Business Studies I Chapter 5 Organizing

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

(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.

In order to complete the organising function of management, following steps are taken:

(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. For example, the various activities of a Mobile Phone manufacturing company can be like this:

(a) purchase of raw material, (b) purchase of manufactured parts, (c) production, (d) stocking of goods, (e) research, (f) advertisement, (g) sales, (h) financial arrangement, (i) maintenance of accounts, (j) correspondence, (k) arrangement of employees, etc. All these activities are different. Every activity is placed under the supervision of a separate manager. In this way, a person performs the same job time and again. Consequently, the benefit of specialisation becomes available.

(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. Similarly, advertisement and sales can be given to the marketing department and the financial arrangements, maintenance of accounts and correspondence can be put in the charge of finance department.

(iii) Assignment of Duties: At this stage, the responsibility of each individual or post is decided, e.g., the purchase manager will be given the task of purchasing goods, the sales manager will be given the work of sale of goods, the advertising manager will be given the work of advertisement and in the same way the finance manager will be given the responsibility of making financial arrangements. 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. Everybody should know who is his superior and who is his subordinate? For example, the purchase manager will be the superior for all the employees of the purchase department; they will receive orders from him and will also be responsible to him.

The importance of organising becomes clear with the help of the following points:

(i) Benefits of Specialisation: Under organising all the activities are sub-divided into various works or jobs. For all the sub-works, competent people are appointed who become experts by doing a particular job time and again. In this way, maximum work is accomplished in the minimum span of time and the organisation gets the benefit of specialisation.

(ii) Clarity in Working Relationship: Organising clarifies the working relations among employees. It specifies who is to report whom. Therefore, communication becomes effective. It also helps in fixing accountability.

(iii) Optimum Utilisation of Resources: Under the process of organising, the entire work is divided into various small activities. There is a different employee performing every job. By doing so, there is no possibility of any activity being left out or any possibility of unnecessary duplicating any job. Consequently, there is optimum utilisation of all the available resources (e.g., material, machine, financial, human resource, etc.) in the organisation.

(iv) Adaptation to Change: Organising process makes the organisation capable of adapting to any change connected with the post of the employees. This becomes possible only because of the fact that there is a clear scalar chain of authority for the managers right from the top to the lower level. Whenever, a managerial post falls vacant, it is immediately filled up by promotion. Since every subordinate is well aware of the working of his boss, there is no difficulty for his taking up the new post.

(v) Effective Administration: It has generally been observed that there is always a condition of doubt about the authority of the managers among themselves. The process of organising makes a clear mention of each and every activity of every manager and also of their extent of authority. It is also made clear as to whom shall a manager order for a particular job. Everybody also knows as to whom they are accountable. In this way, the confusion about authority is put to end. Consequently, effective administration becomes possible.

(vi) Development of Personnel: Under the process of organising, delegation of authority is practised. This is done not because of the limited capacity of any individual, but also to discover new techniques of work. It provides opportunities of taking decisions to the subordinates. By taking advantage of this situation, they try to find out the latest techniques and implement them. Consequently, it helps them to grow and develop.

(1) Organising

(2) They identified the following main activities which they have to perform.

(3) Steps in the process of organising:

(i) Identification and division of work

(ii) Departmentalisation

(iii) Assignment of duties

(iv) Establishing reporting relations

(i) Benefits of Specialisation: Under organising all the activities are sub-divided into various works or jobs. For all the sub-works, competent people are appointed who become experts by doing a particular job time and again. In this way, maximum work is accomplished in the minimum span of time and the organisation gets the benefit of specialisation.

(ii) Clarity in Working Relationship: Organising clarifies the working relations among employees. It specifies who is to report whom. Therefore, communication becomes effective. It also helps in fixing accountability.

(iii) Optimum Utilisation of Resources: Under the process of organising, the entire work is divided into various small activities. There is a different employee performing every job. By doing so, there is no possibility of any activity being left out or any possibility of unnecessary duplicating any job. Consequently, there is optimum utilisation of all the available resources (e.g., material, machine, financial, human resource, etc.) in the organisation.

(iv) Adaptation to Change: Organising process makes the organisation capable of adapting to any change connected with the post of the employees. This becomes possible only because of the fact that there is a clear scalar chain of authority for the managers right from the top to the lower level. Whenever, a managerial post falls vacant, it is immediately filled up by promotion. Since every subordinate is well aware of the working of his boss, there is no difficulty for his taking up the new post.

(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.

The word organisation is derived from the word ‘organism’ which means that a unit with many parts and each part of it, even though working independently, has a definite relationship with the main unit.
According to Haney, “Organisation is harmonious adjustment of specialised parts for the accomplishment of some common purpose or purposes”.

Organisation is treated as a structure of relationship. Under it, various posts are created and the mutual relationship of employees are defined. It is determined that who is the superior and who is the subordinate.

According to Haimann, “Organisation is the structural framework within which various efforts are coordinated and related to each other”.

Organisation is considered to be a machine of management. It is that machine in which no part can afford to be ill-fitting or non-functional. In other words, if the division of work is not done properly or posts are not created correctly, the whole system of management collapses.

It has generally been observed that there is always a condition of doubt about the authority of the managers among themselves. The process of organising makes a clear mention of each and every activity of every manager and also of their extent of authority. It is also made clear as to whom shall a manager order for a particular job. Everybody also knows as to whom they are accountable. In this way, the confusion about authority is put to end. Consequently, effective administration becomes possible.

It indicates about the importance of organisation.

It makes clear the activity of every employee and also of their extent of authority.

At this step, the activities of similar nature are assigned to a particular department.

Organising function of management.

Organising function of management.

Meaning: It refers to the organisation structure which is designed by the management to accomplish a particular task.

Features:

(i) It has Defined Inter-relationship: Formal organisation is a sort of arrangement which clearly defines mutual relationship. Everybody knows their authority and responsibilities. This clearly shows who will be reporting to whom.

(ii) It is Based on Rules and Procedures: It is important to observe all the pre-determined rules and procedures in the formal organisation. The objectives laid down under planning are thus achieved.

(iii) It is Deliberately Created: It is deliberately created in order to achieve the objectives of the organisation in an easy manner.

(iv) It is Impersonal: Under it, personal feelings are ignored and strict discipline is observed. It is not the person but the work that happens to be important.

(v) It is More Stable: Under this changes cannot be introduced because of the needs of individuals and their wishes. Therefore, it is more stable.

Advantages of Formal Organisation:

(i) Easy to Fix Accountability: Since the authority and responsibility of all the employees have been already fixed, inefficient employees can easily be apprehended and in this way their accountability can be fixed.

(ii) No Overlapping of Works: In the formal organisation, everything moves in an orderly manner. Therefore, there is no possibility of any work being left out or unnecessarily duplicated.

(iii) Unity of Command Possible: It is possible to observe the principles of unity of command in view of the presence of scalar chain of authority.

Limitations of Formal Organisation:

(i) Delay in Work: Every activity is bound by rules which causes unnecessary delay in the completion of work.

(ii) Lack of Initiative: In this organisation, the employees have to do what they are asked to do and they do not have a chance of some independent thinking. This, therefore, kills initiative.

(iii) Mechanisation of Relations: The relationship of all the people are defined. This leaves no chance of any mutual interplay and thus the knowledge of other people and their experience cannot be exploited.

Meaning: It refers to the organisation structure which is designed by the management to accomplish a particular task. Advantages of Formal Organisation:

(i) Easy to Fix Accountability: Since the authority and responsibility of all the employees have been already fixed, inefficient employees can easily be apprehended and in this way their accountability can be fixed.

(ii) No Overlapping of Works: In the formal organisation, everything moves in an orderly manner. Therefore, there is no possibility of any work being left out or unnecessarily duplicated.

(iii) Unity of Command Possible: It is possible to observe the principles of unity of command in view of the presence of scalar chain of authority.

(iv) Easy to Get Goals: Under the formal organisation, it is easy to achieve the goals of the organisation because there is an optimum use of all the material and human resources.

(v) Stability in Organisation: All the people work by observing rules and remain confined within the domain of their authority. This leads to the establishment of good relationship which in turn leads to stability to the organisation.

Formal organisation.

Formal organisation.

 Formal organisation.

Under it every activity is bounded by rules which causes unnecessary delay in work.

Meaning: It refers to the natural groupings of people in the work situation to meet personal needs.

Features:

(i) Based on Formal Organisation: This is based on formal organisation where people also have informal relations. (It means first of all the formal organisation is established and then informal organisation is created out of it.)

(ii) It has no Written Rules and Procedures: In this organisation, there are no written rules and procedures to govern inter-relationship. But there are group norms which have to be observed.

(iii) Independent Channels of Communication: In this organisation relations among different people are not defined because a person at the lowest rank can have direct contact with the person at the highest level. The flow of communication cannot be specified.

(iv) It is not Deliberately Created: Informal organisation is not deliberately created. It emerges out of mutual relationship and tastes.

(v) It has no Place on Organisation Chart: Informal organisation has no place on the properly prepared organisation chart. Moreover, there is no information about it even in the organisation manual.

Advantages of Informal Organisation: Following are the advantages of Informal Organisation:

(i) Effective Communication: In the absence of any definite course, it is an effective system of communication. Messages can be quickly conveyed from one place to another with the help of this system.

(ii) Fulfills Social Needs: In the informal organisation, people having similarity of thoughts and ideas form a group of their own. All the people in the group stand by one another in all the organisational or personal matters.

(iii) Fulfills Organisational Objectives: In the informal organisation, the subordinates put their ideas before the superiors without any fear or hesitation. It helps the superiors to understand their difficulties and immediate solution of the problem is sought out. Since the problems are easily solved it becomes easier to achieve the objectives of the organisation.

Limitations of Informal Organisation: Following are the limitations of Informed Organisation:

(i) It creates Rumours: All the persons in an informal organisation talk carelessly and sometimes a wrong thing is conveyed to the other person which may bring in horrible results.

(ii) It resists Change: This organisation resists change and lays stress on adopting the old techniques.

(iii) Pressure of Group Norms: In this organisation, people are under pressure to observe group norms. Sometimes the people assembled in informal group lose sight of their objective and all decide to oppose their superiors unanimously. Such a situation adversely affects productivity.

An informal organisation is that organisation which is not established deliberately but comes into existence because of common interests, tastes, and religious and communed relations. For example, in a formal organisation a supervisor in a purchase department consults only the manager of his department regarding all his problems connected with his activities, but in an informal organisation any manager of any department or supervisor can be consulted. Not only this, a supervisor can talk directly to the general manager. Thus, it is clear that in an informal organisation no stringent rules or procedures are to be followed but it is completely based on mutual goodwill.

It is an informal organisation. The main features of it are the following:

(i) Based on Formal Organisation: This is based on formal organisation where people also have informal relations. (It means first of all the formal organisation is established and then informal organisation is created out of it.)

(ii) It has no Written Rules and Procedures: In this organisation, there are no written rules and procedures to govern inter-relationship. But there are group norms which have to be observed.

(iii) Independent Channels of Communication: In this organisation relations among different people are not defined because a person at the lowest rank can have direct contact with the person at the highest level. The flow of communication cannot be specified.

Formal organisation.

Informal organisation.

 It emerges out of mutual relations and tastes.

Organisation chart is a drawing which shows the relationship among the various posts established in the organisation.

In the organisation manual the authorities and responsibilities of various posts established in the organisation are explained. It also gives other relevant details.

Informal organisation.

No doubt, formal organisation is helpful in attaining the objectives of the enterprise very easily but it has its limitations as well. On the other hand, the informal organisation is not less important if used properly. This can be made clear through the help of limitations of formal organisation and advantages of informal organisation.
Limitations of Formal Organisation:

(i) Delay in Work: Every activity is bound by rules which causes unnecessary delay in the completion of work.

(ii) Lack of Initiative: In this organisation, the employees have to do what they are asked to do and they do not have a chance of some independent thinking. This, therefore, kills initiative.

(iii) Mechanisation of Relations: The relationship of all the people are defined. This leaves no chance of any mutual interplay and thus the knowledge of other people and their experience cannot be exploited.
Advantages of Informal Organisation:
Following are the advantages of Informal Organisation:
(i) Effective Communication: In the absence of any definite course, it is an effective system of communication. Messages can be quickly conveyed from one place to another with the help of this system.

(ii) Fulfills Social Needs: In the informal organisation, people having similarity of thoughts and ideas form a group of their own. All the people in the group stand by one another in all the organisational or personal matters.

(iii) Fulfills Organisational Objectives: In the informal organisation, the subordinates put their ideas before the superiors without any fear or hesitation. It helps the superiors to understand their difficulties and immediate solution of the problem is sought out. Since the problems are easily solved it becomes easier to achieve the objectives of the organisation.
Hence, it will be appropriate to say that the attitude of management towards informal organisation should be positive.

Yes, I do agree with this statement. It can be clarified with the help of advantages of informal organisation and limitations of formal organisation.
Advantages of Informal Organisation:

(i) Effective Communication: In the absence of any definite course, it is an effective system of communication. Messages can be quickly conveyed from one place to another with the help of this system.

(ii) Fulfills Social Needs: In the informal organisation, people having similarity of thoughts and ideas form a group of their own. All the people in the group stand by one another in all the organisational or personal matters.

(iii) Fulfills Organisational Objectives: In the informal organisation, the subordinates put their ideas before the superiors without any fear or hesitation. It helps the superiors to understand their difficulties and immediate solution of the problem is sought out. Since the problems are easily solved it becomes easier to achieve the objectives of the organisation.

Limitations of Formal Organisation:

(i) Delay in Work: Every activity is bound by rules which causes unnecessary delay in the completion of work.

(ii) Lack of Initiative: In this organisation, the employees have to do what they are asked to do and they do not have a chance of some independent thinking. This, therefore, kills initiative.

(iii) Mechanisation of Relations: The relationship of all the people are defined. This leaves no chance of any mutual interplay and thus the knowledge of other people and their experience cannot be exploited.
Hence, it can be said that informal organisation is better than formal organisation.

Difference between Formal and Informal Organisations:

Formal organisation is impersonal: Under it, personal feelings are ignored and strict discipline is observed. It is not the person but the work that happens to be important.
Informal organisation is personal: It is being personal means that under this the feelings of individuals are kept in mind and nothing is imposed upon them.

Organising as a Process: Organising as a process refers to identifying and grouping the work to be performed, delegating authority and responsibility and establishing mutual relationship for the purpose of accomplishing objectives.

Organising as a Structure: Organising as a structure refers to that framework within which all managerial and non-managerial tasks are performed.

The need for a framework is felt by an organisation whenever the size of its activities increases. In case of large sized organisation, it is difficult to coordinate all the activities. Hence, it becomes inevitable to think over the matter that the organisation can run smoothly and face the dynamic environment boldly. Such thinking gives rise to a framework, namely, the ‘organisation structure’. The organisation structure creates harmonious adjustment of various parts to accomplish desired goals.

According to Hurley, “Organisation structures are patterns of relationship among the various positions in a firm and among the various people occupying the positions.”

The need for a framework is felt by an organisation whenever the size of its activities increases. In case of large sized organisation, it is difficult to coordinate all the activities. Hence, it becomes inevitable to think over the matter that the organisation can run smoothly and face the dynamic environment boldly. Such thinking gives rise to a framework, namely, the ‘organisation structure’. The organisation structure creates harmonious adjustment of various parts to accomplish desired goals.

It refers to the outcome of organising process.

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.

Because of different nature of all the organisations.

It refers to that number of employees on whom a supervisor can successfully put his control.

Meaning of Functional Organisation: To divide the whole enterprise according to the major functions (such as production, marketing, finance, personnel, etc.) to be performed by it, is known as functional organisation structure.

Advantages of Functional Organisation: The following are the advantages of functional organisation structure:

(i) Benefits of Specialisation: The whole company is divided into many departments on the basis of major activities to be performed. Each department is headed by an expert manager. This results in more and better work being accomplished in much lesser time. Hence, the benefits of specialisation become available.

(ii) Coordination is Established: All the persons working within a department are specialists of their respective jobs. It makes the coordination easier at department level.

Limitations of Functional Organisation: The following are the limitations of functional organisation structure:

(i) Ignorance of Organisational Objectives: Each departmental head works according to his sweet will. They always give more weight to their departmental objectives. Hence, overall organisational objectives suffer. For example, to establish its image, the production department may produce quality product ignoring the fact that market trend is of accepting medium quality product.

(ii) Difficulty in Inter-departmental Coordination: All departmental heads may work as per their own wish. No doubt this facilitates coordination within the department but it makes inter-departmental coordination difficult.

Meaning: Functional structure refers to the division of whole organisation according to major functions to be performed by it.

Advantages of Functional Structure:

(i) Benefits of Specialisation: The whole company is divided into many departments on the basis of major activities to be performed. Each department is headed by an expert manager. This results in more and better work being accomplished in much lesser time. Hence, the benefits of specialisation become available.

(ii) Coordination is Established: All the persons working within a department are specialists of their respective jobs. It makes the coordination easier at department level.

(iii) Managerial Efficiency is Increased: It helps in increasing managerial efficiency because of performing the same work once and again. Further, this results in increased profit.

(iv) Minimal Duplication of Efforts: In this type of organisation unnecessary duplication of efforts is eliminated. For example, the function of finance is only carried out by the finance department. There is no need to establish two or more departments. It makes it possible to utilise the human and other resources effectively.

(v) Training is Facilitated: It facilities the training of personnel as the focus is only on a limited range of skills. For example, the employees of finance department are given training of financial issues.

Functional organisational structure is most suitable for such type of company.

Advantages of Functional Organisation: Following are the main advantages of it:

(i) Benefits of Specialisation: The whole company is divided into many departments on the basis of major activities to be performed. Each department is headed by an expert manager. This results in more and better work being accomplished in much lesser time. Hence, the benefits of specialisation become available.

(ii) Coordination is Established: All the persons working within a department are specialists of their respective jobs. It makes the coordination easier at department level.

(iii) Managerial Efficiency is Increased: It helps in increasing managerial efficiency because of performing the same work once and again. Further, this results in increased profit.

Sahil Ltd. is following the functional organisation structure.
Advantages of Functional Organisation Structure: Following are the advantages of it:
(i) Benefits of Specialisation: The whole company is divided into many departments on the basis of major activities to be performed. Each department is headed by an expert manager. This results in more and better work being accomplished in much lesser time. Hence, the benefits of specialisation become available.

(ii) Coordination is Established: All the persons working within a department are specialists of their respective jobs. It makes the coordination easier at department level.

(iii) Managerial Efficiency is Increased: It helps in increasing managerial efficiency because of performing the same work once and again. Further, this results in increased profit.

Functional organisational structure is most suitable for such type of company. Following are the reasons of it:

(i) Benefits of Specialisation: The whole company is divided into many departments on the basis of major activities to be performed. Each department is headed by an expert manager. This results in more and better work being accomplished in much lesser time. Hence, the benefits of specialisation become available.

(ii) Coordination is Established: All the persons working within a department are specialists of their respective jobs. It makes the coordination easier at department level.

The following are the disadvantages or limitations of functional organisation structure:

(i) Ignorance of Organisational Objectives: Each departmental head works according to his sweet will. They always give more weight to their departmental objectives. Hence, overall organisational objectives suffer. For example, to establish its image, the production department may produce quality product ignoring the fact that market trend is of accepting medium quality product.

(ii) Difficulty in Inter-departmental Coordination: All departmental heads may work as per their own wish. No doubt this facilitates coordination within the department but it makes inter-departmental coordination difficult.

(iii) Individual Ego Leads to Conflicts: Every departmental head wants to become a functional empire. To satisfy their ego each demands maximum resources for their department. This situation leads to conflicts among the various departmental heads.

(iv) Hurdle in Complete Development: This system is a hurdle in the way of the complete development of the employees. Each employee specialises only in a small part of the whole job.

For this company functional organisation structure will be more appropriate. It has the following advantages:

(i) Benefits of Specialisation: The whole company is divided into many departments on the basis of major activities to be performed. Each department is headed by an expert manager. This results in more and better work being accomplished in much lesser time. Hence, the benefits of specialisation become available.

(ii) Coordination is Established: All the persons working within a department are specialists of their respective jobs. It makes the coordination easier at department level.

(iii) Managerial Efficiency is Increased: It helps in increasing managerial efficiency because of performing the same work once and again. Further, this results in increased profit.

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.

It is the limitation of functional organisation structure.

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.

Dividing the whole enterprise according to the major products to be manufactured is known as divisional organisation structure. This type of organisation structure is most suitable for multi-product companies as it provides equal importance to all products. Except this, it is beneficial for multi-product companies in the following ways:

(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.

(iii) Quick Decision-making: Every division is independent in itself. The divisional manager can take any decision regarding his division independently without consulting other divisional managers. Hence, decisions are quick and effective.

(iv) Easy Expansion: For every product a separate division is opened. If a company wants to introduce a new product, it can be introduced easily without disturbing the existing divisions. Hence, it is easy to expand the concern.

In this situation, divisional organisation structure will be suitable as it provides equal importance to all products. Except this, it is beneficial in the following ways:
(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.

(iii) Quick Decision-making: Every division is independent in itself. The divisional manager can take any decision regarding his division independently without consulting other divisional managers. Hence, decisions are quick and effective.

(iv) Easy Expansion: For every product a separate division is opened. If a company wants to introduce a new product, it can be introduced easily without disturbing the existing divisions. Hence, it is easy to expand the concern.

(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.

(iii) Selfish Attitude: Every division tries to display better performance sometimes even at the cost of other divisions. This shows their selfish attitude. Consequently, it hits the interest of the concern as a whole.

The divisional organisation structure is suitable in the following situations:

(i) where the number of main products is more than one;

(ii) where different manufacturing technologies and marketing methods are required and;

(iii) where the size of the concern is large enough.

To provide equal weightage to all products is the main case of adopting it.

Meaning: Delegation of authority is the process of entrusting responsibility and authority, and creating accountability of the person to whom work or responsibility has been handed over.

Process: The three elements, i.e., responsibility, authority and accountability of delegation process are completed in the following serial order: Assigning Responsibility → Granting Authority → Fixing Accountability

(i) Assigning Responsibility: The first step in the delegation process is assigning responsibility. Often, no officer is capable to the extent that he can perform all activities on his own. For his successful work performance he divides the whole job. In this way, he keeps critical/crucial/significant jobs for himself and delegates the rest to his subordinates. While assigning job/responsibility to the subordinates, their capability and skill are kept in mind. For example, a finance manager keeps the job of financing for himself and delegates rest of the jobs like-Accounting, Data Collection, etc. to his subordinates.

(ii) Granting Authority: The second step in the delegation process is granting authority for successful work performance. Assigning responsibility without authority to the subordinates is meaningless. Thus, all needed authorities should be delegated for the fulfilment of a responsibility. For example, when a chief manager delegates responsibility of Purchase Department to the Purchase Manager, then he gives authority to the purchase manager like purchasing raw-material, stocking inventory, division of work among his subordinates, etc.

(iii) Fixing Accountability: The last step in the delegation process is to hold subordinates accountable for their work performance. Every subordinate is just accountable to that officer who delegates authority for the fulfilment of job/responsibility. Accountability means, justification demanded by the superior for the work performance.

The three elements of Delegation of Authority, i.e., Responsibility, Authority and Accountability are as follows:

(i) Responsibility: Responsibility is the obligation of a subordinate to properly perform the assigned duty. When a superior assigns a job to his subordinate, it becomes the responsibility of the subordinate to complete that job. This means that the word responsibility comes into play only after the job has been assigned. Thus, to assign job can be called to assign responsibility.

Features:

(a) Responsibility can be assigned to some other person.

(b) The essence of responsibility is to be dutiful.

(ii) Authority: Authority means the power to take decisions. Decision can be related to the use of resources, and to do or not to do something.

Features:

(a) Authority can be assigned (delegated) to some other person.

(b) It is related to the post (with the change of post, even authorities change).

(iii) Accountability: Accountability means the answerability of the subordinate to his superior for his work performance.

Features:

(a) Accountability cannot be delegated to some other person.

(b) It is only towards the delegators.

The three elements of Delegation of Authority, i. e., Responsibility, Authority and Accountability are as follows:

(i) Responsibility: Responsibility is the obligation of a subordinate to properly perform the assigned duty. When a superior assigns a job to his subordinate, it becomes the responsibility of the subordinate to complete that job. This means that the word responsibility comes into play only after the job has been assigned. Thus, to assign job can be called to assign responsibility.

Features:

(a) Responsibility can be assigned to some other person.

(b) The essence of responsibility is to be dutiful.

(ii) Authority: Authority means the power to take decisions. Decision can be related to the use of resources, and to do or not to do something.

Features:

(a) Authority can be assigned (delegated) to some other person.

(b) It is related to the post (with the change of post, even authorities change).

(iii) Accountability: Accountability means the answerability of the subordinate to his superior for his work performance.

Features:

(a) Accountability cannot be delegated to some other person.

(b) It is only towards the delegators.

Delegation of Authority: Delegation of authority means to provide for needed authorities to the subordinates for the successful completion of their job or responsibility. Authority means the power to take decisions. Accountability originates when authority is given for fulfilling a responsibility. Accountability refers to answerability of a subordinate towards his senior officer for work performance.

Division of Labour: Often, no officer is capable to the extent that he himself will perform all the activities. For the successful completion of a job an officer divides the whole work. Thus, work is divided into many small jobs and each job is then assigned to a particular person. This whole process is known as division of labour. Its basis is specialisation.

Conclusion: Authority comes into picture after division of labour. Without assigning duties, authority is non-existent. Thus, it can be said that delegation of authority is based on division of labour.

Meaning: The basic principle of delegation of authority is the principle of ‘Absoluteness of responsibility’ (here by responsibility we mean Responsibility to/Ultimate Responsibility/ Accountability). As per this principle, authority can be delegated but accountability is absolute and cannot be delegated. The person who delegates authority remains accountable to his own boss for the work performance of his subordinates.

Example: A Chief Manager assigns jobs to a Departmental Manager who in turn assigns it to his subordinate. Departmental manager along with assigning the job, will also delegate authority but this will not terminate his accountability. He will always be answerable to his boss for the work-performance of his subordinates. On the basis of this, there would be no anomaly to say that just authority can be delegated but not accountability. Thus, accountability is always of the person who delegates authority.

No, I do not agree with the viewpoint of manager.

Here the principle of ‘absoluteness of responsibility’ will apply (By responsibility we mean Responsibility to/Ultimate Responsibility/Accountability). As per this principle, authority can be delegated but accountability is absolute and cannot be delegated. The person who delegates authority remains accountable to his own boss for the work he has delegated to his subordinate. In brief, it can be said that the process of delegation of authority does not relieve the manager of his own accountability.

Authority means the power to take decision. This has to be delegated to the person to whom work is assigned. It means authority can be delegated.

There are two meanings of ‘Responsibility’, i.e.. Responsibility for and Responsibility to. (The ‘Responsibility to’ is also known as Accountability). The ‘Responsibility for’ can be delegated but ‘Responsibility to’ is absolute and can never be delegated. In the statement given in the question, the meaning of responsibility is ‘responsibility to’ that cannot be delegated. It means the person who delegates authority remains accountable to his own boss for the work performance of his subordinate.

A noteworthy question arises in the context of accountability that whether an officer by delegating authority can eschew from accountability or ultimate responsibility? Thus, is he not accountable to his senior officers for the work performance of his subordinates once he has delegated authority? All these questions will be answered in ‘No’ because only authority can be delegated and not the accountability.

For example, a Chief Manager assigns jobs to a Departmental Manager who in turn assigns it to his subordinate. Departmental manager along with assigning the job, will also delegate authority but this will not terminate his accountability. He will always be answerable to his boss for the work-performance of his subordinates. On the basis of this, there would be no anomaly to say that just authority can be delegated but not accountability. Thus, accountability is always of the person who delegates authority.

Yes, he can take the help of ‘delegation of authority’.

The three things that a manager should keep in mind are the following:

(i) Responsibility: While assigning job or responsibility to the subordinates, their capability and skill are kept in mind,

(ii) Authority: All needed authorities should be delegated for the fulfillment of a responsibility.

(iii) Accountability: A proper method to measure the work should be decided so that the accountability can be fixed easily.

It is very right to say that a manager can extend his capacity through the process of delegation of authority. During this process, a manager divides his work among the subordinates. To complete the work successfully the manager also gives sufficient authorities to them. Therefore, he gets himself free from many routine works. Consequently, he finds sufficient time to deal with the major problems. Now, a manager can do more work than before. In other words, it can be said that through delegation of authority a manager multiplies himself.

Yes, the marketing manager is responsible for it.

Here the principle of ‘absoluteness of responsibility’ will apply (By responsibility we mean Responsibility to/Ultimate Responsibility/Accountability). As per this principle, authority can be delegated but accountability is absolute and cannot be delegated. The person who delegates authority remains accountable to his own boss for the work he has delegated to his subordinate. In brief, it can be said that the process of delegation of authority does not relieve the manager of his own accountability.

Delegation of authority is an important part of the organising. Its need is felt when due to excessive workload on a manager, he is unable to perform all jobs independently. According to F.G. Moore, “Delegation of authority means assigning work to others and giving them authority to do it”.

When an officer assigns some work to his subordinate, he also gives necessary authority to perform the work. After getting the authority it becomes the responsibility of the subordinate to complete it. And at the same time he is accountable to his superior for his performance. Thus, accountability and authority are related to each other.

‘Responsibility for’ means obligation of a subordinate to complete the assigned job.

‘Responsibility to’ means accountability of a subordinate for his work performance in relation to the authority given to him.

It refers to power to take decision.

 Its essence is to get decisions implemented.

‘Responsibility for’ can be delegated.

‘Responsibility to’ cannot be delegated.

No, it cannot be delegated.

Division of Labour.

(a) Assigning responsibility (b) Granting authority.

The importance of delegation of authority is clarified through the following facts:

(i) Effective Management: Effectiveness means successful accomplishment of an objective. Delegation of authority reduces the workload of a manager. Managers who practice delegation of authority are definitely better decision makers than those managers who do not delegate authority. The former ones get the benefit of the skills of their subordinates.

(ii) Employee Development: The mental growth of a person takes place only when he has authority to take decisions. The process of delegation of authority provides authority to take decisions to subordinates. With the given authority, managers take decisions contingent to the situations. As a result, in future they become more able to take extra responsibility.

(iii) Motivation of Employees: In the process of delegation of authority, both authority and responsibility are delegated to the subordinates. This situation provides liberty to work and take decisions on part of subordinates. Gaining through this, they exhibit their talent and skill. With better performance the subordinates create a niche for themselves in the organisation. Consequently, they get job satisfaction and feel motivated to perform ever better.

(iv) Facilitation of Growth: Delegation of authority does not only develop only one person or division but facilitates the development of organisation as a whole. As adequate number of able employees are available in an organisation to take decisions Expansion, Modernisation and Diversification of a business can be done with full confidence.

(v) Basis of Management Hierarchy: Management hierarchy is inevitable to run a business organisation successfully. Only because of this hierarchy, the superiors and subordinates come in contact with each other and get an opportunity to understand one another. This hierarchy is established through the process of delegation of authority. Under this, authority flows from top level to the bottom level. As a result, senior and subordinate links are established from top to bottom.

(vi) Better Coordination: Delegation of authority is a process to establish relation among responsibility, authority and accountability. Through this, employees get clarification with regard to their powers, duties and accountability for work performance. Thus, a clear picture is delineated for all the jobs performed at various levels, which automatically establishes better coordination.

The importance of delegation of authority is clarified through the following facts:

(i) Effective Management: Effectiveness means successful accomplishment of an objective. Delegation of authority reduces the workload of a manager. Managers who practice delegation of authority are definitely better decision makers than those managers who do not delegate authority. The former ones get the benefit of the skills of their subordinates.

(ii) Employee Development: The mental growth of a person takes place only when he has authority to take decisions. The process of delegation of authority provides authority to take decisions to subordinates. With the given authority, managers take decisions contingent to the situations. As a result, in future they become more able to take extra responsibility.

(iii) Motivation of Employees: In the process of delegation of authority, both authority and responsibility are delegated to the subordinates. This situation provides liberty to work and take decisions on part of subordinates. Gaining through this, they exhibit their talent and skill. With better performance the subordinates create a niche for themselves in the organisation. Consequently, they get job satisfaction and feel motivated to perform ever better.

(iv) Facilitation of Growth: Delegation of authority does not only develop only one person or division but facilitates the development of organisation as a whole. As adequate number of able employees are available in an organisation to take decisions Expansion, Modernisation and Diversification of a business can be done with full confidence.

Because it reduces the workload of a manager.

Because it provides the authority to take decision to subordinates.

By exhibiting their talent and skill.

It refers to deal in the business of many products instead of a single product.

Following are the main points which highlight the importance of decentralisation:

(i) Develops Initiative among Subordinates: Under decentralisation, authorities are delegated in large amount. Authority is a kind of power which compels a person to think/contemplate or to do something new. This inculcates in him the ability to take initiative. Decentralisation not only gives authority but also makes it possible to convert great ideas into valuable creative work.

(ii) Develops Managerial Talent for Future: Under decentralisation, decision making authority is given even to the lower level managers. In this way, by getting opportunities to take decisions, knowledge and experience of all levels of managers increases. This develops talent in the managers to bear extra responsibility in the future.

(iii) Quick Decision Making: The burden of all managerial decisions is no more confined to some limited people but is distributed among many people. This not only leads to quick decision making but also results in better decision making. All the people are well aware of the problems faced by their unit or division and for this reason they are capable of taking the best possible and quick decisions.

(iv) Relief to Top Management: Under decentralisation authority related to take monotonous decisions is delegated to the subordinates. As a result, top management relieves itself from trivial affairs and consequently the workload is quite reduced. This saves their valuable time which is then utilized to brighten the future of the organisation and to establish coordination.

(v) Facilitates Growth: Under decentralisation full liberty is given to the subordinates to take decisions. This situation inculcates a sense of responsibility among the subordinates. Thus, they make effort to achieve/show better results. This thinking gives origin to departmental competitiveness. In such a situation, everybody tries to perform better than the other. As a result, development of an organisation is made possible.

(vi) Better Control: Decentralisation helps to decisively evaluate the work performance at all levels and even makes possible to fix accountability. Contribution of every department for the attainment of an objective can be ascertained. This situation is just like a challenge for every department. Management adopts a good controlling policy to face this challenge.

The relationship between decentralisation and delegation can be clarified in the following way: Example: If CEO delegates some authority to a divisional manager then this is called delegation of authority. If divisional manager delegates his authority further to his subordinate this will be called decentralisation. If the same process is repeated for two divisions then expansion of decentralisation takes place. If this process is implemented on the organisation as a whole then decentralisation will be at its peak.

Decentralization is an expansion of delegation of authority. Eg- if a chief manager of a company assigns a job to the production manager for appointing employees needed for his division on salary then this will be turned as a delegation of authority. On the contrary, if this authority for appointing employees is delegated to every departmental head then it will be termed as decentralization.

In the light of this statement it can be said that decentralisation results in the multiplication by many because of the following points of its importance:

(i) Develops Initiative among Subordinates: Under decentralisation, authorities are delegated in large amount. Authority is a kind of power which compels a person to think/contemplate or to do something new. This inculcates in him the ability to take initiative. Decentralisation not only gives authority but also makes it possible to convert great ideas into valuable creative work.

(ii) Develops Managerial Talent for Future: Under decentralisation, decision making authority is given even to the lower level managers. In this way, by getting opportunities to take decisions, knowledge and experience of all levels of managers increases. This develops talent in the managers to bear extra responsibility in the future.

(iii) Quick Decision Making: The burden of all managerial decisions is no more confined to some limited people but is distributed among many people. This not only leads to quick decision making but also results in better decision making. All the people are well aware of the problems faced by their unit or division and for this reason they are capable of taking the best possible and quick decisions.

(iv) Relief to Top Management: Under decentralisation authority related to take monotonous decisions is delegated to the subordinates. As a result, top management relieves itself from trivial affairs and consequently the workload is quite reduced. This saves their valuable time which is then utilized to brighten the future of the organisation and to establish coordination.

Decentralisation means leaving only those authorities which need to be reserved for top level, rest all are delegated permanently to the subordinates. Decentralisation is an expansion of delegation of authority. Under decentralisation number of decision taking point increases because authority is delegated to middle level and lower level managers to take significant/ momentous/important decisions.

Following are the salient characteristics of decentralisation:

(i) It is an expanded version of delegation of authority.

(ii) It increases the significance of the role of subordinates.

(iii) It is a process which is applicable to the organisation as a whole.

Let us assume that a Chief Manager of a company assigns a job/responsibility to the Production Manager for appointing employees needed for his Division on salary less than? 10,000 then this will be turned as delegation of authority. On the contrary, if this authority for appointing employees is delegated to every departmental head then it will be termed as decentralisation. If, departmental heads further delegate this authority to their deputy managers, it will lead to the expansion of decentralisation. In this context, it can be said that if we delegate the authority, we multiply it by two; if we decentralise it, we multiply it by many.

Decentralisation.

It is about the importance of decentralisation.

(a) Quick decision making (b) Better control.

(i) Women Empowerment.

(ii) Promotion of equality.

(iii) Making handicapped people independent.

(iv) Increase of job opportunity with production.

(i) Ignorance of democratic values. 
(ii) Promotion of casteism.

(iii) Violation of secularism.
(iv) Narrow mindedness.

(v) Non-consideration of abilities.

(i) Wastage of time and resources. 
(ii) Frustration in employees.

(i) Fearful environment will decrease production.

(ii) Increased feeling of insecurity.

(iii) Pressure will create stress among employees.

(iv) Delay in work.

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

Advantages of a Formal organisation are the following:
1) It is easier to fix responsibility since mutual relationships are clearly defined.
2) There is no ambiguity in the role that each member has to play as duties are specified. This also helps in avoiding duplication of effort.
3) Unity of command is maintained through an established chain of command.

The most suitable organisation structure for Fast Moving Consumer Goods is Divisional Structure.

(ii) Advantages of a divisional structure are:
(a) It promotes flexibility and initiative 
(b) It facilitates expansion and growth 
(c) Divisional heads are accountable for profits.

Authority refers to the right of an individual to command his subordinates and to take action within the scope of his position. Authority also refers the right to take decision-related to management and tell people what to do and what not to.

In a formal organisation, there is no ambiguity in the role that each member has to play as duties are specified. This also helps in avoiding duplication of effort.

The organising process involves the following steps:
1) Defining the objectives: It is the first step in developing organisation structure.
2) Determining activities: In order to achieve the objectives, various activities are to be identified and enumerated.
3) Grouping of activities: The entire activities are to be grouped on the basis of functions, products, customers etc.
4) Assigning duties: The individual groups of activities are then allotted to different individuals on the basis of their ability and aptitude.
5) Delegation of authority: After allotting jobs, he is given the necessary authority to perform the task efficiently.
6) Co-ordinating activities: The activities and efforts of different persons are to be co-ordinated properly for effective performance.
7) Provision of physical facilities and good environment: Physical facilities light, recreation, rest room etc. should be provided in addition to good working environment.
8) Establishment of structural relationship: A clear-cut structural relationship should be established among individuals and groups for the success of enterprise.

The following points highlight the crucial role that organising plays in any business enterprise:
(i) Benefits of specialisation: One of the important role of Organising is, it leads specialisation. By systematic allocation of jobs amongst the work force, it reduces the workload as well as enhances productivity because of the specific workers performing a specific job on a regular basis. Repetitive performance of a particular task allows a worker to gain experience in that area and leads to specialisation.
(ii) Clarity in working relationships: By establishing the line of communication and specifying who to report to whom it clarifies working relationship. This removes confusion in transfer of information and instructions. It helps in creating a hierarchical order thereby enabling the fixation of responsibility.
(iii) Optimum utilization of resources: Resources are scarce. And thus it should be used wisely and judiciously. By proper assignment of jobs, overlapping and duplication of work can be minimised and thereby Organising leads to the best usage of all material, financial and human resources.
(iv) Adaptation to change: The process of organising allows a business enterprise to accommodate changes in the business environment. It allows the organisation structure to be suitably modified and the relationship between various departments and position smoother.

The organising process involves the following steps:
1) Defining the objectives: It is the first step in developing organisation structure.
2) Determining activities: In order to achieve the objectives, various activities are to be identified and enumerated.
3) Grouping of activities: The entire activities are to be grouped on the basis of functions, products, customers etc.
4) Assigning duties: The individual groups of activities are then allotted to different individuals on the basis of their ability and aptitude.
5) Delegation of authority: After allotting jobs, he is given the necessary authority to perform the task efficiently.
6) Co-ordinating activities: The activities and efforts of different persons are to be coordinated properly for effective performance.
7) Provision of physical facilities and good environment: Physical facilities light, recreation, rest room etc. should be provided in addition to good working environment.
8) Establishment of structural relationship: A clear-cut structural relationship should be established among individuals and groups for the success of enterprise.

The organising process involve the following steps:
1) Defining the objectives: It is the first step in developing organisation structure.
2) Determining activities: In order to achieve the objectives, various activities are to be identified and enumerated.
3) Grouping of activities: The entire activities are to be grouped on the basis of functions, products, customers etc.
4) Assigning duties: The individual groups of activities are then allotted to different individuals on the basis of their ability and aptitude.
5) Delegation of authority: After allotting jobs, he is given the necessary authority to perform the task efficiently.
6) Co-ordinating activities: The activities and efforts of different persons are to be coordinated properly for effective performance.
7) Provision of physical facilities and good environment: Physical facilities light, recreation, rest room etc. should be provided in addition to good working environment.
8) Establishment of structural relationship: A clear cut structural relationship should be established among individuals and groups for the success of enterprise.

The following points highlight the crucial role that organising plays in any business enterprise:
(i) Benefits of specialisation: One of the important role of Organising is, it leads specialisation. By systematic allocation of jobs amongst the work force, it reduces the workload as well as enhances productivity because of the specific workers performing a specific job on a regular basis. Repetitive performance of a particular task allows a worker to gain experience in that area and leads to specialisation.

(ii) Clarity in working relationships: By establishing the line of communication and specifying who to report to whom it clarifies working relationship. This removes confusion in the transfer of information and instructions. It helps in creating a hierarchical order thereby enabling the fixation of responsibility.

(iii) Optimum utilisation of resources: Resources are scarce. And thus it should be used wisely and judiciously. By proper assignment of jobs, overlapping and duplication of work can be minimised and thereby Organising leads to the best usage of all material, financial and human resources.

(iv) Adaptation to change: The process of organising allows a business enterprise to accommodate changes in the business environment. It allows the organisation structure to be suitably modified and the relationship between various departments and position smoother.

The organising process involves the following process:
1) Defining the objectives: It is the first step in developing organisation structure.
2) Determining activities: In order to achieve the objectives, various activities are to be identified and enumerated.
3) Grouping of activities: The entire activities are to be grouped on the basis of functions, products, customers etc.
4) Assigning duties: The individual groups of activities are then allotted to different individuals on the basis of their ability and aptitude.
5) Delegation of authority: After allotting jobs, he is given the necessary authority to perform the task efficiently.
6) Co-ordinating activities: The activities and efforts of different persons are to be coordinated properly for effective performance.
7) Provision of physical facilities and good environment: Physical facilities light, recreation, rest room etc. should be provided in addition to good working environment.
8) Establishment of structural relationship: A clear cut structural relationship should be established among individuals and groups for the success of enterprise.

An informal organisation is created through personal relationship within the formal organisation. Interaction among people at work gives rise to a ‘network of social relationships among employees’ called the informal organisation. No conscious attempt is made to create an informal organisation. It is created through friendship, mutual regard, intimacy, and close contact. There is no specific rules of authority and responsibility. There is no rules or procedures to govern this organisation.

Features of informal organisation:
1) They arise spontaneously.
2) It is created due to personal relationship.
3) It is natural grouping of people in a work situation.
4) It has no predetermined objectives.
5) There are no specific rules and regulations.
6) Unofficial channels are used.
7) It is generally small.
8) It cannot be depicted through a chart.
9) Emphasis is given on personal relationship.

Decentralisation refers to the systematic effort to delegate to the lowest levels, all authority except that which can only be exercised at central points. The centre of decision making are dispersed throughout the organisation. The essence of decentralisation is the transference of authority from a higher level to the lower level. The authority of taking major decisions and framing policy is retained at central point, that is, at the top and the authority to the lower levels with respect to the tasks assigned or responsibility is delegated to lower levels.  

The decentralisation is important due to the following reasons:
(i) Develops initiative among subordinates: Decentralisation helps to promote self-reliance and confidence amongst the subordinates. It also keeps them in a state wherein they are constantly challenged and have to develop solutions for the various problems they encounter. 

(ii) Develops managerial talent for the future: Formal training plays an important part in equipping subordinates with skills that help them rise. Decentralisation gives them a chance to prove their abilities and creates a reservoir of qualified manpower who can be considered to fill up more challenging positions through promotions. 

 (iii) Quick decision making: In a decentralised organisation, since decisions are taken at levels which are nearest to the points of action and there is no requirement for approval from many levels, the process is much faster. 

Delegation refers to the downward transfer of authority from a superior to a subordinate. However, decentralization refers to delegation of authority throughout all the levels of the organization. Decision making authority is shared with lower levels and is consequently placed nearest to the points of action. Importance of decentralization is wider than delegation of authority which is mere transfer of authority from a superior to a subordinate.

Decentralization is a fundamental step and its importance are as follows:
i) It develops initiative among subordinates: Decentralisation helps to promote self-reliance and confidence amongst the subordinates. A decentralisation policy helps to identify those executives who have the necessary potential to become dynamic leaders.
ii) Develops managerial talent for the future: Decentralisation gives employees a chance to prove their abilities and creates a reservoir of qualified manpower who can be considered to fill up more challenging positions through promotions.
iii) Quick decision making: In a decentralised organisation, as decisions are taken at levels which are nearest to the points of action, there is no requirement for approval from many levels, the process is much faster.
iv) Relief to top management: Decentralisation diminishes the amount of direct supervision exercised by a superior over the activities of a subordinate because they are given the freedom to act and decide within the limits set by the superior.

Functional structure comprises of grouping of jobs of similar nature under functional and organizing these major functions as separate. In this, the whole activities of the enterprise are divided into different functions like marketing, finance, personnel etc. Functional specialists are appointed at different functional levels. They can give orders and directions to all subordinates in connection with their function. All departments report to a coordinating head.

Advantages of a functional structure of organisation are:
1) Specialization: A functional structure leads to occupational specialisation since emphasis is placed on specific functions. This promotes efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve performance.
2) Better control and coordination: It promotes control and coordination within a department because of similarity in the tasks being performed.
3) Maintenance of higher efficiency: It helps in increasing managerial and operational efficiency and this results in increased profit.
4) Economies of scale: It leads to minimal duplication of effort which results in economies of scale and this lowers cost.
5) No overload of work: The entire work is divided into various functions and is assigned to different functional experts. So managers are not overloaded with work.

Formal organisation refers to the organisation structure which is designed by the management to accomplish a particular task. It specifies clearly the boundaries of authority and responsibility and there is a systematic coordination among the various activities to achieve organisational goals. The structure in a formal organisation can be functional or divisional. It is usually developed for a continuous purpose involving activities of repetitive nature and long-term operations.

Advantages of a Formal organisation are the following:
1) It is easier to fix responsibility since mutual relationships are clearly defined.
2) There is no ambiguity in the role that each member has to play as duties are specified. This also helps in avoiding duplication of effort.
3) Unity of command is maintained through an established chain of command.
4) It leads to effective accomplishment of goals by providing a framework for the operations to be performed and ensuring that each employee knows the role he has to play.
5) It provides stability to the organisation. This is because behaviour of employees can be fairly predicted since there are specific rules to guide them.

(a)The concept of  Delegation is used by Aman Chadha.Delegation refers to the act of transferring authority to lower levels in the hierarchy, For effective and smooth functioning. Delegation helps in lowering the burden of top-level managers and thereby enables them to focus on other priority areas. As under this situation, Aman found all the work too impractical to do it all alone so, he decided to delegate some of his work to his staff. This helped him in focussing on the main and major objectives.
(b) Importance of delegation:
i. Managerial Efficiency: By delegating the work, the burden of the top managers gets reduced to a large extent and They can focus on priority areas (such as research and innovation) while the routine work is handled by subordinates independently. In this, the efficiency of managers is increased and they concentrate on new and important areas.
ii. Employee Proficiency: Delegation proves beneficial to subordinates as well in the sense that it provides them with the responsibility and opportunity to work independently and prove themselves and apply their own creativity and skills. This helps in their growth and development.
iv. Growth: Delegation helps in preparation of ready-made efficient and experienced managers for future positions, which ultimately supports the growth and expansion of the organisation.
iii. Motivation: Delegation of authority proves psychologically beneficial to subordinates. It will motivate them to work even harder to prove their abilities to the best of their efficiency. It helps in developing a feeling of trust and commitment between superior and subordinate.

It refers to the process of defining and grouping the activities of an enterprise and establishing authority relationship among them.

1. Benefits of specialization.
2. Co-ordination is established.

Organization chart is a drawing which shows the relationship among the various posts established in the organization.

1. Delegation of authority.
2. Decentraliztion.

Because it reduces the workload of a manager.

Accountability

Informal organization

Its essence is to get decisions implemented.

It emerges out of mutual relations and tastes.