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Business Studies I

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Class 10 Class 12
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What are the steps in the process of organising?

(i) Identification and Division of Work: The first step of organising is the identification and division of work. At this step, the total work is divided into various activities. Every activity is placed under the supervision of a separate manager.

(ii) Departmentalisation: At this stage, the activities of the same nature are grouped together and assigned to a particular department, e.g., purchase of raw material, purchase of manufactured parts, etc. are given to the purchase department. And production, stocking the goods, research activities are given to the production department.

(iii) Assignment of Duties: At this stage, the responsibility of each individual or post is decided. While assigning these duties, it is important to match the nature of the work and the capabilities of the person to whom the work is given.

(iv) Establishing Reporting Relations: When two or more than two persons work for the attainment of common goals their inter-relationship must be defined very clearly.


What does the term ‘Span of Management’ refer to?

Span of management means that number of employees on whom a superior can successfully put his control. Often, a superior can successfully control 5-6 subordinates.


Define ‘Organising’?

According to Haney, “Organisation is harmonious adjustment of specialised parts for the accomplishment of some common purpose or purposes”.


What is meant by ‘Divisional Structure’ of an organisation? Explain any two advantages and any two limitations of it.

Meaning: To divide the whole enterprise according to the major products (such as metal products, plastic products, etc.) manufactured by it, is known as divisional organisation structure.

Advantages of Divisional Organisation: The following are the advantages of divisional organisation structure:

(i) Development of Divisional Heads: The head of each division looks after all the functions connected with their product, that is, purchase, sale, advertisement, production, finance, etc. This thing helps in the development of varied skill in a divisional head.

(ii) Divisional results can be Assessed: All the activities of each division are carried out independently. Hence, the divisional results (profit/loss) can be assessed easily. On this basis, an unprofitable division can be closed.

Limitations: The following are the limitations of divisional organisation structure:

(i) Conflicts between Divisional Heads: Every divisional head wants to become a divisional empire. To satisfy their ego, each demands maximum resources for their division. This situation leads to conflicts among the various divisional heads.

(ii) Duplicity of Functions: The entire set of functions (e.g., production, marketing, finance, personnel, etc.) is required for all divisions. It gives rise to duplicity of efforts among divisions. Hence, resources are misused and cost of operations is unnecessarily increased.


Under what circumstances would functional structure prove to be an appropriate choice?

Suitability of Functional Organisation: The functional organisation structure is suitable in the situations given below:

(i) where the size of the business unit is large;

(ii) where specialisation is required;

(iii) where decentralisation of authority is needed and;

(iv) where there is only one product that is sold.