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Chapter - 5

Organisation - I

Q - 1 Give the meaning of "Organisation" and explain its formation. (stages

of organisation)

(july 06)

Ans.

INTRODUCTION :- (CLD3EP)

When a large number of people are working for the accomplishment

of an objective, specific understanding and clarity are necessary as to what

functions are to be performed who will perform which, who will issue orders,

who will implementation etc. This work is done by an Organisation.

MEANING :-

" Organisation is that structure that assigns authority and responsibility

amongst individuals working together for the accomplishment of a common

objective".

Formation of an Organisation :-

The formation of an Organisation is a scientific process. Only a flexible

Organisation that can adjust itself to changing circumstances can work

successfully. A ready-made organisation may not be suitable to all business

units. So every business has to form an Organisation suitable to its objectivesand functions.

Stages :-

For the formation of an ideal Organisation the following stages are helpful.

(1) Clarification of Objectives :-

An organisation can be formed only after knowing clearly the primary

and secondary, objectives of the business. Structure of an organisation can

be decided only with respect to these objectives. An Organisation formed

without clarity of objectives is liable to fail.

(2) Listing of Function :-

A detailed list of functions to be performed for the accomplishment of

objectives should be prepared. Whenever necessary, the functions should be

properly defined, to get a clear understanding of the same. A function can be

separated from another only when the task of each one is decided.

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Ans.

The scope of business expands with its size. So Assignment of

authority and responsibilities becomes complex. Hence, clarity of

interrelationship of personnel becomes necessary. Assignment of authority is

the basis of Organisation.

On the basis of such assignment the follwing will be the types of

Organisations :

1. Line Organisation

2. Functional Organisation

3. Committee Organisation

4. Line and staff Organisation

5. Matrix Organisation

Q - 3 Write a short note on :- Line Organisation (T.B)(March 08)

Or

Write a short note on :- Departmental Organisation

Or

Give meaning and Merits, Demerits of Line Organisation

Ans.

MEANING:-

Line Organisation is such an Organisation where authority andresponsibility flow downward from top to the bottom and where every personis responsible to his immediate superior. The higher the position the more isthe authority and lower the position the converse in the case. LineOrganisation is an old and simple and has been used by the millitary foryears.

Here in this Organisation it is department which is important & not function.That is why it is also called departmental Organisation.

FORMATION :-

Entier business is divided into various departments and departmental headis appointed for every department, who is given full authority andresponsibility of his department.

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Various departmental heads, though at the same lavel, are

independent of one another and every departmental head has foremanand supervisors working under him and workers and employees workunder there foreman & supervisors.

The BOD (Board Of Directors) has top most authority and takes policy

decisions, where as status of GM(General Manager) is that of theCEO(Chief Executive Officer) and derives his authority from the boardand makes the department officers impement the decisions of theboard.

As shown in below figure organisation is divided into three department,

viz the production sales and administrative and officers such asproduction, purchase, sales, manager etc appointed.

These officers have total authority over their departments and function

of GM (General Manager) is to co-ordinate the working of variosdepartments and also exercise control over them.

Thus in a Line Organisation authority and responsibility flow lineally

from the top to bottom level.

Board Of Directors

MERITS :-

Line Organisation has following Merits or Advantages :-

(1) Simple :- Line organisation has a simple structure understood by eventhe common man.

(2) Division of Authority and Responsibility :- Authority and responsibility areclearly demarcated in this type of Organisation.

(3) Effective Control :- Since the departmental haed has total authority overhis department, discipline and control are maintained.

(4) Quick Decision :- Quick decisions are possible as the departmentalofficer enjoys freedom.

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(5) Growth of officers :- Departmental head man develop his efficiency andpersonally as he has to perform all the functions of the department.

(6) Flexibility :- Necessary changes can be affected according to time andcircumstances and to that extent flexibility is possible in this structure.

(7) Unity of command :- Everyone has to take orders from a simpleindividual and hence unity of command is maintained.

(8) Less expensive :- This structure is comparatively less expensive than theother structure or form Organisation.

DEMERITS :- (L4AE)

Following are Disadvantages or Demarits of line Organisation.

(1) Autocratic Management :- As authority becomes centralised indepartmental heads, there is a possibility of the becoming autocratic.

(2) Lack Of Specialization :- There is a lack of specialisation in this type ofOrganisation, as departments have more importance than the functions.

(3) Increased Workload :- As departmental heads have to carry out all thefunctions of their respective departments their burden of work increases.

(4) Lack of experts :- In this type of Organisation it becomes difficult toacquire the services of highly qualified executives capable in every respect.

(5) Lack of coordination :- As the department and officers are independent,co-ordination is difficult.

(6) Lack of proper communication :- In this type of Organisation, many

times, the flow of communication from bottom to top level is not effectivelydone, which creates many problems.

Q - 4 Write a short note on :- Functional Organisation

Or

Explain in detail functional Organisation (along with Merits andDemerits)

Ans.

MEANING :-

The functional type of organization, authority and responsibility isbased on functions and not on departments. For each function one experts isappointed and this executive is not only advisors but also administrativeofficers. These experts are not only responsibility for department, but forentire function of Organisation.

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E.g. :- Personal officer minds the functions of recruitment, selection etc.Purchase officer minds the purchase function of entire Organisation.

FORMATION OF FUNCTIONAL ORGANISATION :-

In the Functional Organisation the chief executive has the top most

authority. The unit is divided into two :- Planning Department andFactory Deoartment.

Small segments are decided and handed over to various experts such

as Information officers, Accounts officer, Quality officer, Maintenanceofficer.

Every officer can give orders to every worker of the unit, meaning

thereby that here function is more important and not the Department.

Here workers are not responsible to a single officer but receive orders

from different officers. Experts are not independent but are linked

inter-se to one another.

Chief Executive

MERITS OR ADVANTAGES :- (SDCB2TFQ)

(1) Specialization :- Different experts are appointed for each function, which

makes specialization possible.

(2) Decentralisation of authority :- No single executive has total authority,but all have equal authority and so decentralisation of authority is madepossible.

(3) Co-ordination :- Every expert is not totally independent, but remainsmutually connected. So co-ordination is maintained.

(4) Burden reduces :- Executives are responsible only for their part of work.So the burden of work is reduced.

(5) Benefit of expertise :- As the responsibility of every work is given to

various officers their recruitment becomes easy and hence, the benefit oftheir expertise is obtained.

(6) Training :- Training to workers and officers is easy.

(7) Flexible :- Since benefit of expertise is available, flexibility as demandedby time and circumstances is possible.

(8) Quick decision :- Decision making process becomes simple and quick.

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DEMARITS OR DISADVANTAGES :- (CN2UDM)

(1) Complexity :- Compared to line organisation it lack's in simplicity andthus results in compexity.

(2) No Unity of Command :- As different workers have to obtain order from

different workers unity of command is not maintained.

(3) No discipline and control :- Since no single executive has total authoritylack of discipline and control may results.

(4) Uncertainity of responsibility :- Every executive has authority for his workonly. So it become difficult to pin point the responsibility in case of failure.

(5) Delay in decision :- As decisions are to be taken from various officers thedecisions are delayed.

(6) More expensive :- As various experts are appointed in this type oforganisation it is generally more expensive.

Q - 5 Differentiate between line and functional organisation (T.B.)(July 07)

Ans.

Q - 6 Explain in detail formal organisation.

Ans.

Any structure, established to bridge the relationship between

functions and individuals for the accomplishment of specific objectives, iscalled formal organisation.

Line organisation, functional organisation, line and staff organisation

are all formal organisations.

In all formal organisations, authority is given for the responsibility of

some functions only.

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Matters such as who is superior, who is equal, who is subordinate are

all made very clear in formal organisation.

Everyone involved develops and maintains inter- relationship.

Q - 7 Explain in detail :- Informal Organisation

Or

Give the meaning of informal organisation along with its merits anddemerits.

Or

Write short note on :- Informal Organisation (T.B.)

Ans.

MEANING :-

When a group of willing and concerned employees is formed on the

basis of human relations it becomes an informal organisation.

Informal organisation is a social structure established for the purpose

of satisfyinf needs and depends on informal relationship.

All groups formed with the growth of human relationship on the basis

of similiar ideology, feelings, religion, taste and aptitudes are known asInformal organisation.

In short Informal organisation concerns itself with their individuals and

their normal inter-relationships, It depends on individuals attitudes andpreferences and not on management rules or planning processes.

It is the shadow of formal organisation & has no place in organisation

chart.

MERITS :-

6. Mental stress of employees is reduced because of personal interaction.

7. The authority of management is restrained becuse of employeegroups.

8. This type of organisation complements the accomplishments ofobjectives of formal organisation.

9. It helps in communication.

10. Social restrictions on employees are imposed.

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DEMERITS :-

11. Due to opposition by employees there is a possibility of resistances tochanges by the management.

12. Indiscipline is likely to be encouraged.

13. In place of correct information there is a risk of rumours being spread.

14.There is also a risk of industrial peace being endangered due tonegative leadership.

15.There is a possibility of obstacles being placed in management.

Q - 8 Differentiate between (T.B.)

(1) Formal organization & Informal organization

Ans.

Q - 9 Explain the statement :- (T.B.)

(1) Organisation is a structure as well as a process

(March 07 & 3 marks)

Ans. Various experts have tried to define Organisation with various angles.Certain experts explain Organisation as a process.

According to them, Organisation is a process comprising of below

mentioned functions :-

To decide the objectives, to formulate subsidiary plans, policies and

programmes to list the functions for the achievement of objectives andto analyses the same to form functional group, to assign authority andresponsibility as well as to decide interrelations.

Certain experts describe Organisation as a structure. According to

them, after completion of Organisation process, the structure gettingformed is called Organisation.

It decides the shape of the Organisation based on which administrative

and Organisational decisions are taken.

In that clarity is made about the authority and responsibility of the

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various managerial level employees and their interrelatio betweenthem can be established.

Thus Organisation is a structure as well as a process.

(2) Compared to other factors, the success or otherwise of management

depends more on Organisation. (March 07 & 3 marks)

Ans.

Whether business unit will suceed or fail depends primarily on theOrganisation.

Even if the various factors affecting business are favourable but if the

Organisation impementing the activities is inefficient, the maximumutilisation of resources will become difficult.

Time, energy, resources will be wasted and it will become difficult to

meet production targets.

As a result it will be difficult to put in the market timely the right

quality of products, the market will be lost and business units will fail.

As per opinion of a successful industrialist if Organisation is efficient,

the lost factories, transportation vehicle, business trade etc.can beregained.

Thus success or failure of management primarily depend on its

Organisation rather than other factors.

(3) The basis of Organisation is the balance between authority andresponsibility.

(July 07 & 3marks)

Ans.

The Organisation delegates authority and responsibility among variousdepartments and individuals.

In Organisation, balance should be maintained between authority and

responsibility.

The employee should be assigned with proper authority and

responsibility.

If authority given is more than necessary, then there will be misuse of

authority.

If authority fails short of responsibility then employee will try to reduce

some responsibility or otherwise he will fail in competing the job

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assigned.

Thus, in Organisation the balance should be maintained between

authority and responsibility.

Hence, it can be said that the basis of Organisation is balance between

authority and responsibility.

(4) Informal Organisation is a shadow of formal Organisation.

Or

Formal and informal Organisations are compliments to each other.

Ans.

Formal Organisations are formed procedurally for the impementation ofplanned activities.

There the creation of various divisions and interrelationship amongemployees working there in are clarified.

Each officers has to strictly follow the order and directions of his

superior officer.

The employees of all these divisions come across with each other, so

friendship and heartily relations develop in them.

On account of this they voluntarily try to complete the work of each

other and cooperate each other.

The system formed in this manner is called informal Organisation.

Thus, from formal Organisation the informal Organisation emerge

hence they are called the shadows of formal Organisation.

On account of informal Organisation the functioning of formal

Organisation is eased hence they are considered complementry toeach other.

Q - 10 Explain in detail : Committee Organisation

Or

Write a short note on committee Organisation (T.B.)

Ans.

INTRODUCTION :-

Since the other types of Organisations are not able to fully satisfy

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the needs of modern times, committee Organisation developed as acomplementry Organisation.

MEANING :-

In committee Organisation the responsibility of any special function

or that of taking decisions is vested in a group of individuals and not in asingle person. This group is called the committee. Since there are morepeople in the committee, yhe benefit of their experience, knowledge and skillis obtained.

FORMATION OF COMMITTEE ORGANISATION :-

Various functions of business are performed by a committee of

individuals instead of single person. Members of this committee workas a group.

The decisions of this committee are taken after free deliberations

among themselves.

Decisions taken after a healthy discussion among people represented

by various function become more effective.

Committee Organisation is useful not only in business but also has

been found to be more useful in social institutions, co-operativesocieties, public undertakings, religious and political institutions etc.

The persons appointed in the committee should be experts in their

respective fields for the success of this type of Organisation.

Top Executive Committee

Following are merits of commitee Organisation (DB2C QGR)

(1) Matured decision :-Since more individulas are included in decision-

making, mature decisions are possible.

(2) Democratic approch :-All members of the committee are given an

opportunity to express their views and opinions democratically.

(3) Benefit of specialization :-The members of the committee are experts in their

respective fields and hence the benefits of specialization are available.

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(4) Coordination eased :-Co-ordination is easily maintained as decisions are

taken after free deliberations.

(5) Quick decision :-Reporting is expedited as the members of the

commitee are the know of the decision taken.

(6) Decentralization of authority :-As more individuals are involved in the decision

making process, there is decentralisation of authority.

(7) Burden decreases :-Burden of work of executives is reduced due to the

help of committee.

(8) Growth of members :-As workers are included in the committees,

employer- employee relations are strenghthened.

(9) Research is encouraged :-In committee organisation when there is need for

research in any matter relating to producyion or marketing, then committeeconsisting experts in that field is formed.

DEMERITS OF COMMITTEE ORGANISATION :- (NDUJC)

(1) No secrecy :-As discussions take place regarding functions or

decisions among members of the committee, business secrets are notmaintained.

(2) Delay in decision :-At times decisions are delayed due to less

attendence of members of the committee or differences of opinion amongthem, decisions are delayed.

(3) Uncertainity of responsibility :-The decisions of the committee are impemented

by the administrative officers, so it is difficult to hold any one personresponsible for any failure.

(4) Injustice in decision :-Decisions in the committee are taken by a

majority. So, many times even if the minority members are right their viewsare not accepted and there is a likelihood of injustice to the minority.

(5) Conflict between members :-If the members of the committee adopt a

political stance, there is a possibility of groupism or internal conflict.

CONCLUSION :-

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In short committee organisation is that type of organisation that takesdecisions collectively for the business by the majority.

Q - 11 State the types of organisation and discuss "line organisation" indetail.(T.B)

Ans.Refer Ans.2 and Ans. 3

Q - 12 State the features of an organisation.Or

Describe the characteristics of an organisation.Ans.

MEANING :-

Same as Ans - 1

FEATURES :- (CI2

D2

FBNO)

(1) Objective oriented :- Organisation is an objective-orientedactivity and performs various functions for accomplishment of objective.

(2) Delegation of Authority :- Organisation delegate the authorityto individuals working and also assigns them duties for the same.

(3) Dependent on planning :- Organisation depends on planning. Itis rightly said that planning is the brain of a business while organisation is itsphysical structure.

(4) Flexible :- Organisation is flexible. The necessary changes are

incorporated into it on the basis of time and circumstances.

(5) Importance to human factor :- In the formation of theorganisation, human element is at the centre. Thus, it gives importance tohuman element.

(6) Interrelationship of activities :- The organisation establishesinter-relationship among various functions, positions, sections andindividuals.

(7) Co-ordination of activities :- Supervision control andcoordination are basic requirenments for the success of an organisation.

(8) Nourishes administerial structure :- organisation is anadministrative frame work (structure)

(9) Balance between authority and responsibility :- organisationdivides the activities of the unit into different sections of departments anddivides authority and responsibility among them based on their skill.

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Q - 13 Briefly explain the importance of organisation with reference tobusiness unit,(July 06)Ans.

INTRODUCTION :-

Organisation establishes an inter-relationship between authority andresponsibility. To clarify the importance of organisation, a successfulindustrialist notes.

' Take away our plants, take away our business, oh! take away ourwealth (finance) but permit us to retain our organisation. Within no time weshall be on our feet once again' .

IMPORTANCE :- (D3IURCE)

The points given below also clarify the importance of organisation :

(1) Basis of success :- The success or failure of a business largelydepends on its organisation.

(2) No duplication :- There is no duplication of work and co-ordination is maintained because of organisation.

(3) Interrelationship :- Organisation establishes inter-relationshipsbetween functions and individuals.

(4) Usage of time :- Maximum utilisation of time and resourcesbecomes possible due to organisation.

(5) Responsible :- By organisation employees come to known about

which employee is to do which activity, in what period etc. Thus employeesbecome responsible and alert.

(6) Control :- organisation defines the span of control of eachofficer. Thus organisation makes control effective.

(7) Discipline :- When a division being ahead of other division isdisclosed to any other division, then the moral of employees of that divisiontowards work increases and discipline towards work is seen.

(8) Division of labour :- Division of labour and research areencouraged, and by adopting new technology administrative efficiency can

be increased.(9) Smooth administration :- Smooth administration is maintained

due to clarity of authority and responsiblity.

(10) Equality :- Every activity gets equal justice.

CONCLUSION :-

The different divisions have different goals but ultimate objective of

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organisation is to maintain existence of business and achieve objectives.

Q - 14 In which organisation every person is responsible to his immediatesuperior. (July 06)

Ans.

In line organisation every person is responsible to his immediatesuperior.

Q - 15 Explain three merits of committee organisation (March 07)

Ans.

Refer Ans. 10 (Merits)

Q - 16 State in which type of business line organisation is suitable? (T.B.)

Or

Where linear organisation is convenient?

Or

Where linear organisation succeed?

Ans.

Linear or line organisation convenient or succeed when the unit issmall, when discipline and control is required where production is automaticand where same type of function is to be repeated.

Q - 17 Where committee organisation is useful :- (July 07 & March 08)Ans.

Committee organisation is useful not only in business but also hasbeen found useful in social institutions, cooperative societies, publicundertakings, religious and political institutions.

Q - 18 Give two suggestion for the success of committee organisation (T.B.)

Ans.Following are the suggestions for the success of committee

organisation.

(1) Person appointed in committee should be experts in theirrespective fields for success of organisation.

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(2) It is also necessary that the strength of committee be limitedand scope made clear.

(3) Sub committees can be formed as & when required.

Q - 19 Give point of differences between functional and commiteeorganisation. (March 08)

Ans.

Q - 20 State the Merits and Demerits of functional organisation. (T.B.)

Ans.

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