the organization; their division amongst various members with clear identification of their authority and responsibility is the basic foundation of successful management. Unless there is clarity of who is responsible to whom, no management can function effectively.

(f) Goal-oriented: Whether it is a business or a non-business organisation, it is always set-up for the accomplishment of a specific objective of profit or service. It is only for the successful achievement of this goal that all the organizational activities are divided amongst members, departments are created, the work of different departments is co-ordinated and a continuous monitoring of the various activities is done. The entire process of organization is, thus, a goal oriented process.

(g) Adaptive to change: Though the organization structure is created to provide stability to the activities of members, it is also open to change. Any change in the environment, internal or external, has to be incorporated into the existing organization structure so that it can effectively carry out its functions.

(h) Situational: No structure of organization can be designated as the best. Depending upon the nature of activities, size of the organization and nature of interrelationships amongst people, the organization structure also varies.

13. Discuss the Graicunas theory of relationships.

Ans: It is not possible to specify the correct span to control for every situation, but number of relationships of a managerial position goes a long way in deciding the span of control. V.A. Graicunas, a French management consultant worked on this premise and derived a formula to determine possible number of relationships of a manager having a given number of subordinates.

Graicunas has identified three types of superior subordinate relationships as follows:

(i) Direct Single Relationships: Relationships that arise from direct interaction by a manager with each subordinate. This is one-on-one relation of manager with each subordinate.

(ii) Direct Group Relationship: Relationships that arise between a manager and group of subordinates.

(iii) Cross Relationships: Relationships that arise among subordinates themselves working under a manager.

Graicunas formula to calculate these relationships are as follows:

(i) Direct Relationships = Number of subordinates.

(ii) Direct Group Relationships = n (2n-1-1) or n (2n/2-1)

(iii) Cross Relationships = n (n-1)

(iv) Total Relationships = n (2n/2 + n-1)

n represents the number of subordinates reporting to the manager i.e. direct relationships.

14. Difference between formal and Informal organization.


(i) NatureIt is deliberately created impersonal with emphasis on authority, functions, status differentials and downward communicationsIt is personal with emphasis on people and their intricate relationships, informal rankings and multidimensional communications. 
(ii) StructureIt is official, so it has a prescribed structure of roles and relationships.  It is planned and deliberately created by managementIt is unofficial or natural having no specific structure.  It arises spontaneously without official sanction by management
(iii) BaseIt is based on delegation of authority & may grow to very big size.  It is mechanistic and brings order in the organizations.It arises through social interactions between employees.  It usually remains small in size.  It is humanistic and gives satisfaction to employees.
(iv) ShapeIt is hierarchical and pyramid shaped.It has no definite shape, and no division of work.  It is structural less and ill defined.  It is psychosocial system.
(v) OrientationIts tasks, goals and values are economic oriented towards efficiency, productivity profitability and growth.Its tasks, goals and values are socio- psychological centering on individual and group satisfaction affiliation co-friendship esteem etc.
(vi) Charts and ManualsIt can be shown in the form of charts and manuals of the organisation.It finds no place on organisation charts and manuals.

15. Explain the three types of Authority in organisation.

Ans: Three main types of authority can exist within an organization:

Each type exists only to enable individuals to carry out the different types of responsibilities with which they have been charged.

(i) LINE AUTHORITY: The most fundamental authority within an organization, reflects existing superior-subordinate relationships. It consists of the right to make decisions and to give order concerning the production, sales or finance related behaviour of subordinates.

In general, line authority pertains to matters directly involving management system production, sales, finance etc., and as a result with the attainment of objectives.

People directly responsible for these areas within the organization are delegated line authority to assist them in performing their obligatory activities.

(ii) STAFF AUTHORITY: Staff authority consists of the right to advise or assist those who possess line authority as well as other staff personnel. Staff authority enables those responsible for improving the effectiveness of line personnel to perform their required tasks.

Line and Staff personnel must work together closely to maintain the efficiency and effectiveness of the organization. To ensure that line and staff personnel do work together productively, management must make sure both groups understand the organizational mission, have specific objectives, and realize that they are partners in helping the organization reach its objectives.

Size is perhaps the most significant factor in determining whether or not an organization will have staff personnel. The larger the organization, the greater the need and ability to employ staff personnel.

As an organization expands, it usually needs employees with expertise in diversified areas. Although small organizations may also require this kind of diverse expertise, they often find it more practical to hire part time consultants to provide it is as needed rather than to hire full time staff personnel, who may not always be kept busy.

(iii) FUNCTIONAL AUTHORITY: Functional authority consists of the right to give orders within a segment of the organization in which this right is normally non existent.

This authority is usually assigned to individuals to complement the line or staff authority they already possess.

Functional Authority generally covers only specific task areas and is operational only for designated amounts of time. It is given to individuals who, in order to meet responsibilities in their own areas, must be able to exercise some control over organization members in other areas.

16. What is line organisation? What are its different features?

Ans: Meaning: Line organization or Scalar organisation is the oldest type of organisation. It is also known as military organisation because it was developed in the army. Line organization is characterized by direct lines of authority flowing from the top to the bottom level of the organizational hierarchy and lines of responsibility flowing in an opposite but equally direct manner. These direct vertical flows of authority and responsibility create superior subordinate relationship or a scalar chain from top to bottom where one person delegates authority to his subordinate and who in turn delegates to his subordinate and so on. The line of authority consists of the uninterrupted series of authority steps.

Features: The basic features of line organisation are as follows–

(i) There is a scalar chain from the top to the bottom of the organization.

(ii) There is no provision for staff experts.

(iii) Orders and instruction flow from a superior directly to his subordinates.

(iv) Each subordinate is directly responsible to his superior for work performance.

(v) Each superior is independent and takes decision in his own area of work.

(vi) Every individual is responsible to his executive only.

(vii) There is a direct vertical flow of authority and every person is in the chain of direct command.

(viii) Authority is highest at the top and reduces through each successive level down the scalar chain.

(ix) The planning and doing aspects of a job are combined in the same individual.

17. What are the different types of line organisation? Discuss its various advantages and disadvantages.

Ans: Line organisation may be two types:

(i) Pure line organisation. and

(ii) Departmental line organisation.

Pure Line Organization: In a pure line organization, all the individuals at any given level perform the same type of work. They are divided into groups only to enable effective control and supervision. For example, at the lowest level of an organization all the workers may be engaged in a similar activity, but for better supervision and control, they may be divided into different groups each placed under the charge of a foreman.

Department Line Organization: In this type of organisation, the business is broadly divided into departments. Departmental head derives his authority from the Chief Executive and has complete control over his own department. All departmental head enjoy equal status and authority and they function independently. No departmental head can directly exchange information with each other. Their immediate boss acts as a communication link between them.

Advantages: Line organisation offers the following benefits:

(a) Simple: Line organization is very simple and can be easily understood by all the personnel. As every person is accountable to only one boss so there is no complexity in the organization. Everybody is the organization know what to do and to whom he/she is responsible.

(b) Speedy Action: As every manager has complete authority and control over his subordinates, decisions can be made and executed promptly. Quick decisions help to make the best use of business opportunities. No staff specialists are to be consulted before taking decisions.

(c) Proper Discipline: Every subordinate receives order from only one superior and he is fully accountable to only one manager. Unity of command helps to maintain perfect discipline throughout the organization. There is no division of Loyalty or conflicting orders.

(d) Fixation of Responsibility: The lines of authority and responsibility are clear and definite. There is no overlapping of authority and confusion.

(e) Flexibility: Line organisation can be easily adjusted to the requirements of the business. Each executive has sole authority over his group and can freely make necessary changes to accomplish the objectives.

(f) Executive Development: Line organisation provides opportunities for the all-round development of executives because every executive has the sole charge of his department or section.

(g) Unified control: Since the responsibility for performance at each level is clearly defined and is absolute, effective control becomes possible. Lines of communication are direct and clear.

(h) Economical: Line organisation does not employ expert staff personnel and it is, therefore, less expensive than other types of organizations.

(i) Executive Development: Under Departmental Line Organization the Departmental head is involved in multitasking. His task is challenging and he is expected to discharge his responsibility in an efficient way resulting in development of his capabilities by learning many things.

18. What is organizing? Explain the importance and process of organizing?

Ans: Organising is a process of defining and grouping the activities of the enterprise and establishing the authority relationships among them. In performing the organising function, the manager defines, departmentalizes, and assigns activities so that they can be most effectively executed. Organising involves the establishment of an intentional structure of roles through determination and enumeration of the activities required to achieve the goals of an enterprise and each part f it, the grouping of these activities, the assignment of such groups of activities to manager, the delegation of authority to carry them out and provision for co-ordination of authority and informational relationships, horizontally and vertically in the organisation structure.

Following are the importance of organising:

(i) Benefits of Specialization: In an organisation, work is divided into units and departments. This division of work leads to specialization in various activities of the concern. The entire philosophy of the organisation is based on the concept of division of work into compact jobs. This leads to systematic allocation of jobs amongst staff, which enhances productivity and reduces the workload.

(ii) Facilities Administration: A properly designed and balanced organisation facilitates both management and operation of the enterprise.

(iii) Clarity in a Working Relationship: After identification of a job, organising also clarifies the authority and responsibility of individuals of different departments. It is a means of creating coordination among different departments of enterprises. It aims at creating clear-cut responsibility, and authority relationships amongst different levels and ensuring cooperation amongst individuals and groups.

(iv) Integration of individual efforts to achieve organizational goals: The functions, duties and responsibilities of the different departments are clearly defined which helps in achieving organizational goals.

(v) Encourages healthy human relations: Scientific and balanced organisational structure when manned by right type of people tends to motivate people through job satisfaction that promotes healthy human relations in the organisation.  It helps maintaining morale at a higher level.

(vi) Optimum Utilization of Resources: Organising ensures the optimum utilization of human and material resources. In organising, work is assigned as per skill and knowledge. The clarity in the job in advance of what the employees are supposed to do avoids confusion and motivates employees to put in their best.

(vii) Reduction in work load of top management: Sound organisation stimulates creative thinking and initiative by providing opportunities to experiment with new ideas for developing new ways of doing things.

(viii) Smooth direction: In sound organisation right men are placed at right place hence direction tends to become smooth and effective.

The  steps/process involved in the process of organising are as follows:

(i) Identification and Division of Work: The function of organising starts with the identification of the total work which is to be done to achieve the organisational goal. The work is divided systematically so that each person gets a separate task to perform. This helps to avoid unnecessary duplication and wastage of efforts and facilitates the specialization of efforts and skills.  

(ii) Determination of Objectives: It is the first step in building up an organization. Organization is always related to certain objectives. Therefore, it is essential for the management to identify the objectives before starting any activity. Organization structure is built on the basis of the objectives of the enterprise.This step helps the management not only in framing the organization structure but also in achieving the enterprise objectives with minimum cost and efforts.

(iii) Departmentalisation: Once the identification and division of work are done. The next step is to combine group-related activities into units and departments. This process of grouping similar and related activities into groups of large independent units or departments is known as departmentalisation. The grouping may be done on the basis of function, product, customer, etc. 

(iv) Enumeration of Objectives: If the members of the group are to pool their efforts effectively, there must be proper division of the major activities. The first step in organising group effort is the division of the total job into essential activities. Each job should be properly classified and grouped. This will enable the people to know what is expected of them as members of the group and will help in avoiding duplication of efforts. 

(v) Assignment of Duty: After grouping various activities into departments, the next step is necessary to allocate the work of different employees. Duty should be assigned based on the knowledge, qualification, experience, and capability of the individual. There should be a proper match between job requirements and the capabilities of employees. 

(vi) Classification of Activities: The next step will be to classify activities according to similarities and common purposes and functions and taking the human and material resources into account. Then, closely related and similar activities are grouped into divisions and departments and the departmental activities are further divided into sections.

19. What is line and staff organisation? What are its different features?

Ans: Meaning: Line refers to those positions and elements of the organization, which have the responsibility and authority and are accountable for accomplishments of primary objectives. Staff refers to those elements, which have responsibility and authority for providing advice and service to line in attainment of objectives.

According to Louis Allen, Line functions are those, which have direct responsibility for accomplishing the primary objectives of the organization. Staff refers to those elements of the organization that help the line in the attainment of organizational objectives by providing advice and service. Line executives exist to take and execute decisions while staff executives exist to provide specialised knowledge for taking decisions.


(i) There are two types of authorities -Line authority and staff authority.

(ii) There is a direct chain of command from the chief executive to the lowest level manager.

(iii) Staff experts have the authority to advise, support and serve. Their role is advisory and they donot have the right to take decisions. They cannot directly issue orders and instructions to people in other departments.

(iv) Activities of specialised natures are separated from the main or basic activities and groups into separate units. For example, repairs and maintenance, quality control, marketing research, recruitment and training of employees are separately grouped to ensure specialization.

(v) Unity of command is maintained, as staff experts do not have line authority except within their own units.

20. What are the different types of Staff? Mention the advantages and disadvantages of line and staff organisation?

Ans: Staff specialists can be of three kinds as given below:

(a) Personal Staff: Personal staff consists of personal assistants attached to key line executives. Its main function is to assist the line executive in his day-to-day work. For example, private secretary or personal assistant to the managing director is a personal staff member.

(b) Specialised Staff: Specialised staff includes experts who have specialised knowledge in specific fields such as accounting, purchasing, public relations, engineering, personnel management etc. They provide specialised advice and assistance to all departments in the enterprise.

(c) General Staff: Such staff positions are created to provide general assistance. Typing section, dispatch section, etc. are examples of general staff.

Advantages: The advantages of line and staff organisation are given as follows–

(a) Planned Specialization: Line and staff organization offers the benefits of systematic specialization. The expert advice of specialists is made available to line executives at all strategic points. This enables higher efficiency in management.

(b) Better Coordination: Greater coordination becomes possible because staff supplies complete factual data to line executives.

(c) Sound Decisions: The line officer can take better decisions with the help of information and advice from staff experts. Proper balance among various activities is maintained.

(d) Discipline: The staff does not disturb the scalar chain and unity of command is maintained. As a result, discipline and stability can be maintained in the organization.

(e) Better utilization of personnel: Line executive can concentrate fully on execution of work as the function of investigation and advice is taken over by staff. Departmental managers are not overburdened with technical details.

(f) Opportunity for Advancement: A greater variety of responsible positions exist in line and staff organisation. Therefore, this system offers more opportunity for advancement of personnel. Young staff executives get training in their respective fields.

(g) Greater Flexibility: Line and staff organisation provides greater scope for the growth and expansion of business. The staff component helps in taking care of increasing complexity caused by expansion and environmental charges.

Disadvantages: The disadvantages of line and staff organisation are discussed below–

(a) Confusion: Authority and responsibility relationship become more complex and people at lower levels may be confused as to whom they are accountable and how. Relations between line and staff may not always be clear. This may hamper co-ordination.

(b) Line and Staff conflicts: Conflicts between line executives and staff experts are very common. Line managers may ignore staff advice thinking it impracticable. They may overlook staff also because of suspicion or mistrust. An over enthusiastic staff may encroach upon line authority to get its suggestions implemented. Staff may tender half-baked ideas because it is not held responsible. Lack of mutual understanding is the main cause of line staff conflicts.

(c) Ineffective Staff: The staff may feel ineffective, as it does not have authority to command and implement its suggestions. It may also be ignorant of practical routine of the enterprise.

(d) Costly: Line and staff organisation is more expensive than other types of organizations. Two separate types of executives, line and staff have to be employed at high salaries.

(e) Over Dependence: Line executives may depend too much on staff experts for ideas and information. As a result, they may lose their own initiative, thinking and judgement.

Despite these drawbacks line and staff organization is suitable for large-scale enterprises.

21. Explain the different conflict between Line and staff organisation? Give some remedial measures for resolving this conflict?

Ans: An unfortunate result of the line and staff concept is that it often results into some sorts of conflicts. In fact, there is a continuous warfare, sometimes open and sometimes concealed between them. Conflict arises when any of them fails to appreciate the viewpoint of the other. When a conflict between line and staff arises, both the parties try to explain the causes of conflict in terms of behavior of the other.

(A) Grievances of line Against Staff: The important causes of line and staff conflict as reported by line men are discussed below–

(i) Staff officers’ encroach upon the line authority. They interfere in the work of line managers and try to tell them how to do their work.

(ii) Staff does not know its place and wants to assume line authority. This feeling is generated more where the staff advisor forget his position of have to be helpful rather than being in position to dictate.

(iii) Staff takes full credit for successful programmes and hold line people wholly responsible for unsuccessful schemes.

(iv) The advice of the staff is academic and is devoid of reality. Since they are not involved in the real work situations, their ideas are impractical.

(v) Staff men generally fair to see the whole picture objectively as they are specialists in their particular areas.

(B) Grievance of Staff against Line: The staff advisors have their own arguments against line officers. Some of the often-repeated arguments are as follows–

(i) Line managers generally donot make a proper use of the services of staff specialists. The staff personnel often expect their expert services should be demanded at all levels of the organization. As against this, line managers consult them only as a last resort.

(ii) Staff specialists lack authority to have their ideas implemented. This creates frustration among them.

(iii) Line managers often resist the new ideas given by the staff specialists and are sometimes not prepared to listen to the arguments of staff specialists.

(iv) Line managers reject the advice without giving reasons and this causes resentment and frustration among staff personnel.

(v) Line managers often do not make full use of staff services. They try to sabotage their programmes.

(C) Resolving the Line-Staff Conflict: In order to achieve cordial relationships between the line and staff people, the following steps are necessary:

(i) The limits of line and staff authority should be laid down clearly. It should be made clear that line has the ultimate responsibility for the implementation of various decisions and staff is responsible only for providing advice and service to the line executives.

(ii) Line managers should act on the advice of staff personnel and if they disagree with their proposals, they should give reasons for that to convince the staff personnel.

(iii) Line and staff people should try to understand the orientation of each other. They should try to achieve co-operation for the achievement of enterprise objectives.

(iv) The staff specialists should try to appreciate the difficulties in implementing the new ideas. They should not consider it as a prestige issue if the line managers do not follow sometimes their advice.

22. What is Functional Organization? Explain its characteristics. Explain the advantages and disadvantages of functional organization.

Ans: As the name implies, the whole task of management and direction of subordinates should be divided according to the type of work involved. Really speaking, almost all business concerns have got some sort of functionalization at the top. For example, most of the business houses have separate departments to look after production sales and the general office. The functional management carries this idea to its logical limit and divides up management into a number of functions. Such as, production, research and development, personnel, purchasing, finance, office management and sales. Each one of these departments would serve the rest of the organization. The personnel department, for example, would recruit, train and deal with the people required for all the other departments. The purchasing department would handle purchases on behalf of the entire concern.

Characteristics of Functional Organization:

Following are the main characteristic of functional organization:

(a) Functional Specialisation: The organizations work is divided into a number of parts with each part needed by a functional specialist to govern, advise and monitor the work.

(b) Specialists equipped with authority: Specialists in functional organization as against line and staff organization are given a part of line authority and besides giving expert advices, have the power to impose those too.

(c) Large number of subordinates: In comparison to line and staff organization, officers of functional organization have to supervise the work of a large number of subordinates.

(d) Principle of unity of command ignored: A subordinate has to take instructions from many bosses and is also answerable to all of them leading to confusion, conflicts and difficulty is maintaining coordination in instruction.

The advantages of functional organization are:

(a) Specialisation: This structure helps in achieving the benefits of specialisation of work. The functional incharge as a specialisation of work. The functional in charge as a specialist helps to improve the performance of subordinates.

(b) Executive development: This helps the organization to develop executives with the functional specialists.

(c) Work load: This reduces the work load of the top executives. The functional specialists share the supervision function and he concentrates only on his area.

(d) Functional organization offers a greater scope for expansion when compared to the line organization. The introduction of specialists facilitate the line managers to overcome the problem of their limited capabilities.

(e) The functional managers facilitate better control and supervision in the organization.

Disadvantages of functional organization: Functional organization suffers from the following drawbacks.

(a) It violates the principle of unity of command since an employee is accountable to a member of superiors.

(b) The operation of functional organization is too complicated to be easily understood by the workers. They are supervised by a number of losses. This crates confusion in the organization.

(c) This structure develops specialists rather than generalists. This may create problem in succession of top executives.

(d) It reduces the outlook of the managers by narrowing it down to the department and it creates boundaries. This results in loss of overall perspective in dealing with business problems.

(e) Coordination becomes difficult among functional executives and there is a delay in decision making due to the movement of specialists.

23. What do you mean by the terms ‘authority’ and ‘responsibility’? Describe the main characteristics of authority and responsibility.  

Ans: The right of an individual to command his subordinates and take actions within the power allocated to him is known as Authority. The concept of authority arises when an organisation follows the Scalar chain, which defines positions and roles. Thus, we can say that it arises by the virtue of position. Authority grants the power to an employee to take actions for the work assigned to him. It always flows from top to bottom and the extent of authority is highest at the top level of management. It reduces as we go downwards in a hierarchical setting. 

The obligation of a subordinate to perform the work assigned properly is known as Responsibility. It arises from a superior-subordinate relationship as a subordinate is bound to perform the work assigned to him by the superior. Thus, it flows upwards from bottom to top. 

The characteristics of authority are as follows:

(i) Legitimacy: Legitimacy can be understood as one of the essential characteristics of Authority. Authority refers to the legal right of superiors in an organisation. This legitimate concept is practised with a common intent of achieving some goals. And the norms and control it entails are supported by every entity within that realm. 

(ii) Decision Making: Decision-making is an integral part of Authority. When an individual or a group is authorised to exercise control, they ultimately have the Authority to direct decisions concerning the operations carried out in an organisation.

(iii) Delegation: The delegation of authority refers to the division of labor and decision-making responsibility to an individual that reports to a leader or manager. It is the organizational process of a manager dividing their own work among all their people.

(iv) Hierarchical: Hierarchy is a way to structure an organization using different levels of authority and a vertical link, or chain of command, between superior and subordinate levels of the organization. Higher levels control lower levels of the hierarchy. You can think of an organizational hierarchy as a pyramid.

The characteristics of responsibility are as follows:

(i) Authority Alignment: Alignment is “a state of agreement or cooperation among persons or groups with a common cause or viewpoint.” When your organization nails it, all employees—from entry-level to your leadership team—share and act on your vision. Organizational alignment is the glue to performance excellence.

(ii) Clear Definition: The state of being the person who caused something to happen. A duty or task that you are required or expected to do. Something that you should do because it is morally right, legally required, etc. The state of having the job or duty of dealing with and taking care of something or someone.

(iii) Commitment: Responsible individuals demonstrate a commitment to fulfilling their duties and obligations to the best of their abilities. It is the feeling of responsibility that a person has toward the goals, mission, and vision of the organization he/she is associated with.

(iv) Proactiveness: Being proactive means taking responsibility. A better way might be to write that is “Response-Ability.” It’s the ability to respond to whatever life or business gives us. Being reactive is the opposite. It means we’re controlled by external forces around us and that we have no say in what happens to us.

(v) Accountability: Responsibility relates to the completion of a task, whereas accountability relates to the subsequent examination of its success, processes and other consequences. A person can be both responsible and accountable, or only responsible or accountable.

24. Explain the advantages and disadvantages of decentralisation.

Ans: Advantages of Decentralisation:

(i) Motivation of Subordinates: Decentralization improves the level of job satisfaction as well as employee morale, especially amongst the lower level managers. Furthermore, it strives to satisfy the varying requirements for participation, independence, and status. Decentralization also promotes a spirit of group cohesiveness and spirit.

(ii) Quick Decision Making: Another important pointer in the advantages and disadvantages of decentralization is that decisions are taken and executed by authorized personnel. This, in turn, results in faster and accurate decisions which are well aware of the real scenario.

(ii) Efficient Communication: The wider span of management under decentralization leads to fewer hierarchical level. This makes the communication system more efficient as intimate relationships develop between superiors and subordinates.

(iv) Ease of Expansion: Decentralization can add inertia to the expansion process of a growing business. This might often result in the opening of new business units in varying geographical locations. Decentralization unleashes the fullest potential of the organization and can react easily to area-specific requirements.

(v) Relief to top executives: Top executives can focus more on more on the executive level work like planning and decision making if the lower level employees take all the responsibilities on their own. This relieves their workload which eventually is for the greater good of the organisation.

(vi) Satisfaction of Human needs: Decentralization serves as an important tool for satisfying our basic need of independence, powef, prestige, and status. A cadre of satisfied manager is build up by this satisfaction as they feel responsible towards the company’s betterment.

Disadvantages of Decentralization:

(i) Difficult To Coordinate: While talking about the advantages and disadvantages of decentralization, it is imperative to note that substantial autonomy is enjoyed by every single division. This, in turn, makes it difficult to coordinate the overall activity.

(ii) External Factors: The trade union movement, market uncertainties, and government intervention might make it impossible to benefit the most out of decentralization.

(iii) Narrow Product Lines: Decentralized product lines need to be adequately broad so that autonomous units can flourish within the same. This might not be of much help in small business houses having narrow product lines. Lower levels in the organization also lack competent managers thus adding to the difficulty quotient.

(iv) Expensive: In decentralisation, every employee takes responsibility for the better of the organisation so they work harder to achieve all the organisational objective. In return, they have to be paid more which sometimes proves to be very expensive for the company.

25. Explain the different steps of the process of delegation of authority. What is the various principle of delegation of authority?

Ans: The process involves the following four steps:

(a) Determining the Results Expected: The first step in delegation process in the determination of results expected from a position or subordinate. Assignment of task will be meaningful only when the subordinate clearly knows what results he has to achieve. Moreover, it helps in deciding the adequate amount of authority to be delegated to a subordinate. To make the delegation effective, the expected result must be determined.

(b) Assignment of Duty: People in the enterprise are assigned tasks or duties i.e. the superior indicates what the subordinates are exactly to do. Duties can be described either in terms of functions or goals and results. When we say that Mr. Y’s duty is to operate a machine for producing a particular article, we express the duty in terms of function. But if we say that Y’s duty is to produce 5 articles during 8 hours by operating a machine, we express his duty in terms of a target or a goal. Expressing duty in terms of goals while delegating is better of the two, because it provides psychological satisfaction to the subordinates.

(c) Grant of Authority: If the assigned duty is to be discharged by the subordinate effectively, he must be granted proper authority. As the total work of manager cannot be delegated, authority delegation also need not be dull in any situation. It does not indicate power over people. Authority is an essential element in any modern enterprise. When, the question of delegation arises, the manager should be clear as to what rights are associated with the task that is to be delegated.

(d) Creation of Obligation or Accountability: Delegation implies accountability from subordinates to the superior. Subordinates’ performance must always be measured and appraised by the supervisor. In accepting a delegated task, a subordinate gives his promise to do his best in carrying out his duties. Duty can be delegated, authority can be delegated but it is not the same with accountability. Duties and authority always flow downwards but accountability always flows upward from the subordinate to the superior. Because of this accountability the manager must keep for him some reserved authority and duties for regulating and controlling the course of work undertaken by his subordinates.

The basic principles of delegation authority are given below –

(a) Principle of Functional Definition: Before delegating authority, the functions or duties of the subordinates should be defined in clear and precise terms. Every subordinate must fully understand the nature and significance of his job, its relationship with other jobs and the limits of his authority.

(b) Principle of Delegation by Results Expected: The nature and extent of authority delegated to a subordinate should be consistent with the results expected of him. The manager should first define the objectives and should delegate authority in such a manner as to accomplish the desired objectives.

(c) Principle of Unity of command: Every subordinates should be under the command of one superior. A person cannot serve two or more masters effectively. When an employee is asked to get orders and instructions from more than one manager, he gets confused and his loyalty gets divided between different bosses. Therefore, dual subordination should be avoided.

(d) Principle of Absoluteness of Responsibility: The responsibility of a subordinate to his superior is absolute and it cannot be delegated. When a person delegates his authority, he remains ultimately responsible for performance. Every executive is responsible to his superior not only for his own acts but also for the acts of his subordinates.

(e) Principle of Parity of Authority and Responsibility: According to this principle, authority and responsibility should go hand in hand. Whenever a subordinate is given authority, he should be held responsible for doing the task properly. Similarly, if a subordinate is to be held responsible for a job, adequate authority to perform it should be given to him.

26. Discuss the importance of delegation. Explain the different drawbacks or dangers of delegation.

Ans: When the size of an organization expands, a manager alone cannot do all the work himself. He has to share his work and authority with others. An executive can extend his personal capacity through delegation of authority. Delegation is the means by which a manager can get results through others.

The main advantages of delegation are as follows:

(a) Relief to Top Executives: Delegation reduces the burden of work on senior executives. By transferring routine work to subordinates, a manager can concentrate on important policy matters. He can, therefore, make better use of his valuable time and ability.

(b) Scalar chain: Delegation of authority creates a chain of superior subordinates relationships among managers. It provides meaning and content to managerial jobs. It also directs and regulates the flow of authority from top to the bottom of organisation.

(c) Specialization: Through delegation an executive can assign jobs to his subordinates according to their abilities and experience. In this way, he can obtain the benefits of division of work.

(d) Quick decisions: When authority is delegated, lower level employees can take decisions quickly without consulting senior executive. Subordinates are better in touch with local conditions and can take more practicable decisions within the policy framework laid down by top management.

(e) Motivation: Delegation provides a feeling of status and importance to subordinates. Their independence and job satisfaction increases due to the authority they enjoy. They become more willing to work hard and achieve the targets laid down by higher authorities. Thus, delegation promotes a sense of initiative and responsibility among employees.

(f) Executive Development: Delegation gives an opportunity to employees to learn decision-making and leadership skills by exercising authority. It helps to improve the quality of personnel at lower levels.

(g) Growth and Diversification: It is the quality of managerial talent improves, the organisation can face the future challenges better. It can grow and expand to a bigger size. It can also undertake new types of business activities.

Following are the drawbacks or dangers of delegation –

(i) Reluctance on the part of superior: The superior, very often, does not want to delegate authority to his subordinate due to following reasons-

(a) Feeling of Perfectionism: The superior has a feeling that he can do the job better himself than subordinates and therefore, he does not wish to delegate authority. But this thinking is not always good. The superior must accept the fact that someone else is capable of doing his work and perhaps better than him.

(b) Autocratic Attitude: A superior, who is a power worshipper, does not believe in delegation. He always retains all authority with him and does not delegate to his subordinates.

(c) Lack of Ability to Direct: An executive’s lack of ability to direct is another barrier to successful delegation. Delegation of authority from the superior to the subordinate is not effective and suitable unless the former is able to direct and guide the later.

(d) Lack of confidence in subordinates: Another possible obstacle of effective delegation is lack of confidence in subordinates. Superior often lacks confidence in their subordinates for jobs they have not done before.

(e) Absence of controls that warn of coming difficulties: Since a good executive is sensitive to his continuing obligation even though work is delegated, he obviously needs some feed back about what is going on. He wants to be sure of serious troubles in advance so that he can help overcome it. If the control machinery fails to keep him informed, he will be hesitant about delegation at least on major matters.

(f) Conservative and continuous temperament: A manager may be handicapped by a temperamental aversion to taking a chance. It is true that risk is involved in delegating a job to a subordinate. Even with clear instructions, dependable subordinates and selective controls, the possibility remains that something will go wrong. Unless the manager adjusts himself emotionally as well as intellectually to this element of risk, he will be reluctant to delegate anything to anyone.

(g) Fear of competition: Some executive, fear that if their subordinates learn too much, they will become competitors. This problem is unexpressed but nevertheless is very real.

(ii) Reluctance on the part of Subordinates: Delegation is not always welcomed and carried though effectively by subordinates. Even when the superior is ready to delegate authority, a subordinate may shirk from accepting it, for the following reason:-

(a) Dependence on the Boss for Decisions: Often a subordinate finds it easier to task than to decide for himself how to deal with a problem. Making a wise decision is usually a hard mental work, which the subordinate may avoid.

(b) Fear of criticism: Another factor that may defer a man from taking duties is fear of criticism for mistakes. Unwarranted criticisms by superiors discourage initiative, cause resentment and destroy a subordinate’s self-confidence.

(iii) Developing a personal discipline for supervision, which requires a faith in the ability of, subordinates and tolerance of human mistakes.

(iv) Motivation of subordinates is made through incentives of various kinds such as increase in wages, feeling of reorganization and appreciation, proper communication and participation etc. Motivation depends upon complex psychological, emotional and other incentive factors. Organizationally, creating small work groups and providing for maximum interaction by group members encourage motivation.

(v) Providing training to the subordinates is also essential to enable them in accepting delegation. Training subordinates to accept delegation is complicated by the fact that individuals vary greatly in capacity. Some are capable of working independently with authority delegated while others are not so, no matter how much authority they are delegated. Training programmes for subordinates in accepting authority should include the appraisal of current performance in delegation, counselling for improvement and coaching on the job.

(vi) Setting up adequate controls, which will act as selective checkpoints where measures will be made to see if any correcting action is needed. This will reduce the task of the accountable superior. In establishing controls for delegation, the best approach is to give the subordinate the means of self-control.

27. What are the main components of delegation of authority? Discuss how can you make delegation more effective?

Ans: The following elements are involved in delegation:

(i) Determining the result expected: The first step in delegation process is the determination of results expected from a position or subordinate. Assignment of task will be meaningful only when the subordinate clearly understands the results that he has to achieve.

(ii) Assignment of duty: People in the organisation are assigned jobs and duties. It means that superior asks to subordinate to perform a particular work within a given period of time. Duties can be described in terms of functions or in terms of goals and results.

(iii) Grant of authority: In order to enable the subordinate to discharge their duties effectively, he must be granted proper authority. The subordinate can only perform the work when he has authority required for accomplishing task.

A number of measures are required to make delegation effective.

(i) Defining of assignments: The work of every person should be properly defined. The results expected from them should be made clear. They should be given sufficient authority to accomplish the given results.

(ii) Proper selection of persons: The persons should be selected in the light of the job to be done. The delegation will be influenced by the qualifications of persons. So, the personnel manager should keep these things in mind while selecting persons for various positions.

(iii) Proper communication: There should be open line of communication. There should be free flow of information between superior and subordinate. Communication is essential for making delegation effective.

(iv) Establishing proper controls: The manager cannot relinquish responsibility, delegation should be accompanied by adequate controls. The performance of subordinates should be regularly assessed to see that things are going as per plans.

28. What is Formal organisation? Explain its features. And also explain the advantages and disadvantages of it.

Ans: Refers to the organisational. structure that is designed by the management to accomplish organizational objectives. It specifies clearly the boundaries of authority & responsibility and there is a systematic coordination among the various activities to achieve organizational goals.

– Louis Allen – System of well defined jobs, each bearing a definite measure of authority, responsibility & accountability.


(i) It is deliberately created by the top management.

(ii) It is based on rules and procedures which are in written form.

(iii) It is impersonal i.e. does not takes into consideration emotional aspect.

(iv) It clearly defines the authority and responsibility of every individual.

(v) It is created to achieve organizational objectives.


(i) Easier to fix responsibility since mutual relationships are clearly defined.

(ii) No overlapping of work – because things move according to a definite plan.

(iii) Unity of command through an established chain of command.

(iv) Easy to achieve objectives – because coordination and optimum use of human and material resources.

(v) Stability in the organization – because behavior of employees can be fairly predicted since there are specific rules to guide them.


(i) The Work is based on rules which causes unnecessary delays.

(ii) Lack of initiative: The employees have to do what they are told to do and they have no opportunity of thinking.

(iii) Limited in scope: It is difficult to understand all human relationships in an enterprise as it places more emphasis on structure and work.

29. What is Informal organisation? Explain its features. And also explain the advantages and disadvantages of it.

Ans: An informal organization is that organization which is not established deliberately but comes into existence because of common interests, tastes and religious and communal relations. The main purpose of this organization, structure is getting psychological satisfaction. For example, employees with similar interest in sports, films, religion etc. may form their own informal groups.


(i) It originates from within the formal organization as a result of personal interaction among employees.

(ii) It has no written rules and procedures.

(iii) It does not have fixed lines of communication.

(iv) It is not deliberately created by the management.

(v) It is personal means the feelings of individuals are kept in mind.


(i) Speed: Prescribed lines of communication are not followed which leads to faster spread of information.

(ii) Fulfillment of social needs: enhances job satisfaction which gives them a sense of belongingness in the organization.

(iii) Quick solution of the problems: because the subordinates can speak without hesitation before the officers, it helps the officers to understand the problems of their subordinates.


(i) It creates rumours: All the persons in an informal organization talk careless and sometimes a wrong thing is conveyed to the other persons.

(ii) It resists change and lays stress on adopting the old techniques.

(iii) Priority to group interests: Pressurizes members to conform to group expectations.

30. Write short notes:

(i) Departmentation.

Ans: The process of dividing activities into units and subunits is referred to as departmentation. The term departmentation is used in a generic sense n is not only confined to the creation of such units as are called departments, but it includes divisions, sections and jobs also. Dividing up work calls or identification of total activities and classification of such activities into units and subunits. There are three bases for primary grouping of activities at the second level of the organisation just below the top level. Units at the second level are commonly called departments when business functions are adopted as the pattern of grouping activities. Such units go by the name of divisions when either products manufactured or territories are adopted as the means of classifying activities.

There are, however, two approaches to departmentation- top down and bottom-up approaches. In the top-down approach, activities are divided step by step downward form the chief executive’s job to the operating jobs. In the bottom-up approach, the division of activities is carried on in a reverse order. Starting form operating jobs, there arise sections form combining some correlated jobs, departments from combining some sections and finally the chief executive position form putting departments together. While the top-down approach gives emphasis on co-ordination and managerial action, the bottom-up approach gives emphasis on co-ordination and managerial action, the bottom-up approach focuses attention on employee performance. Although the top-down approach is easy for understanding the departmentation process, both the approaches are utilized in actual practice.

(ii)  Line and Staff organisation.

Ans: In line organisation, there is unity of command, hut there is no specialization. In functional organisation, there is extreme specialisation, hut there is no unity of command. To overcome the defects and to take advantage of the merits of both line organisation and functional organisation, line and staff organisation has been evolved. Line and staff organisation is the Usual form of organisation found in modern enterprise.

Line and staff organisation is a combination of line organisation and functional organisation. It is a type of organisation in which there arc two sets of officers for administration, viz., (1) line officers who have the authority and command over the subordinates and are responsible for the accomplishment of the results, and-(2) staff officers or specialists who render experts advice to the line officers to help them to discharge their functions efficiently.

31. Distinguish between formal and informal organisation?

Ans. Following are the points of distinction between formal and informal organisation–

(i) Meaning: Formal organisation involves activities of two or more persons consciously coordinated.

Whereas informal organisation involves a system of spontaneous personal relationship.

(ii) Basis: The basis of formal organisation is delegation of authority, functions, procedures and regulations.

While informal organisation deals with personals whims, attitudes and needs.

(iii) Nature: Formal organisation is stable and predictable, While informal organisation is unstable and unpredictable.

(iv) Form: Formal organisation has definite structure and well-defined jobs.

But informal organisation is structureless and full of discretion.

(v) Sources of authority: The authority is in formal position in formal organisation.

But in informal organisation, the authority is informal without position.

(vi) Emphasis: The formal organisation lays emphasis on office whereas informal organisation lays emphasis on people.

32. What is Network Organisation? Write its feature. Explain the Advantages and Disadvantages of Networking Organization.

Ans: The network structure is a newer type of organizational structure viewed as less hierarchical (i.e., more “flat”), more decentralized, and more flexible than other structures. A networking organisation is one that is created around a central organisation (called the hub organisation) that has relationship and arrangement with some other organisations, to perform functions like designing, manufacturing, marketing etc. for the central organisation, on a contractual basis.A networking organisation is called a boundaryless organization; as the central organisation has relationships and arrangements with many business partners beyond its own boundary lines. In an extreme case of a networking organisation, the hub organisation has arrangements with so large a number of business partners that it, on its own, does only the coordination work.

A networking organisation is also called a virtual organisation, in that it is nearly a complete organisation; and any slight difference in the structure of organisation is not important.

Salient Features of a Networking Organization:

Following are some of the salient features of a networking organisation:

(i) In the central (or hub) organisation of the networking structure, usually there is an absence of horizontal and vertical boundaries within the organisation. There is emphasis on cross hierarchical teams and participative decision making.

(ii) A networking organisation rests on co-operative relationships with suppliers, distributors and many other business partners. Co-operation and co-ordination are the hallmarks of a networking organisation.

(iii) In a networking organisation, the critical management decisions are with whom to develop business relations, for what and on what basis. The central organisation management is specially involved in strategic decisions of developing new relations and abandoning some old ‘less useful’ relations with business partners.

(iv) Sharing of information among constituents of the networking organisation is greatly facilitated by electronic technology, such as computer, e-mail, fax etc.

(v) A networking organisation is a temporary arrangement between a numbers of companies. It is created to exploit fast changing opportunities; and may come to an end when such opportunities disappear or cease to be profitable at all.

Following are the important advantages of a networking organisation:

(i) Motivated functioning in the hub organization: Because of the absence of vertical and horizontal boundaries within the hub organisation, there are minimum status and rank differentials. Hence people work with a sense of enthusiasm; being motivated by the organisational structural environment.

(ii) Utilisation of best capabilities: A networking organisation allows different organisation engaged in performing different tasks for the hub organisation to bring their best capabilities together. Hence, at least in theory, the performance of a networking organisation is at its peak.

(iii) Less environmental uncertainty: Management of the hub organisation faces less environmental uncertainty; because it has sub-contracted many responsibilities to partners, in the networking structure.

(iv) Flexibility of structure: A networking organisation possesses the advantage of flexibility. Depending on environmental conditions, new alliances can be made; and old dropped out. In a way, a networking organisation quickens response to changing environmental scenario; and helps in the best exploitation of opportunities.

(v) Boon for small firms: Small firms, who otherwise face problems of survival, can ensure their survival by being a partner of a networking organisation. A networking organisations is an umbrella protecting the small, who are efficient but cannot face up to the challenges of the environment.

Limitations of Networking Organization:

A networking organisation suffers from the following limitations:

(i) Coordination- The biggest problem: Coordination among the functioning of business partners is perhaps, the biggest problem for the management of the hub organisation, in the networking structure. In fact, each partner has his own manner of performing without regard to the nature of functioning of related business partners.

(ii) Problem of reliability: A networking structure is successful only to the extent that its business partners are reliable. How to ensure reliability of business partners? For this, there is no formula devised so far.

(iii) Lack of close control: In a networking organisation, there is usually lack of close control over manufacturing and marketing operations etc. by the management of hub organisation. Hence, there may be poor operational performance in the networking organisation, produced by the networking partners.

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