CBSE Class 12 Business Studies HOTs Organising Set B

CBSE Class 12 Business Studies HOTs - Organising. Higher Order Thinking Skills (HOTS) download and print.

Hots Questions

Q.1 Why does informal organisation exist within the framework of formal organisation? Give any two reasons for the emergence of informal organization.
Q.2 A manager is of the view that he is not responsible for the quality of work that he has delegated to his subordinate. “Do you agree with his view points? Explain.
Q.3 In a large organisation, why is decentralization considered almost essential?
Q.4 “Informal organisation cannot be altogether eliminated”. Do you agree with this statement? Give reasons in support of your answer.
Q.5 Sushma Ltd. is engaged in the production of marble articles. The members of the org. have friendly relations among them. What type of org. is Sushma Ltd.? Explain any 3 benefits of developing such an org.
Q.6 In an electrical goods manufacturing Co. there are four main activities. Marketing, Production, Finance and Personnel. The General Manager is planning to structure the organisation. Which type of org. goal structure should be adopt and why? Give two reasons.
Q.7 Why does organising function earn due importance in the context of effective mgt?
Q.8 The first step in the process of organising is identification and division of work? Why is the work divided into manageable activities?
Q.9 How can departments or divisions be created?
Q.10 How does organizing lead to specialization?
Q.11 How does organizing lead to optimum utilization of resources?
Q.12 Define span of management.
Q.13 How is span of management related to organisation structure?
Q.14 Which tern denotes “the number of subordinates that can be effectively managed by superior? 
Q.15 Which type of organizational structure is suitable for high degree of specialization?
Q.16 Whether decentralization increases the importance of subordinates or reduces it?
Q.17 How does the concept ‘authority’ arise?
Q.18 What is the source of origin of ‘Responsibility’?
Q.19 “For effective delegation , the authority granted must be commensurate with the assigned responsibility” Why?
Q.20 How does delegation facilitate employee development?
Q.21 How does delegation facilitate better co-ordination?
Q.22 As an organisation grows in size and complexity it becomes centralized or decentralized? Why?
Q.23 Why is it said that decentralized in spite of its benefits, should be applied with caution ?
Q.24 Why is it easy to fix responsibility in formal organisation?
Q.25 Which network of interaction facilitates emotional and mutual objectives to be fulfilled in an organisation?
Q.26 Which organisational structure is suitable for a multiproduct manufacturing company?
Q.27 Which organizational structure is suitable for a uni-product manufacturing company?
Q.28 Name the concept which reduces the work load of a manager.
Q.29 Define span of control.
Q.30 In ABC Ltd. are the decisions are taken by top level management only. Which policy is followed by organisation? Explain the drawback of this organisation.
Q.31 Delegation of authority is based on elementary. Principal of division of work. Explain.
Q.32 An organisation is manufacturing medicines cosmetics, textiles and soaps. What kind of organizational structure is suitable for this organisation and why? 
Q.33 “Authority can be delegated but accountability cannot be”. Explain.
Q.34 “The existence of informal organisation depends on the formal organisation”. Comment.
Q.35 “A manager is of view that he is not responsible for the quality of work that he has delegated to his subordinate”. Do you agree with this view point ? Justify your answer.
Q.36 The directors of Narmade Ltd. have asked their marketing manager to achieve a target sale of 100 units per day. The marketing manager has delegated the task to his deputy sales manager working under him. The deputy sales manager could not achieve the target. Who is responsible for non-completion of task? Explain in brief the relevant principal.
Q.37 Bhuvan & Co. are running a shoe manufacturing company successfully. So they planned to expand their business activities by adding more line of product ie. leather bags, belts and garments. Which type of structure would you recommend after expansion and why?
( 1 Mark Questions)

Q.1 Which organizational structure is suitable for a multi-product manufacturing company?
Q.2 Which organizational structure is suitable for a uni-product manufacturing company?
Q.3 Out of formal and informal organisation which is dependant upon which?
Q.4 How informal organisation is created?
Q.5 Name the organisation in which employees are allowed to communicate freely and there are no rules and regulations.
Q.6 Distinguish between formal and informal on the basis of purpose.
Q.7 Name the concept which reduces the workload of a manager.
Q.8 Define span of control.
Q.9 Define job description.
Q.10 In ABC Ltd. all the decisions are taken by top level management only. Which policy is followed by organisation? Explain the drawback of this organization
Very short answer type questions :-

Q.1 Define orgnisation.
Q.2 What is meant by organizing?
Q.3 What do you mean by organization as ‘process’?
Q.4 Which level of managers are responsible for determining formal organisation?
Q.5 Name the organisation which emerges due to mutual relationship.
Q.6 Name the type of organisation which does not have any predetermined objectives.
Q.7 Enumerate steps in the process of organizing.
Q.8 Give the meaning of organisation as structure.
Q.9 Define authority.
Q.10 Mention the essential elements of delegation of authority.
Q.11 Can responsibility be delegated? Explain with an example.
Q.12 What do you mean by centralization?
Q.13 What is decentralization?
Short Answer Type Question

Q.1 How does informal system work.
Q.2 Write notes on functional org.
Q.3 Explain the importance of organizing as a function of mgt.
Q.4 What do you mean by divisional organization? Explain its characteristics.
Q.5 Give any three demerits of divisional organisation.
Q.6 Differentiate between formal and informal organisation on the basis of
formation, purpose, structure and communication.
Q.7 State any 3 circumstances in which functional organisation is more suitable.
Q.8 Explain how organizing helps in ‘specialisation’ and co-ordination. 
Q.9 Explain the meaning of formal organisation.
Q.10 How is accountability related to authority? Explain.
Q.11 Delegation of authority is based on the elementary principle of division of work. Explain.
Q.12 Distinguish between decentralization and delegation on the basis of nature, control, need & responsibility.
Q.13 Authority can be delegated but responsibility cannot. Explain.
Q.14 Delegation of authority is necessary in all types of organizations. Explain with reasons in support.

Q1. Distinguish between formal and informal organisation?
Q2. Explain the concepts of delegation and decentralization bringing out its distinction?
Q3. What is meant. by functional structure? Give its merits & demerits?
Q4. Why is organising considered an important function of management? Give any six reasons?
Q5. “Delegation is the entrustment of responsibility and authority to another and the creation of accountability for performance.” Explain the elements of delegation in the light of this statement.
HOTS Answers

Ans1. 1. To fulfill the social needs of the members. 2. To develop the sense of belongingness in the organisation.
Ans2. No, because delegation does not relieve the manager from the accountability.
Ans3. To cope up the complexities of technological, competitive and other changes in the business environment. It provides greater flexibility & freedom of action to managers at all levels to tackle problems quickly and competently.
Ans4. True because
• Flexibility in informal group
• Availability of an extra channel of communication i.e. grapevine.
• Less risk of confrontation.
Ans5. Informal Organisation. (Its advantages to be mentioned)
Ans6. Functional structure (Its benefits may be mentioned)
Ans7. Organising is a means for translating plans into action.
Ans8. The work is divided into manageable activities so that duplication of efforts and resources can be avoided & the burden of work can be shared among the employees.
Ans9. On the basis of (a) Territory (b) Products.
Ans10. Organising leads to a systematic allocation of jobs amongst the work force. A worker performs a specific job on a regular basis. Repetitive performance of the job allows him to gain experience in that area & leads to specialization.
Ans11. The proper assignment of jobs avoids overlapping or duplication of work. Avoidance of duplication of work helps in preventing confusion & minimizing the wastage of efforts & resources.
Ans12. Span of mgt. refers to the number of subordinates that can be effectively managed by a superior.
Ans13. The span of management to a large extents, gives shape to the organisation structure. This determines the levels of mgt. in the structure.
Ans14. Span of management
Ans15. Functional structure
Ans16. Increases
Ans17. Authority arises, from the established ‘scalar chain’ which links the various jobs positions & levels of an organisation.
Ans18. Superior subordinate relationship. 
Ans19. Because if granted is more than responsibility, it may lead to misuse of authority and if responsibility is more than authority it may make a person ineffective.
Ans20. Delegation empowers the employees by providing item with the chance to use their skills, gain experience and develop themselves for higher positions.
Ans21. Clarity in reporting relationships help in developing & maintaining effective co-ordination amongst the departments, levels & functions of mgt.
Ans22. Decentralised.(Features of decentralization to be mentioned.
Ans23. Because it can lead to organizational disintegration if the departments start to operate on their own guidelines which may be contrary to the interest of the organisation.
Ans24. Because rules and responsibilities as well as the interrelationship job position are made clear.
Ans25. Informal organisation
Ans26. Divisional Structure
Ans27. Functional structure
Ans28. ‘Delegation of Authority’ reduces the work load of a manager.
Ans29. It refers to number of sub-ordinates under one superior.
Ans30. The policy followed is centralization. Drawback is delay in decision making.
Ans31. Delegation means when superior divides some of his work and authority and assigns to his Sub-ordinates to reduce his burden. Division of work also means dividing the task among various individuals. So as to reduce the burden and promote efficiency.
Ans32. Must adopt divisional organisational structure. In this type of organizational structure, all activities related to one product are grouped under one department.
Ans33. Yes it is correct. This is according to the principle of absolute responsibility. The accountability remains with the manager even after delegating the work. Give an eg.
Ans34. Informal organisation refers to network of social and friendly relations established between the employees working at different job positions. The network of these job positions is known as formal organisation Hence informal organisation is created within formal organisation.
Ans35. I do not agree because authority can be delegated but responsibility can never be delegated. This is according to the principle of absolute responsibility wherein the manager retains the ultimate responsibility of the Completion of task.
Ans36. The marketing manager is responsible for non-completion of task. Since authority can be delegated by responsibility cannot be delegated as per the principle of absolute responsibility.
Ans37. Presently the company has a functional structure since it is a uniproduct company. But on addition of more live of products, it will go for divisional structure since it is suitable for a multiproduct company (List advantages of divisional structure).
Answer to Short Questions

2. Organisation is a structure may be organisation of system of job positions, the roles assigned to them and the authoring relationship among various positions.
3. Organising can be defined as a process that initiates implement-tation of plans by clarifying jobs and working relationships and effectively deploying resources for attainment of identified and desired results (goals).
4. Organising as a process is identification and division of work, departmentalisation, assigning of duties and established reporting relationship.
5. Top level management
6. Formal organisation
7. Informal organisation
8. Steps in the Process of Organising
Step 1. Identification and Division of Work 
Step 2. Departmentalisation
Step 3. Assigning of Duties
Step 4. Establishing Reporting Relationships
1. Identification and Division of Work The first step in the process of organizing involves identifying and dividing the total work to be done into specific activities (called jobs) in accordance with previously determined plans. Such division of work into jobs is necessary because of the following reasons :
On individual cannot perform the entire work. By dividing the work, the burden of work can be shared among the employees.
• It facilitates specialization of work and skills.
• The work is divided into manageable activities so that duplication can be avoided.
2. Departmentalisation

The second step in organizing is to combine or group similar/related jobs into larger units called departments, divisions or sections.
This grouping process is called “Departmentalisation”.
Departments can be created using several criteria as a basis. Examples of some of the most popularly used basis are :
(a) Territory
(b) Products.
3. Assignment of Duties It is necessary to allocate work to various employees. Once departments have been formed, each of them is placed under the charge of an individual, called departmental head (e.g., production manager, finance manager, marketing manager, etc.) Jobs are then allocated to the members of each department according to their skills and competencies.
4. Establishing Reporting Relationships Merely allocating work is not enough. Each individual should also know from whom he has to take orders and to whom he is accountable.
The establishment of such reporting relationships helps in coordination amongst various departments.
9. Organisation structure can be defined as a framework within which managerial and operating tasks are performed
• It specifies the relationship between people, work, and resources.
• It allows the correlation and coordination among human, physical and financial resources and the enables a business enterprises to accomplish desired goals.
10. Authority refers to the right of an individual to command his subordinate and to take action within the scope of his position.
• The concept of authority arises from establishing scalar chain. Which links the various jobs positions and level of an organisation.
• Authoring is needed to discharged a given responsibility
• Authority flows from top to bottom i.e. the superior has authority over the subordinate.
11. Elements of Delegation of Authority
Responsibility                   Authority                        Accountability
1. Responsibility

Responsibility is the obligation of a subordinate to carry out assigned activities to the best of his abilities. It arises from a superior-subordinate relationship because the subordinate is bound to perform the duty assigned to him by his
superior. Thus, responsibility flows upwards, i.e., as subordinate will always be responsible to his superior.
2. Authority
Authority is the sum of powers and rights of an individual to command his subordinates, to use financial, material and human resources as well as the right to take action within the scope of his position.
Authority is needed to discharge a given responsibility.
Authority flows from top to bottom, i.e., the superior has authority over the subordinate.
An important consideration to be kept in view with respect to both authority and responsibility is that when an employee is given responsibility for a job he must also be given the degree of authority necessary to carry it out. Thus, for effective delegation, the authority granted must be equal to the assigned responsibility.
• If authority granted is more than responsibility, it may lead to misuse of authority.
• On the other hand, if responsibility assigned is more than authority, it may make a person ineffective.
3. Accountability
Accountability implies being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot deny accountability.
It cannot be delegated and flows upwards, i.e., a subordinate will be accountable to a superior for satisfactory performance of work.
It indicates that the manager has to ensure the proper discharge of duties by his subordinates.
Conclusion :
• While authority is delegated, responsibility is assumed, accountability is imposed.
• Responsibility is derived from authority and accountability is derived from responsibility.
12. According to the principle of absolute responsibility. authority can be delegated but responsibility can’t be delegated by a manager. The manager remains responsible our accountable to his own superior for the tasks which he may assign to his subordinate. In other words, the manager can’t escape from responsibility for any default on the part of his subordinate. The process delegation does not relieve the manager of his own responsibility. Every superior is responsible for the acts of his subordinate to whom he delegates authority for any default in the part of his subordinate’ The process of delegation does not relieve the manager of his own responsibility Every superior is responsible for the acts of his subordinates to whom he delegates authority for any work. For example, if the foreman parts to get 100 units produced by the workers on any day, he is responsible to his superior. He can’t escape by saying that the workers were at fault. Similarly the manager remains responsible to his superior for the work he entrusted to his foreman he can’t escape from responsibility by passing on the blame to his foreman.
13. Centralization means concentration of al decision making functions at the apex of the management hierarchy decision making authority hies with the help of top level of management. Managers have less freedom action. It is suitable for small organisation.
14. Decentralization means the delegation of all decision making functions to the lower level of the hierarchy. Decision making authority is shared with lower levels of Management Mangers have more freedom of action. It is suitable for
large organisation.
Short Answer Type Questions
1. An informal system works in an informal organisation without any formalities.
a. An informal organisation originates from within the formal organisation as a result of personal interaction among employees.
b. The standards of behaviour evolve from group norms rather than officially laid down rules and regulations.
c. Independent channels of communication without specified direction of flow of information are developed by group members.
2. A functional structure is an organizational design that groups similar or related jobs together.
Managing Director
Personnel Marketing R & D Purchasing
• functional structure in formed by grouping together the entire work to be done into major functional department.
• All deptt are report to a coordinating head
• These dept may further be divide into sections.
3. The importance of organizing may be summarise as follows :-
(a) Benefits of specialization : The activities are grouped very carefully into specialized jobs on the basis of similarity. repetitive performance of a particular task leads to specialization.
(b) Clarity in working relationships : The jobs of managers and non managers are clearly defined & differentiated.
(c) Effective administration : Organising provides a clear description of a jobs and related duties. This helps to avoid confusion and duplication.
Clarity in working relationship enables proper execution of work. This brings effectiveness in administration.
(d) Source of support and security improves job satisfaction : Organising is a source of support, security and satisfaction to managers and employees in performing their assigned tasks. It recognizes the status levels of members; each one of the members enjoys a definite status and position in the organisation.
In a sound organisation every individual is assigned the job for which he is best suited. The assignment of right jobs to right persons improves job satisfaction among the employees.
(e) Optimum utilization of resources : A sound organisation helps In the optimum utilization of technological and human resources by avoiding duplication of work and overlapping of efforts.
(f) Adaptation of change : The process of organizing allows a business enterprise to adapt itself according to changes in the business environment. It allows the organisation structure to be suitably modified and the revision of interelationships amongst managerial levels to pave the way for a smooth running of the business.
(g) Development of personnel : Organising stimulates creativity amongst the managers. Effective delegation allows the managers to reduce their workload by assigning routine jobs to their subordinates. The reduction in workload by delegation gives them the time to explore areas for growth and opportunity to innovate, thereby strengthening the company’s competitive position.
(h) Expansion and growth : Organising helps in the growth and diversification of an enterprise. It allows a business enterprise to add more job positions, departments and even diversify their product lines.
Conclusion : Organising is a process by which the manager—
• brings order out of chaos,
• removes conflict among people over work or responsibility, and
• creates an environment suitable for teamwork.
4. In large diversified organizations, activities and personnel are grouped into a number of divisions on the basis of different products manufactured or geographical areas.
• Each unit or division has divisional manager responsible for performance and who has authority over the unit or the division.
• Each division is multi-functional because within each division functions like production, marketing, finance, purchase, etc., are performed together to achieve a common goal.
• Further, each division works as a profit center where the divisional head is responsible for the profit loss of his divisional.
For example, a large company may have divisions like cosmetics, garments, footwear, etc
CBSE_Class_12_Bussiness_Studies_Organising _Set_B_1
(i) Divisional structure is suitable for those business enterprises where a large variety of products are manufactured using different productive resources.
(ii) When an organisation grows and needs to add more employees, create more departments and introduce new levels of management, it will decide to adopt a divisional structure.
5. Demerits of Divisional structure
(i) Departmental conflicts : Conflict may arise among different divisions with reference to allocation of funds and further a particular division my seek to maximize its profits at the cost of other divisions.
(ii) Costly : It may lead to increase in costs since there may be a duplication of activities across products. Providing each division with separate set of similar functions increases expenditure.
(iii) Ignoring of organizational interests : It provides managers with the authority to supervise all activities related to a particular division. In course of time, such a manager may gain power and then he may ignore organizational interests.
.CBSE_Class_12_Bussiness_Studies_Organising _Set_B_2
CBSE_Class_12_Bussiness_Studies_Organising _Set_B_3
7. Functional structure is most suitable when
(i) the size of the organisation in large.
(iii) it has diversified activities.
(iii) operations require a high degree of specilisation.
8. Organising helps in specialization through division of work, departmentalization, assignment of duties & establishing reporting relationships.
9. Forma org. refers to the org. structure which is designed by the mgt. to achieve organizational goals.
10. Refer Ans. 10 (S.A.)
11. In division of work, the work is divided into small tasks. Same way in delegation, the manager divides some of his work & authority among his subordinates. No manager can perform all the functions himself. To get the work done efficiently and in a specialized manner, the manager divides the work among his subordinates according to their qualification & capability.
CBSE_Class_12_Bussiness_Studies_Organising _Set_B_4
CBSE_Class_12_Bussiness_Studies_Organising _Set_B_5
Ans. 13 Authority can be delegated but responsibility cannot. Delegation does not mean abdication. The manager shall still be accountable for the performance of assigned tasks. The manager cannot escape from the responsibility for any default or mistake on the part of his subordinates.
Thus irrespective of the extent of delegated authority, the manager shall still be accountable to the same extent as before delegation.
Ans. 14 Delegation of authority is necessary in all types of organizations. Reasons can be seen through the importance.
The importance of delegation of authority may be outlined as follows :
1. Reduced workload of managers : Delegation of authority permits a manager to share his workload with his subordinates. By passing on the routine work to the subordinates, the manager is able to concentrate on more important aspects of his subordinates and is able to concentrate on policy matters and decision-making. This would increase his effectiveness.
2. Effective management : The manager who delegates authority can perform much more than the one who does not. This is because the manager can get some work done by his subordinates and is able to concentrate on policy matters and decision-making. This would increase his effectiveness.
3. Motivation of employees : Delegation implies grant of authority to the subordinates along with responsibility for work. A result, subordinates have a sense of recognition. They are motivated to work for higher performance. They do their job to the best of their abilities and skills.
4. Employee development : As a result of delegation, employees get more opportunities to utilize their talent. It allows to develop those skills which will improve their career prospects. It makes them better leaders and decision makers. Thus, delegation helps by preparing better future managers.
5. Facilitates organizational growth : Delegation helps in the expansion of an organisation by providing a ready work force to take up leading positions in new ventures. Trained and experienced employees are able to play significant roles in the launch of new projects for organizational growth.
6. Quick decision-making : The subordinates are granted sufficient authority to take decisions. They need not go to their superiors again and again for taking decisions concerning the routine matters. This increases the speed of decision-making.
Long Answer Type Questions
Ans. 1. Refer Ans. 6 (S.A.)
Ans. 2. Refer Ans 12 (S A)
Ans. 3. Meaning of functional structure (Refer Ans 2 (SA)

1. Specialisation : A functional structure leads to occupational specialization since emphasis is placed on specific functions. this promotes efficiency in utilization of manpower as employee perform similar tasks within a department and are able to improve performance.
2. Efficiency : It helps in increasing managerial and operational efficiency and this results in increased profit.
3. Minimises costs : It leads to minimum duplication of efforst which results in economies of scale and thus lowers cost.
4. Better control and coordination : It promotes control and coordination within a department because of similarity in the tasks being performed.
i. Proper attention : It ensures that different functions get due attention.
5. Ease in training employees : In makes training of employees easier as the focus is only on a limited range of skills.

1. Functional empires : A functional structure places less emphasis on overall organizational objectives than the departmental objectives. Such practices may lead to functional empires wherin the importance of a particular function (or department) may be overemphasised.
2. Problems in coordination : Pursuing departmental interests at the cost of organizational interests can also hinder the interaction between two or more departments. It may lead to problems in coordination among different departments.
3. Conflict of interests : A conflict of interests may arise among departments when the interests of two or more departments are not compatible.
4. Inflexibility : It may lead to inflexibility as people with same skills and knowledge base may develop a narrow perspective and thus have difficulty in appreciating any other point of view.
Ans. 4. Refer Ans. 3 (SA)
Ans. 5. Refer Ans 10 (V.S.A.)



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