NCERT Solutions for Class 12 Business Studies Chapter 5: Organising
These Class 12 Business Studies Chapter 5 solutions cover Organising, the management function that comes right after planning. The chapter explains the meaning and process of organising, the importance of organising, the two main types of organisation structure (functional and divisional), formal and informal organisation, and the closely linked ideas of delegation and decentralisation. Below you get every NCERT exercise question — Very Short, Short and Long Answer Type — reproduced verbatim and answered in exam-ready CBSE style, plus key terms, extra practice, MCQs, Assertion–Reason and FAQs, updated for the 2026–27 session.
Class: 12Subject: Business StudiesChapter: 5Chapter Name: OrganisingPart: Principles and Functions of ManagementSession: 2026–27
Once plans are laid down, the next step is to organise resources so that those plans can be carried out. Organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships so that people can work together effectively to achieve objectives. The chapter describes the four steps of the organising process — identification and division of work, departmentalisation, assignment of duties, and establishing authority and reporting relationships — and the importance of organising (specialisation, clarity in working relationships, optimum utilisation of resources, adaptation to change, effective administration, development of personnel, and expansion and growth). It then explains organisation structure and its two types, the functional and the divisional structure, along with their advantages, disadvantages and suitability, and compares formal and informal organisation. Finally it discusses delegation (its three elements — authority, responsibility and accountability — and its importance) and decentralisation (its meaning, importance, and how it differs from delegation).
Key Concepts & Terms
Organising: the process that initiates implementation of plans by clarifying jobs and working relationships and effectively deploying resources for attainment of identified and desired goals.
Steps in organising: (i) Identification and division of work, (ii) Departmentalisation, (iii) Assignment of duties, (iv) Establishing authority and reporting relationships.
Organisation structure: the framework within which managerial and operating tasks are performed; it specifies relationships between people, work and resources and is shown in an organisation chart.
Span of management: the number of subordinates that can be effectively managed by a superior; it determines the number of levels of management in the structure.
Functional structure: grouping of jobs of a similar nature into separate departments (production, marketing, finance, etc.) that report to a coordinating head; promotes occupational specialisation.
Divisional structure: the organisation is split into separate, self-contained divisions on the basis of product lines, each headed by a divisional manager and being multifunctional.
Formal organisation: the structure of authority relationships deliberately created by management to achieve organisational goals; it specifies the boundaries of authority and responsibility.
Informal organisation: the network of social relationships that arises spontaneously out of interaction among employees, without written rules or fixed lines of communication.
Delegation: the downward transfer of authority from a superior to a subordinate; its three elements are authority, responsibility and accountability.
Authority, Responsibility, Accountability: authority is the right to command (flows downward, can be delegated); responsibility is the obligation to perform an assigned duty (flows upward, cannot be entirely delegated); accountability is answerability for the outcome (flows upward, cannot be delegated at all).
Decentralisation: the systematic delegation of authority throughout all the levels of the organisation, pushing decision-making authority down the chain of command nearest to the points of action.
Centralisation: the retention of decision-making authority by higher levels of management; centralisation and decentralisation are relative terms and co-exist in every organisation.
NCERT Exercises — Full Solutions
All questions below are reproduced verbatim from the NCERT textbook’s end-of-chapter Exercises. Answers are original, written in exam-ready style.
Very Short Answer Type
1. Identify the network of social relationships which arises spontaneously due to interaction at work.
ANSWERThe network of social relationships which arises spontaneously due to interaction at work is the informal organisation. It emerges from within the formal organisation when people interact beyond their officially defined roles, and it has no written rules or fixed lines of communication.
2. What does the term ‘Span of management’ refer to?
ANSWER‘Span of management’ refers to the number of subordinates that can be effectively managed by a superior. It largely determines the number of levels of management in the organisation structure — a narrow span creates more levels while a wide span creates fewer.
3. State any two circumstances under which the functional structure will prove to be an appropriate choice.
ANSWERA functional structure proves appropriate when: (i) the size of the organisation is large with diversified activities and operations requiring a high degree of specialisation; and (ii) the organisation produces one main line of product (or closely related products), so that grouping jobs by function rather than by product is enough.
4. Draw a diagram depicting a functional structure.
ANSWERIn a functional structure, all departments report to a coordinating head (the Managing Director). A typical chart is shown below.
Managing Director
Human Resources
Marketing
Research and Development
Purchasing
Each functional department (Human Resources, Marketing, Research and Development, Purchasing, and so on) is placed under the Managing Director, who coordinates all of them. In a manufacturing concern the key functions would typically be production, purchase, marketing, accounts and personnel, each of which may be further divided into sections.
5. A company has its registered office in Delhi, manufacturing unit at Gurgaon and marketing and sales department at Faridabad. The company manufactures the consumer products. Which type of organisational structure should it adopt to achieve its target?
ANSWERThe company should adopt a functional structure. The work is divided on the basis of functions — the registered office (administration), the manufacturing unit (production) at Gurgaon and the marketing and sales department at Faridabad — rather than on the basis of products.Since the company manufactures consumer products that form essentially one line of products, grouping similar jobs under separate functional departments (production, marketing, administration, finance, etc.) reporting to a coordinating head will promote occupational specialisation, control and economy. Hence a functional structure is the suitable choice.
Short Answer Type
1. What are the steps in the process of organising?
ANSWEROrganising is carried out through the following four steps:(i) Identification and division of work: the total work to be done is identified and divided into manageable activities in accordance with previously determined plans, so that duplication is avoided and the burden of work can be shared among employees.(ii) Departmentalisation: activities that are similar in nature are grouped together to facilitate specialisation. Departments can be created on the basis of territory (north, south, west, etc.) or products (appliances, clothes, cosmetics, etc.).(iii) Assignment of duties: the work of different job positions is defined and allotted to employees according to their skills and competencies, ensuring a proper match between the nature of a job and the ability of the individual.(iv) Establishing authority and reporting relationships: clear relationships are established so that each individual knows whom he is to take orders from and to whom he is accountable. This creates a hierarchical structure and helps in coordination.
2. Discuss the elements of delegation.
ANSWERDelegation has three essential, interdependent elements:(i) Authority: the right of an individual to command his subordinates and to take action within the scope of his position. Authority arises from the scalar chain, flows downward from superior to subordinate, and is restricted by the rules and regulations of the organisation.(ii) Responsibility: the obligation of a subordinate to properly perform the assigned duty. It arises from the superior–subordinate relationship and flows upward — a subordinate is always responsible to his superior. Authority granted must be commensurate with the responsibility assigned.(iii) Accountability: being answerable for the final outcome of the assigned task. Accountability cannot be delegated and also flows upward. Thus, while authority is delegated, responsibility is assumed and accountability is imposed.
3. How does informal organisation support the formal organisation?
ANSWERThe informal organisation supports the formal organisation in several ways:Faster communication and feedback: since prescribed lines of communication are not followed, information spreads quickly and management gets quick feedback on its plans and policies through the informal network.Fulfilment of social needs: it helps members find like-minded people and gives them a sense of belongingness, which increases job satisfaction and, in turn, productivity.Fills gaps in the formal structure: it contributes to the fulfilment of organisational objectives by compensating for inadequacies in the formal organisation; for example, employees’ reactions to plans can be tested through the informal network. Hence, management should not confront informal groups but skilfully use both organisations so that work continues smoothly.
4. Can a large sized organisation be totally centralised of decentralised? Give your opinion.
ANSWERNo, a large organisation can be neither totally centralised nor totally decentralised. Complete centralisation would mean all decision-making is concentrated at the apex, which would remove the need for a management hierarchy; complete decentralisation would push all decisions to the lowest level, removing the need for higher managerial positions. Both extremes are unrealistic.In my opinion, as an organisation grows in size and complexity there is a natural tendency to move towards decentralised decision-making, because employees closely involved with operations have more knowledge about them. However, major policy decisions must still be retained at the top. Therefore every organisation is characterised by a balance of both centralisation and decentralisation.
5. Decentralisation is extending delegation to the lowest level. Comment.
ANSWERThe statement is correct. Delegation is the transfer of authority from a superior to his immediate subordinate; it is confined to one superior and one subordinate. Decentralisation is the systematic delegation of authority throughout all the levels of management, right down to the lowest level where the actual action takes place.Thus, when delegation is extended downward across every level of the management hierarchy — not stopping at one level but reaching the lowest — it takes the form of decentralisation. In this sense decentralisation is simply delegation carried to the lowest level of the organisation, giving lower levels the authority to take decisions nearest to the points of action.
6. Neha runs a factory wherein she manufactures shoes. The business has been doing well and she intends to expand by diversifying into leather bags as well as western formal wear thereby making her company a complete provider of corporate wear. This will enable her to market her business unit as the one stop for working women. Which type of structure would you recommend for her expanded organisation and why?
ANSWERFor Neha’s expanded organisation, a divisional structure is recommended. After diversification she will have more than one category of products — shoes, leather bags and western formal wear — and a divisional structure suits enterprises that offer several distinct product lines.Why: separate divisions can be created for each product (footwear, leather bags, formal wear), each headed by a divisional manager and being self-contained with its own production, marketing, finance and purchase functions. This brings product specialisation, makes each divisional head accountable for profits, promotes flexibility and initiative as each division acts autonomously, and facilitates expansion since new product lines can be added by simply adding a new division without disturbing existing operations.
7. The production manager asked the foreman to achieve a target production of 200 units per day, but he doesn’t give him the authority to requisition tools and materials from the stores department. Can the production manager blame the foreman if he is not able to achieve the desired target? Give reasons.
ANSWERNo, the production manager cannot blame the foreman for failing to achieve the target.Reason: for effective delegation, the authority granted must be commensurate with the responsibility assigned. Here the foreman has been given the responsibility of producing 200 units per day, but he has not been given the matching authority to requisition tools and materials from the stores department. When responsibility is greater than authority, the person is rendered ineffective — he cannot carry out the task. Since the manager failed to grant the authority needed to discharge the responsibility, the fault lies with the manager, not the foreman.
Long Answer Type
1. Why delegation is considered essential for effective organising?
ANSWERDelegation is the downward transfer of authority from a superior to a subordinate. It is essential for effective organising because no manager, however capable, can perform every task himself; the volume of work makes it impractical. By delegating, the structure of authority–responsibility relationships is actually built. Its benefits are:(i) Effective management: by empowering employees, managers get more time to concentrate on important matters and function more efficiently.(ii) Employee development: employees get opportunities to use their talent, develop new skills and prepare for higher responsibilities, becoming better leaders and decision makers.(iii) Motivation of employees: delegation involves trust and commitment; responsibility for work builds self-esteem and confidence, motivating subordinates to perform better.(iv) Facilitation of growth: it provides a ready, trained workforce to take up leading positions in new ventures, aiding expansion.(v) Basis of management hierarchy: delegation establishes superior–subordinate relationships, which form the very basis of the hierarchy and decide who reports to whom.(vi) Better coordination: the elements of delegation (authority, responsibility, accountability) clearly define powers, duties and answerability, avoiding overlapping of duties and helping coordination. Hence delegation is a key element in effective organising.
2. What is a divisional structure? Discuss its advantages and limitations.
ANSWERDivisional structure: an organisation structure that comprises separate business units or divisions formed on the basis of product lines. Each division has a divisional manager responsible for performance and is multifunctional and self-contained, as functions like production, marketing, finance and purchase are performed within it. Each division works as a profit centre.Advantages:(a) Product specialisation develops varied skills in a divisional head and prepares him for higher positions.(b) Accountability for profits: revenues and costs can be easily identified and assigned to divisions, providing a proper basis for performance measurement and fixation of responsibility.(c) Flexibility and initiative: each division functions as an autonomous unit, leading to faster decision making.(d) Expansion and growth: new divisions can be added without interrupting existing operations by simply adding another divisional head and staff.Limitations:(a) Conflict among divisions over allocation of funds, and a division may maximise its own profit at the cost of others.(b) Increase in costs due to duplication of activities and similar functions across divisions.(c) Ignoring organisational interests: a divisional manager with authority over all activities of his division may, in time, gain power and ignore the interests of the rest of the organisation.
3. Decentralisation is an optional policy. Explain why an organisation would choose to be decentralised.
ANSWERDecentralisation is the systematic delegation of authority throughout all levels of management. Unlike delegation (which is compulsory), decentralisation is an optional policy decision taken at the discretion of top management. An organisation chooses to decentralise for the following reasons:(i) Develops initiative among subordinates: giving lower levels freedom to take decisions promotes self-reliance and confidence and helps identify potential leaders.(ii) Develops managerial talent for the future: handling assignments independently gives subordinates real experience, creating a reservoir of qualified manpower for higher positions.(iii) Quick decision making: decisions are taken nearest to the points of action without needing approval from many levels, so the process is faster and information is less distorted.(iv) Relief to top management: direct supervision is reduced and replaced by other controls (such as return on investment), leaving top management free for important policy decisions.(v) Facilitates growth: greater autonomy fosters competition among departments, increasing productivity and generating more returns for expansion.(vi) Better control: performance can be evaluated at each level and departments held individually accountable, supported by tools like the balanced scorecard. However, decentralisation must be balanced with centralisation in areas of major policy.
4. Distinguish between centralisation and decentralisation.
ANSWERCentralisation and decentralisation are relative terms describing where decision-making authority lies in an organisation.
Basis
Centralisation
Decentralisation
Meaning
Decision-making authority is retained by higher levels of management.
Decision-making authority is delegated throughout all levels of the organisation.
Authority
Authority is concentrated at the top of the hierarchy.
Authority is dispersed down to the lower levels, nearest the points of action.
Freedom of action
Lower levels have little freedom; greater control by the top.
Lower levels enjoy greater freedom and autonomy of action.
Speed of decisions
Slower, as decisions traverse many levels.
Faster, as decisions are taken at the point of action.
Burden on top management
Higher, as it takes both policy and operational decisions.
Lower, as top management is relieved for major policy decisions.
Suitability
Suitable for small organisations and for matters of major policy.
Suitable as the organisation grows in size and complexity.
5. How is a functional structure different from a divisional structure?
ANSWER
Basis
Functional Structure
Divisional Structure
Formation
Formation is based on functions.
Formation is based on product lines and is supported by functions.
Specialisation
Functional specialisation.
Product specialisation.
Responsibility
Difficult to fix responsibility on a department.
Easy to fix responsibility for performance.
Managerial development
Difficult, as each functional manager has to report to the top management.
Easier; autonomy as well as the chance to perform multiple functions helps managerial development.
Cost
Functions are not duplicated, hence economical.
Duplication of resources in various departments, hence costly.
Coordination
Difficult for a multi-product company.
Easy, because all functions related to a particular product are integrated in one department.
6. A company, which manufactures a popular brand of toys, has been enjoying good market reputation. It has a functional organisational structure with separate departments for Production, Marketing, Finance, Human Resources and Research and Development. Lately to use its brand name and also to cash on to new business opportunities it is thinking to diversify into manufacture of new range of electronic toys for which a new market is emerging. Which organisation structure should be adopted in this situation? Give concrete reasons with regard to benefits the company will derive from the steps it should take.
ANSWERThe company should switch from its functional structure to a divisional structure. Once it diversifies into a new range of electronic toys, it will have more than one product category (ordinary toys and electronic toys), and a divisional structure is best suited to multi-product enterprises.It should create separate divisions — one for the existing range of toys and one for the new electronic toys — each being self-contained with its own production, marketing, finance, HR and R&D functions, and each headed by a divisional manager. Benefits the company will derive:(a) Product specialisation in each division and development of varied skills in the divisional heads.(b) Accountability for profits, as the revenues and costs of each product line can be separately identified, giving a clear basis for performance measurement.(c) Flexibility and faster decision making, since each division functions as an autonomous unit.(d) Easy expansion, as the new electronic-toys division can be added without disrupting the existing toy business. Thus a divisional structure will help the company exploit the new opportunity efficiently.
7. A company manufacturing sewing machines set up in 1945 by the British promoters follows formal organisation culture in totality. It is facing lot of problems in delays in decision making. As the result it is not able to adapt to changing business environment. The work force is also not motivated since they cannot vent their grievances except through formal channels, which involve red tape. Employee turnover is high. Its market share is also declining due to changed circumstances and business environment. You are to advise the company with regard to change it should bring about in its organisation structure to overcome the problems faced by it. Give reasons in terms of benefits it will derive from the changes suggested by you.
ANSWERThe company follows formal organisation in totality, which is the source of its problems — procedural delays, red tape, lack of motivation and high employee turnover. It should recognise and encourage the informal organisation alongside the formal one, and not rely on formal channels alone.By giving space to the informal organisation (the network of social relationships among employees), the company will derive the following benefits:(a) Faster communication and feedback: the informal network spreads information quickly without following prescribed lines, reducing the delays in decision making caused by red tape.(b) Better motivation and fulfilment of social needs: employees can vent grievances and find like-minded people, gaining a sense of belongingness and higher job satisfaction, which will reduce the high employee turnover.(c) Fills inadequacies of the formal structure: it helps test employees’ reactions to plans and policies and supports the achievement of organisational goals.Thus, instead of confronting informal groups, the management should skilfully take advantage of both the formal and informal organisation so that work proceeds smoothly, helping the company adapt to its changing environment and recover its market share.
8. A company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, new liberalised environment has seen entry of many MNC’s in the sector. With the result the market share of X limited has declined. The company had followed a very centralised business model with Directors and divisional heads making even minor decisions. Before 1991 this business model had served the company very well as consumers had no choice. But now the company is under pressure to reform. What organisation structure changes should the company bring about in order to retain its market share? How will the changes suggested by you help the firm? Keep in mind that the sector in which the company is FMCG.
ANSWERX Limited has followed a highly centralised model in which directors and divisional heads take even minor decisions. In the competitive, fast-moving FMCG environment after liberalisation, this is too slow. The company should move towards decentralisation — systematically delegating authority to lower levels of management so that decisions can be taken nearest the points of action.How decentralisation will help the firm:(a) Quick decision making: decisions taken at lower levels need not wait for approval from many levels, allowing the firm to respond rapidly to MNC competition and changing consumer demand — crucial in FMCG.(b) Develops initiative and managerial talent: lower-level managers gain confidence, initiative and experience, creating a reservoir of capable managers.(c) Relief to top management: directors are freed from minor operational decisions and can focus on major policy and strategy needed to regain market share.(d) Facilitates growth and better control: greater autonomy fosters competition among departments, raising productivity, while performance can be evaluated and controlled at each level. These changes will help X Limited become responsive and regain its declining market share.
Extra Practice Questions
Short Answer Type Questions
Q1. Define organising.
ANSWEROrganising is the process that initiates the implementation of plans by clarifying jobs and working relationships and effectively deploying resources for the attainment of identified and desired goals. According to Theo Haimman, it is the process of defining and grouping the activities of the enterprise and establishing authority relationships among them.
Q2. State any two advantages of a functional structure.
ANSWER(i) It leads to occupational specialisation since emphasis is placed on specific functions, promoting efficiency in the use of manpower. (ii) It promotes control and coordination within a department because of the similarity of tasks performed, and leads to economies of scale by minimising duplication of effort.
Q3. Differentiate between authority and responsibility on the basis of flow.
ANSWERAuthority flows downward from a superior to a subordinate, as the superior has the right to command. Responsibility flows upward from a subordinate to a superior, because the subordinate is obliged to perform the duty assigned by his superior.
Q4. List any two features of formal organisation.
ANSWER(i) It specifies the relationships among various job positions, clarifying who has to report to whom. (ii) It is deliberately designed by the top management and places more emphasis on the work to be performed than on interpersonal relationships among employees.
Q5. State any two disadvantages of informal organisation.
ANSWER(i) When an informal organisation spreads rumours, it can become a destructive force that works against the interest of the formal organisation. (ii) If the informal organisation opposes changes, management may fail to implement them, and such resistance can delay or restrict growth.
Long Answer Type Questions
Q1. Explain the importance of organising.
ANSWEROrganising plays a crucial role in any enterprise: (i) Benefits of specialisation — systematic allocation of jobs lets workers gain experience and specialise, raising productivity. (ii) Clarity in working relationships — it specifies who reports to whom, removing ambiguity and fixing responsibility and authority. (iii) Optimum utilisation of resources — proper assignment of jobs avoids overlapping and duplication, minimising wastage. (iv) Adaptation to change — it allows the structure and inter-relationships to be modified to accommodate environmental change, giving stability. (v) Effective administration — a clear description of jobs avoids confusion and duplication, making management easier. (vi) Development of personnel — effective delegation stimulates creativity and lets managers explore new areas. (vii) Expansion and growth — it helps the enterprise add job positions, departments, products and territories, aiding diversification.
Q2. Distinguish between formal and informal organisation.
ANSWER
Basis
Formal Organisation
Informal Organisation
Meaning
Structure of authority relationships created by the management.
Network of social relationships arising out of interaction among employees.
Origin
Arises as a result of company rules and policies.
Arises as a result of social interaction.
Authority
Arises by virtue of position in management.
Arises out of personal qualities.
Behaviour
It is directed by rules.
There is no set behaviour pattern.
Flow of communication
Takes place through the scalar chain.
Not through a planned route; can take place in any direction.
Nature
Rigid.
Flexible.
Leadership
Managers are leaders.
Leaders may or may not be managers; they are chosen by the group.
Q3. Distinguish between delegation and decentralisation.
ANSWER
Basis
Delegation
Decentralisation
Nature
A compulsory act, because no individual can perform all tasks on his own.
An optional policy decision, done at the discretion of top management.
Freedom of action
More control by superiors, hence less freedom to take own decisions.
Less control over executives, hence greater freedom of action.
Status
A process followed to share tasks.
The result of a policy decision of top management.
Scope
Narrow scope, limited to a superior and his immediate subordinate.
Wide scope, implying extension of delegation to the lowest level of management.
Purpose
To lessen the burden of the manager.
To increase the role of subordinates by giving them more autonomy.
MCQs & Assertion–Reason
1. Organising is best described as the process of:
(a) setting objectives (b) identifying and grouping work and establishing authority relationships (c) filling job positions (d) directing employees
2. Which of the following is the first step in the process of organising?
(a) Departmentalisation (b) Assignment of duties (c) Identification and division of work (d) Establishing reporting relationships
3. The number of subordinates that can be effectively managed by a superior is known as:
(a) chain of command (b) span of management (c) delegation (d) departmentalisation
4. Grouping of jobs of a similar nature into separate departments creates a:
7. Which element of delegation cannot be delegated at all?
(a) Authority (b) Responsibility (c) Accountability (d) Span of management
8. In an organisation, authority flows:
(a) upward from subordinate to superior (b) downward from superior to subordinate (c) horizontally (d) in all directions equally
9. Decentralisation refers to the systematic delegation of authority:
(a) only to the immediate subordinate (b) throughout all levels of the organisation (c) only at the top level (d) to external agencies
10. Which of the following is an advantage of a functional structure?
(a) Product specialisation (b) Easy fixation of responsibility on products (c) Occupational specialisation and minimal duplication of effort (d) Autonomy of divisions
For each Assertion–Reason question, choose: (A) Both true and the Reason correctly explains the Assertion; (B) Both true but the Reason is not the correct explanation; (C) Assertion true, Reason false; (D) Assertion false, Reason true.
A-R 1. Assertion: Authority granted to a subordinate should be commensurate with the responsibility assigned.
Reason: If responsibility is more than authority, the person may become ineffective and unable to carry out the task.
A-R 2. Assertion: Accountability can be delegated by a superior to his subordinate.
Reason: Delegation of authority empowers a subordinate to act on behalf of his superior.
A-R 3. Assertion: A divisional structure is costlier than a functional structure.
Reason: A divisional structure leads to duplication of resources and similar functions across divisions.
A-R 4. Assertion: Delegation is a compulsory act in every organisation.
Reason: No single individual can perform all the tasks of an organisation on his own.
A-R 5. Assertion: An organisation can be completely centralised.
Reason: As an organisation grows in size and complexity, there is a tendency to move towards decentralised decision making.
Answer key: 1-(A), 2-(D), 3-(A), 4-(A), 5-(D).
Exam Tips & Common Mistakes
How to score full marks in this chapter
Memorise the four steps of the organising process and the seven points of its importance in order. For structure questions, always state meaning, advantages, disadvantages and suitability separately. Present comparison questions (functional vs divisional, formal vs informal, delegation vs decentralisation, centralisation vs decentralisation) as a clear table with a ‘basis’ column — examiners reward this format. Learn the three elements of delegation with their flow direction (authority — downward; responsibility and accountability — upward) and the one-line rule: authority is delegated, responsibility is assumed, accountability is imposed. In case studies, first identify the concept (structure, delegation, decentralisation, formal/informal) and then justify with named benefits.
Common mistakes to avoid
Confusing delegation (one superior to one subordinate) with decentralisation (extension to the lowest level of the whole organisation).
Writing that accountability or responsibility can be delegated — only authority can be delegated.
Recommending a functional structure for a multi-product company, or a divisional structure for a single-product firm.
Mixing up the flow of authority (downward) with responsibility and accountability (upward).
Treating centralisation and decentralisation as absolute — they are relative terms that always co-exist.
Forgetting to give the suitability of a structure or the reasons/benefits demanded in case-study questions.
Frequently Asked Questions
What is Chapter 5 of Class 12 Business Studies about?
Chapter 5, Organising, explains the meaning and four-step process of organising, its importance, organisation structure and its two types (functional and divisional), formal and informal organisation, and the concepts of delegation (authority, responsibility, accountability) and decentralisation.
What are the three elements of delegation?
The three elements of delegation are authority (the right to command, which flows downward and can be delegated), responsibility (the obligation to perform a duty, which flows upward and cannot be entirely delegated) and accountability (answerability for the outcome, which flows upward and cannot be delegated at all).
What is the difference between a functional and a divisional structure?
A functional structure groups jobs on the basis of functions (production, marketing, finance, etc.) and suits single-product organisations, while a divisional structure groups activities on the basis of product lines into self-contained divisions and suits multi-product organisations.
