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Organising

NCERT Class 12 · Business Studies Based on NCERT Class 12 Business Studies textbook · Free CBSE study kit

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Chapter Notes

Overview
This chapter explains the management function of organising, which involves structuring work and resources to implement plans effectively. It covers the process of organising, types of organisational structures (functional and divisional), formal and informal organisations, and the concepts of delegation and decentralisation. The one big idea a student must walk away with is that organising creates a framework of authority, responsibility, and accountability that enables efficient teamwork, specialisation, and growth.
Key Concepts (14)
Organising
Organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.
e.g. In a school fete, the work is divided into committees (food, decoration, ticketing), each with a leader, and reporting relationships are established to coordinate efforts.
Organisation Structure
The framework within which managerial and operating tasks are performed; it specifies the relationships between people, work, and resources.
e.g. Sunita's travel agency has departments for operations, sales, and administration, each with defined roles and reporting lines.
Functional Structure
Grouping of jobs of similar nature under functional departments, each reporting to a coordinating head.
e.g. A manufacturing company has separate departments for production, purchase, marketing, accounts, and personnel.
Divisional Structure
An organisational structure comprising separate business units or divisions, each responsible for a product line and functioning as a profit centre.
e.g. A large company has divisions for cosmetics, clothing, and footwear, each with its own production, marketing, and finance functions.
Formal Organisation
A system of well-defined jobs, each bearing a definite measure of authority, responsibility, and accountability, deliberately designed by management.
e.g. The official organisation chart of a company showing departments, managers, and reporting lines.
Informal Organisation
A network of personal and social relations not established or required by the formal organisation but arising spontaneously as people associate with one another.
e.g. Employees who play cricket together on Sundays form an informal group with its own norms and communication channels.
Delegation
The downward transfer of authority from a superior to a subordinate to perform a specific task, while the superior remains accountable.
e.g. A manager assigns the task of preparing a sales report to a subordinate, giving him access to data and the right to request information from other departments.
Authority
The right of an individual to command his subordinates and to take action within the scope of his position; it flows from top to bottom.
e.g. A department head has the authority to assign work, give orders, and expect compliance from team members.
Responsibility
The obligation of a subordinate to properly perform the assigned duty; it flows upward from subordinate to superior.
e.g. A subordinate is obligated to complete the sales report assigned by his manager and cannot delegate this obligation.
Accountability
Being answerable for the final outcome; it cannot be delegated and flows upward.
e.g. Even after delegating the sales report task, the manager is answerable to the top management for its accuracy and timeliness.
Decentralisation
Systematic effort to delegate to the lowest level all authority except that which can be exercised at central points; it refers to delegation of authority throughout all levels of the organisation.
e.g. Wipro shifted from a centralised to a decentralised management system, giving each subsidiary autonomy over its own accounting, personnel, and administration.
Centralisation
Concentration of decision-making authority at the top management levels.
e.g. In a small family-run business, the owner makes all major decisions without consulting lower-level employees.
Span of Management
The number of subordinates that can be effectively managed by a superior; it determines the levels of management in the structure.
e.g. A manager with a span of 5 directly supervises 5 subordinates, leading to fewer management levels.
Departmentalisation
The grouping of similar activities into departments to facilitate specialisation.
e.g. A company groups all sales activities into a sales department and all production activities into a production department.
How It Works
Steps in the Process of Organising
  1. Step 1: Identification and division of work — Divide the total work into manageable activities to avoid duplication and share the burden.
  2. Step 2: Departmentalisation — Group similar activities together to facilitate specialisation (e.g., by territory or product).
  3. Step 3: Assignment of duties — Allocate work to employees based on their skills and competencies, ensuring a proper match between job and person.
  4. Step 4: Establishing authority and reporting relationships — Define who reports to whom, creating a hierarchical structure for coordination.
💡 Students often forget that assignment of duties must match skills, and that establishing reporting relationships is the final step that creates the hierarchy.
Elements of Delegation
  1. Step 1: Authority — The superior grants the subordinate the right to command and take decisions within limits.
  2. Step 2: Responsibility — The subordinate accepts the obligation to perform the assigned duty.
  3. Step 3: Accountability — The subordinate is answerable to the superior for the outcome; the superior remains ultimately accountable.
💡 Authority can be delegated, responsibility cannot be entirely delegated, and accountability cannot be delegated at all. Students often confuse these three.
Exam Traps — Don't Make These Mistakes
⚠ Confusing Delegation with Decentralisation
✗ Delegation and decentralisation are the same thing.
→ Delegation is a one-to-one transfer of authority from a superior to a subordinate, while decentralisation is a systematic policy of delegating authority throughout all levels. Delegation is a process; decentralisation is a philosophy.
✓ Delegation is the downward transfer of authority from a superior to a subordinate. Decentralisation is the systematic delegation of authority to the lowest levels across the organisation.
⚠ Thinking Responsibility Can Be Delegated
✗ A manager can delegate responsibility to a subordinate.
→ Responsibility is the obligation to perform a duty; it arises from the superior-subordinate relationship and cannot be entirely delegated. The subordinate assumes responsibility, but the superior remains ultimately responsible.
✓ Responsibility is the obligation to perform an assigned task; it cannot be entirely delegated. The subordinate is responsible to the superior, and the superior retains overall responsibility.
⚠ Mixing Up Formal and Informal Organisation
✗ Formal organisation arises from social interactions, and informal organisation is created by management.
→ Formal organisation is deliberately designed by management with rules and hierarchy. Informal organisation arises spontaneously from social interactions among employees.
✓ Formal organisation is created by management through rules and policies. Informal organisation emerges spontaneously from personal interactions among employees.
⚠ Claiming Decentralisation Means No Centralisation
✗ Decentralisation means all decisions are taken at lower levels; centralisation means all decisions are taken at the top.
→ Complete centralisation or decentralisation is unrealistic. Every organisation has a mix; decentralisation means sharing authority with lower levels, but major policy decisions remain centralised.
✓ Decentralisation refers to the systematic delegation of authority to lower levels, but it must be balanced with centralisation for major policy decisions. No organisation is completely centralised or decentralised.
⚠ Forgetting That Accountability Cannot Be Delegated
✗ When a manager delegates a task, the subordinate becomes fully accountable, and the manager is no longer answerable.
→ Accountability is imposed and cannot be delegated. The manager remains answerable for the outcome even after delegation.
✓ Accountability cannot be delegated. The manager is still accountable to his superior for the final outcome, even though the subordinate performs the task.
Compare & Contrast
Basis of formation
Functional Structure
Divisional Structure
Functional structure is formed based on functions (e.g., production, marketing), while divisional structure is formed based on product lines and supported by functions.
Scope and nature
Delegation
Decentralisation
Delegation is a one-to-one process of transferring authority from a superior to a subordinate; decentralisation is a systematic policy of delegating authority throughout all levels of the organisation.
Origin
Formal Organisation
Informal Organisation
Formal organisation arises from company rules and policies; informal organisation arises from social interaction among employees.
Flow in the organisation
Authority
Responsibility
Authority flows downward from superior to subordinate; responsibility flows upward from subordinate to superior.
Exam Focus
Marks pattern: 2 MCQs (1 mark each), 1 Short Answer (3 marks) on process or importance, 1 Long Answer (5 marks) on comparison of structures or delegation vs decentralisation, and occasionally a case study (5-6 marks) on organising concepts.
Most asked: Steps in the process of organising · Advantages and disadvantages of functional and divisional structures · Distinction between formal and informal organisation · Elements of delegation (authority, responsibility, accountability) · Importance of delegation and decentralisation · Distinction between delegation and decentralisation
Don't skip: Distinguish between functional and divisional structure (5 marks); Explain the elements of delegation (5 marks); Distinguish between delegation and decentralisation (5 marks); Explain the importance of organising (3-5 marks)
One-Line Revision (read aloud before the exam)
  1. Organising is the process of identifying and grouping work, defining and delegating responsibility and authority, and establishing relationships for effective teamwork.
  2. The four steps of organising are: identification and division of work, departmentalisation, assignment of duties, and establishing authority and reporting relationships.
  3. Functional structure groups similar jobs into departments; divisional structure groups activities by product lines.
  4. Functional structure promotes specialisation but may lead to inter-departmental conflicts; divisional structure facilitates growth but increases costs due to duplication.
  5. Formal organisation is deliberately designed by management with rules and hierarchy; informal organisation emerges spontaneously from social interactions.
  6. Informal organisation spreads information faster and fulfills social needs but can spread rumours and resist change.
  7. Delegation involves three elements: authority (right to command), responsibility (obligation to perform), and accountability (answerability for outcome).
  8. Authority flows downward, responsibility flows upward, and accountability cannot be delegated.
  9. Decentralisation is the systematic delegation of authority to the lowest levels; it is a philosophy, not just a process.
  10. Decentralisation develops initiative, quickens decision-making, relieves top management, and facilitates growth.
  11. No organisation is completely centralised or decentralised; a balance is needed.
  12. Delegation is a one-to-one transfer; decentralisation is organisation-wide policy.
  13. Span of management determines the number of levels in the organisation structure.
  14. Organising leads to specialisation, clarity in working relationships, optimum resource utilisation, and adaptation to change.

MCQs — 10 Questions with Answers

Q1. Which of the following best defines organising?

  • A. The process of planning goals and deciding how to achieve them
  • B. The process of identifying work, grouping activities, assigning duties, and establishing relationships to achieve objectives ✓
  • C. The process of making final decisions and controlling employees
  • D. The process of recruiting and training new employees

Answer: B — Organising specifically involves dividing work, grouping activities, assigning roles, establishing relationships, and allocating resources — not planning goals, making decisions, or recruitment alone.

Q2. What was the primary reason Wipro restructured into divisional organisation (by product line)?

  • A. To reduce the total number of employees in the company
  • B. To improve customer orientation and enable autonomous decision-making in each subsidiary ✓
  • C. To eliminate the need for management entirely
  • D. To increase the price of their shares on the stock market

Answer: B — Wipro explicitly shifted to divisional structure with self-sufficient subsidiaries to enable customer focus and empower business leaders with growth responsibility.

Q3. In the school library example with 12 students, grouping students by task (unloading, stocking, waste disposal) and assigning each group a quota represents which step of organising?

  • A. Identification and division of work
  • B. Departmentalisation ✓
  • C. Assignment of duties
  • D. Allocation of resources

Answer: B — Grouping similar activities (unloading together, stocking together, disposal together) into departments is departmentalisation; this facilitates specialisation.

Q4. Which organisational structure groups departments by function (Marketing, Finance, HR)?

  • A. Divisional structure
  • B. Territorial structure
  • C. Functional structure ✓
  • D. Customer-based structure

Answer: C — Functional structure organises departments by similar functions, promoting deep specialisation and expertise within each function.

Q5. A manager assigns a subordinate the task of completing a sales report by Friday. The manager still monitors and is responsible if the report is late. This is an example of which concept?

  • A. Decentralisation
  • B. Delegation ✓
  • C. Departmentalisation
  • D. Formal organisation

Answer: B — Delegation involves assigning a specific task while retaining ultimate accountability — the manager gave authority but remains responsible for the outcome.

Q6. Which of the following is NOT an advantage of divisional organisation?

  • A. Quick decision-making within each division
  • B. Strong customer focus and product orientation
  • C. Greater specialisation and depth of expertise in core functions ✓
  • D. Autonomy and independence of each division

Answer: C — Divisional structure sacrifices specialisation depth because functions are duplicated across divisions; functional structure provides greater specialisation.

Q7. Assertion: Formal organisation is deliberately designed with documented roles and clear hierarchy. Reason: Informal organisation emerges spontaneously from social relationships among employees. Which statement is correct?

  • A. Both Assertion and Reason are true; Reason explains Assertion
  • B. Both Assertion and Reason are true; Reason does not explain Assertion ✓
  • C. Assertion is true; Reason is false
  • D. Both Assertion and Reason are false

Answer: B — Both statements are factually correct — formal is planned and informal is spontaneous — but the Reason does not explain why formal is designed; they describe two separate phenomena.

Q8. Wipro removed an entire layer of executives and decentralised management to each subsidiary. This action is best described as:

  • A. Delegation of sales tasks to department heads
  • B. Decentralisation of decision-making power to multiple business units ✓
  • C. Departmentalisation of activities by function
  • D. Formalisation of the organisational structure

Answer: B — Removing layers and distributing power and responsibility to each subsidiary is decentralisation — a systemic shift in how decision-making authority is spread across the organisation.

Q9. An informal group of employees regularly meets after work to discuss company issues and make social plans. Which characteristic of informal organisation does this best illustrate?

  • A. It follows the official organisational chart
  • B. It emerges spontaneously from social interactions, not from official design ✓
  • C. It has clearly defined roles assigned by management
  • D. It creates formal reporting relationships and accountability

Answer: B — Informal organisation is unplanned and arises naturally from employees' social relationships and common interests, not from management design.

Q10. A company has five functional departments (Production, Marketing, Finance, HR, R&D). If it reorganises into three divisions based on product lines (Electronics, Appliances, Software), which change would most likely occur?

  • A. Increased specialisation in each function
  • B. Faster cross-divisional coordination
  • C. Duplication of some functions within each division but quicker product-focused decisions ✓
  • D. Elimination of all functional expertise from the company

Answer: C — Shifting from functional to divisional structure trades deep specialisation for autonomy; each division will need its own finance, HR, etc., causing duplication but enabling faster division-level decisions.

Flashcards

What is organising?

Organising is the process of identifying and dividing work, grouping activities, assigning duties, establishing reporting relationships, and allocating resources to achieve specified objectives.

Name the first step in the organising process.

Identification and division of work — breaking down overall work into manageable, non-duplicated activities.

What is departmentalisation?

Grouping similar activities together to facilitate specialisation; can be based on territory, product, function, customer, or process.

Distinguish delegation from decentralisation in one sentence.

Delegation assigns a specific task to a subordinate while keeping the manager accountable; decentralisation systematically distributes decision-making power throughout the organisation.

What is functional organisation structure?

Departments grouped by similar functions (Marketing, Finance, HR) — promotes specialisation but creates weak cross-functional coordination.

What is divisional organisation structure?

Departments organised by product line, geography, or customer type — enables quick decisions and autonomy but causes duplication of functions.

Define formal organisation.

A deliberately planned structure with documented authority relationships, defined roles, and official hierarchy.

What is informal organisation?

Unplanned social networks and relationships that emerge spontaneously among employees, based on friendships and common interests.

Why is organising important for management?

Organising ensures resources are optimally used, work is coordinated, authority and responsibility are clear, and plans are successfully implemented.

How did Wipro's decentralisation help it grow?

By creating self-sufficient product subsidiaries with independent decision-making power, removing management layers, and empowering business leaders, Wipro became more customer-focused and agile.

Important Board Questions

Define organising and state why it is important in management. [2 marks]

State the definition involving division of work, grouping, assignment, and resource allocation. Mention that organising translates plans into action, optimises resources, and clarifies authority-responsibility relationships.

Explain the first three steps of the organising process using the example of organising a school science fair. [5 marks]

Step 1: Identify and divide work — separate the fair into tasks (setup, judging, registration, cleanup). Step 2: Departmentalisation — group similar tasks (all setup tasks together, all registration together). Step 3: Assignment of duties — assign each group members based on their skills. Use the science fair example in each step.

Distinguish between functional and divisional organisational structures. Using Wipro's example, explain why Wipro shifted from a centralised to a divisional structure based on product lines. [6 marks]

Functional: departments by function (Marketing, Finance, HR) — advantages (specialisation, cost) and disadvantages (slow cross-functional coordination). Divisional: departments by product/region — advantages (autonomy, customer focus) and disadvantages (duplication). Wipro case: separated into subsidiaries by product line (telecom, engineering, financial services), each self-sufficient, removed management layers, empowered leaders — resulted in improved customer orientation and faster growth.

Assertion-Reason Questions for Organising

Q1. Assertion (A):

Organising is essential for translating plans into action and ensuring optimal utilisation of resources.

Reason (R):

Without organising, there is no clarity about job responsibilities, authority relationships, or how different activities connect to achieve objectives.

Answer: A — Both A and R are true, and R is the correct explanation of A — Both the assertion and reason are true, and the reason correctly explains why organising is essential. The reason describes the consequences of poor organising that the assertion claims prevents. This demonstrates the logical link between the process of organising and its critical importance to implementation.

Q2. Assertion (A):

Departmentalisation involves grouping similar activities together based on specific criteria such as territory, product, or function.

Reason (R):

Departmentalisation is the same as the assignment of duties to individual employees.

Answer: C — A is true but R is false — The assertion is true — departmentalisation is indeed the grouping of similar activities into departments. However, the reason is false — assignment of duties is the third step that comes after departmentalisation and involves allocating specific jobs to individual employees. These are distinct steps in the organising process, so although the assertion is correct, the reason does not explain it.

Q3. Assertion (A):

The Wipro case demonstrates that shifting from centralised to decentralised organisational structure improved customer orientation.

Reason (R):

Decentralisation gave each product subsidiary autonomy and growth responsibility, enabling them to make faster, customer-focused decisions.

Answer: A — Both A and R are true, and R is the correct explanation of A — Both assertion and reason are true. The reason correctly explains the mechanism by which decentralisation achieved improved customer orientation — by granting subsidiaries autonomy and responsibility, they could focus on their specific customers' needs and respond quickly. This is a cause-and-effect relationship clearly demonstrated in the case.

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Case-Based Questions (CBQ) for Organising

Case Study:

Infosys Technologies is one of India's leading IT service providers. When the company expanded rapidly across 15 different countries, top management realised that maintaining a centralised functional structure (with all HR, Finance, and Operations reporting to the India headquarters) was creating delays in decision-making and making it difficult to serve diverse client needs across regions. The company decided to reorganise into a divisional structure based on geographical regions: Europe Division, North America Division, Asia-Pacific Division, and India Division. Each division was given its own HR team, Finance team, and operational support. Additionally, the company removed two layers of middle management to empower regional division heads to make strategic decisions without always seeking approval from headquarters.

Q1. Which type of organisational structure did Infosys shift FROM and shift TO in this reorganisation?

  • A. From divisional to functional; to matrix structure
  • B. From functional (centralised) structure to divisional (decentralised) structure ✓
  • C. From divisional to functional; to a hierarchical structure
  • D. From informal to formal organisational structure

Answer: B

Q2. What was the PRIMARY reason Infosys needed to reorganise according to the passage?

  • A. To reduce the total number of employees in the company
  • B. To increase centralised control over all regional offices
  • C. To enable faster decision-making and better serve diverse regional client needs ✓
  • D. To eliminate the need for HR and Finance functions

Answer: C

Q3. By removing two layers of middle management and giving regional division heads strategic decision-making authority, Infosys was demonstrating which principle of organising?

  • A. Decentralisation of authority and responsibility ✓
  • B. Fayol's principle of unity of command
  • C. Elimination of all levels of management
  • D. Functional specialisation and departmentalisation

Answer: A

Q4. According to the case, why did having separate HR and Finance teams in each division (rather than centralised teams) support the reorganisation's goals?

  • A. It automatically reduced operational costs across all divisions
  • B. It allowed each division to address regional HR and financial needs quickly without waiting for headquarters approval ✓
  • C. It eliminated the need for any coordination between divisions
  • D. It ensured that all employees across regions would receive identical compensation

Answer: B

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Previous Year Questions (PYQ) for Organising

Real CBSE board exam questions from past papers — free to attempt.

CBSE 2026 · Set 66/2/1 · 1 mark

The process by which a manager synchronizes the activities of different departments is known as:

  • Management
  • Planning
  • Organising
  • Co-ordination

CBSE 2026 · Set 66/2/1 · 3 marks

(a) State any three features of Co-ordination.

CBSE 2026 · Set 66/2/1 · 4 marks

Fresh Foods Pvt. Ltd. manufactures and distributes organic packaged food products. It's operations are divided into five main departments – Production, Marketing, Finance, Human Resources and Research and Development. Each department has its own head and a team that focuses only on the work related to their department. This promotes efficiency in utilization of manpower as employees perform similar tasks within a department and are able to improve performance. This also helps in increasing managerial and operational efficiency and results in increased profit. Since each department handles a narrow range of tasks and focus is on a limited range of skills, it is easier to train new employees. (i) Identify the organization structure followed by Fresh Foods Pvt. Ltd.

CBSE 2026 · Set 66/2/2 · 4 marks

Fresh Foods Pvt. Ltd. manufactures and distributes organic packaged food products. It's operations are divided into five main departments – Production, Marketing, Finance, Human Resources and Research and Development. Each department has its own head and a team that focuses only on the work related to their department. This promotes efficiency in utilization of manpower as employees perform similar tasks within a department and are able to improve performance. This also helps in increasing managerial and operational efficiency and results in increased profit. Since each department handles a narrow range of tasks and focus is on a limited range of skills, it is easier to train new employees. (i) Identify the organization structure followed by Fresh Foods Pvt. Ltd. (ii) Also state three advantages of the structure identified in (i) above not discussed in the given case.

CBSE 2026 · Set 66/2/2 · 4 marks

Explain the following points of importance of Decentralisation: (i) Quick decision-making (ii) Relief to top management

CBSE 2026 · Set 66/2/3 · 1 mark

The process by which a manager synchronizes the activities of different departments is known as :

  • Management
  • Planning
  • Organising
  • Co-ordination

CBSE 2026 · Set 66/1/1 · 1 mark

Organising is the process that initiates implementation of plans by clarifying jobs and working relationships and effectively deploying resources for attainment of identified and desired results. Organising process thus involves a series of steps that need to be taken in order to achieve the desired goal. Arrange the steps of the process of organizing in the correct order:

  • Identification and Division of work, Assignment of duties, Departmentalisation, Establishing authority and reporting relationships
  • Identification and Division of work, Assignment of duties, Establishing authority and reporting relationships, Departmentalisation
  • Departmentalisation, Identification and Division of work, Establishing authority and reporting relationships, Assignment of duties
  • Identification and Division of work, Departmentalisation, Assignment of duties, Establishing authority and reporting relationship

CBSE 2026 · Set 66/1/1 · 3 marks

'Soal Footwear Ltd.' is known for its high quality athletic shoes and casual sneakers. With increasing competition and changing consumer preferences, it decided to diversify its product range by adding clothing, bags and accessories under the same brand umbrella. This diversification aimed to capture a larger share of the market and increase customer loyalty. (i) Suggest with reason which type of organisational structure will be suitable for 'Soal Footwear Ltd.' (1+2) (ii) State any two advantages of the organisational structure suggested in (i) above.

CBSE 2026 · Set 66/1/1 · 3 marks

State any three functions of middle level management.

CBSE 2026 · Set 66/1/2 · 4 marks

'Sheetal Cosmetics Ltd.', is a fast growing beauty and skin care company known for its innovative products and aggressive market expansion. As the company increased its marketing activities like new product launches, accelerated advertising campaigns, social media promotions and influencer collaborations etc., the workload of the marketing department grew sharply. Despite working long hours, the marketing manager Arjun couldn't give adequate attention to strategic planning and high impact decisions as minor operational issues began consuming most of his time. Noticing this, the Chief Executive Officer (CEO) advised Arjun that it was now impractical for him to handle the entire volume of work alone, so he should allow his subordinates to take up routine tasks. This would not only help him manage his time better but also satisfy the subordinate's need for recognition. This will also provide opportunities to the subordinates to develop and exercise initiative. (i) Identify the concept suggested by CEO that will help Arjun to manage volume of work effectively. (ii) State any three points of importance of the concept identified in (i) above.

CBSE 2026 · Set 66/1/3 · 3 marks

Soal Footwear Ltd. is known for its high quality athletic shoes and casual sneakers. With increasing competition and changing consumer preferences, it decided to diversify its product range by adding clothing, bags and accessories under the same brand umbrella. This diversification aimed to capture a larger share of the market and increase customer loyalty. (i) Suggest with reason which type of organisational structure will be suitable for Soal Footwear Ltd. (1+2) (ii) State any two advantages of the organisational structure suggested in (i) above.

CBSE 2026 · Set 66/3/1 · 1 mark

Which of the following is not an advantage of divisional structure of an organisation?

  • It helps in development of varied skills in the divisional head which prepares him for higher positions.
  • It promotes flexibility and initiative, because each division functions as an autonomous unit, leading to faster decision making.
  • It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.
  • It leads to minimal duplication of effort which results in economies of scale and lowers cost.

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Class 12 Business Studies Previous Year Questions, Chapter-wise

All 924 CBSE board questions from 2022–2026, sorted by chapter and question type. Free PDF download.

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