Organising Class 12 Notes Business Studies Chapter 5 - CBSE

Chapter: 5

What Are Organising ?

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    Organising is a process which starts implementation of plans by clarifying jobs and working relationships and optimum utilisation of resources for attainment of identified and desired goals.

    Steps of Organising Process

    • Identification and division of work
    • Departmentalisation
    • Assignment of duties
    • Establishing authority and reporting relationships

    Importance of Organising

    • Benefits of specialization
    • Clarity in working relationships
    • Adaptation to change
    • Effective administration
    • Development of personnel
    • Expansion and growth

    Thus, Organising is a process by which the manager brings order out of chaos, removes conflict among people over work or reponsibility sharing and creates an environment suitable for teamwork.

    Span Of Management

    The number of subordinates that can be effectively managed by a superior.

    Organisation Structure

    Organisation Structure is the outcome of the organising process. An effective structure will result in increased profitability of the enterprise. The need for an adequate organisation structure is felt by an enterprise whenever it grows in size or complexity.

    Types Of Organisational Structure

    • Functional Structure
    • Divisional Structure

    Functional Structure

    Under this structure jobs of similar nature are being grouped together and named as one function. It is  suitable for large organisations.


    • Specialisation
    • Coordination
    • Operational efficiency
    • Makes training easier
    • Higher focus


    • Deviation in interests
    • Conflicts
    • Lack of Coordination
    • Rigidity

    Divisional Structure

    An organizational structure which works as separate units or divisions and each division is accountable for its own job and must consider its own profit and loss. Divisional structure is suitable for those organisations which are producing a variety of products for performing diversified activities.


    • Product Specialisation
    • Accountability Flexibility Expansion
    • Prepare for future positions
    • Better Initiatives


    • Conflicts
    • Duplication of efforts
    • Misuse of power

    Formal Organisation

    Formal organisation designed by the management to accomplish a particular task. It specifies clearly the boundaries of authority and responsibility and here is a systematic coordination among the various activities to achieve organisational goals.


    • Easy to fix responsibility
    • No ambiguity in instructions
    • Unity of command is maintained
    • Accomplishment of organisational goals
    • Provide stability to organisations


    • Procedural delays
    • Poor Organisation Practices
    • Problem in understanding human relationships.

    Informal Organisation

    Informal organisation emerges from within the formal organization when people interact beyond their officially defined roles.


    • Quick communication
    • Faster feedback due to informal communications.
    • Fulfills social needs
    • Makes up for inadequacies of formal organisation.


    • Spreads rumours
    • Resistance to change
    • Pressurises members to conform to group expectations


    Delegation refers to the downward transfer of authority from a superior to a subordinate.

    Elements of Delegation

    • Authority: It refers to the right of an individual to command his or her subordinate and take action within the scope of his or her position.
    • Responsibility: Responsibility is the obligation of a subordinate to properly perform the duties assigned by the superior.
    • Accountability: Accountability means being answerable for the outcome of the assigned work.

    Importance Of Delegation

    • Effective management
    • Employee development
    • Motivation of employees
    • Facilitation of growth
    • Basis of management hierarchy
    • Better Coordination


    In centralisation, all powers and authority of decision-making is retained with the top level management.


    The power and decision-making authority are delegated or shared among all the levels of management and all departments.

    Importance Of Decentralisation

    • Develop Initiative among Subordinates
    • Develops managerial talent for the future
    • Quick decision making
    • Relief to Top Management
    • Facilitates Growth
    • Better Control