QUESTION-BANK (2014-15)

BUSINESS STUDIES
CLASS- XII GR12/BST/CH5/AK
Chap!" 5#O"$a%&'&%$
T(p&)# C(%)!p* &+p("a%)!* ("$a%&'&%$ p"()!''* '",),"! (- ("$a%&'a&(%--,%)&(%a. a%/
/&0&'&(%a.* -("+a. a%/ &%-("+a. ("$a%&'a&(%1
S!)&(% A
1 +a"2 3,!'&(%'#
1. D!-&%! ("$a%&4&%$ a' a -,%)&(% (- +a%a$!+!%1
Ans: Organizing is the process of defining and grouping activities and establishing
authority relationships among them.
2. Th&' -,%)&(% (- +a%a$!+!% +a%a$!' 0a"&(,' "!'(,")!' -(" a))(+p.&'h+!% (-
(56!)&0!'7
Ans: Organizing
3. 8h&)h &' h! -&"' '!p &% h! p"()!'' (- ("$a%&4&%$7
Ans: Identification and division of wor.
!. G&0! a%9 (%! &+p("a%)! (- ("$a%&4&%$1
Ans: "enefits of specialization#Organizing leads to a systematic allocation of $obs
amongst the worforce. %his reduces the worload as well as enhances productivity
because of the specific worers performing a specific $ob on regular basis.
&epetitive performance of a particular tas allows a worer to gain e'perience in that
area and leads to specialization.
(. Na+! h! ("$a%&4a&(%a. '",),"! /!'&$%!/ a%/ !'a5.&'h!/ 59 h! +a%a$!+!%1
Ans: )ormal organizational structure.
*. G&0! a%9(%! 5!%!-& (- &%-("+a. ("$a%&4a&(%1
Ans: +rescribed lines of communication are not followed. %hus, the informal
organization leads to faster spread of information as well as -uic feedbac.
.. 8ha &' h! a&+ (- ("$a%&4a&(%7
Ans: %he aim of organizing is to bring order out of chaos, remove conflict among
employees and creating an environment suitable for teamwor.
: +a"2' 3,!'&(%'#
/. 8ha &' +!a% 59 ;-("+a. ("$a%&4a&(%<7 L&' ( a%9 =( a/0a%a$!' (- -("+a.
("$a%&4a&(%1
Ans: It0s a system of well#defined $obs, each bearing a definite measure of authority,
responsibility and accountability. )ormal organization refers to the organisation
structure which is designed by the management to accomplish a particular tas.
%he two advantages are:#
It0s easier to fi' responsibilities since mutual relationships are clearly defined.
1nity of command is maintained through an established chain command.
2. E>p.a&% h! +!a%&%$ (- ("$a%&4&%$ (" /!-&%! ("$a%&4&%$ a' a '",),"!1
Ans: Organising essentially implies a process which coordinates human efforts,
assembles resources and integrates both into a unified whole to be utilized for achieving
Page 1 of 12
specified ob$ectives. Organising can be defined as a process that initiates implementation
of plans by clarifying $obs and woring relationships and effectively deploying resources
for attainment of identified and desired results 3goals4.
15. 8ha &' +!a% 59 ;-("+a. ("$a%&4a&(%<7 L&' ( a%9 =( .&+&a&(%' (- -("+a.
("$a%&4a&(%1
Ans: )ormal organization is designed by the management to achieve organizational
goals. &ules and procedures related to wor processes have strictly, rigidly been
laid down.
%he limitations are:
%he formal communication may lead to procedural delays as the established
chain of command has to be followed which increases the time taen for decision
maing.
+oor organization practices may not provide ade-uate recognition to creative
talent since it does not allow any deviations from rigidly laid down polices.
11.
2. Sa! a%9 h"!! a/0a%a$!' (- &%-("+a. ("$a%&4a&(%1
Ans: %he 3 advantages of informal organization are:

+rescribed lines of communication are not followed. %hus the informal

organization leads to faster spread of information as well as -uic feedbac.

It helps to fulfill the social needs of the members and allows them to find lie#
minded people. %his enhances their $ob satisfaction since it gives them a sense of
belongingness in the organization.

It contributes towards fulfillment of organizational ob$ectives by compensating

for inade-uacies in the formal organization. )or e'ample employee0s reactions
towards plans and policies can be tested through the informal networ.
12. E>p.a&% 59 $&0&%$ a%9 h"!! "!a'(%' =h9 ("$a%&4&%$ &' )(%'&/!"!/ a' a% &+p("a%
-,%)&(% (- +a%a$!+!%1
OR
?O"$a%&4a&(% &' h! ha"+(%&(,' a/6,'+!% (- 'p!)&a.&4!/ pa"' -(" h!
a))(+p.&'h+!% (- '(+! )(++(% p,"p('! (" p,"p('!'@1 I% h! .&$h (- h&'
'a!+!% !>p.a&% a%9 -(," p(&%' (0!" h! &+p("a%)! (- ("$a%&4&%$1
Ans: %he reasons are:
B!%!-&' (- 'p!)&a.&'a&(%# Organising leads to a systematic allocation of $obs amongst
the wor force. %his reduces the worload as well as enhances productivity because of
the specific worers performing a specific $ob on a regular basis. &epetitive performance
of a particular tas allows a worer to gain e'perience in that area and leads to
specialisation.
C.a"&9 &% =("2&%$ "!.a&(%'h&p'# %he establishment of woring relationships clarifies
lines of communication and specifies who is to report to whom. %his removes ambiguity
in transfer of information and instructions. It helps in creating a hierarchical order
thereby enabling the fi'ation of responsibility and specification of the e'tent of authority
to be e'ercised by an individual.
Page 2 of 12
Op&+,+ ,&.&4a&(% (- "!'(,")!'# Organising leads to the proper usage of all material,
financial and human resources. %he proper assignment of $obs avoids overlapping of
wor and also maes possible the best use of resources. Avoidance of duplication of
wor helps in preventing confusion and minimizing the wastage of resources and efforts.
4 +a"2' 3,!'&(%'#
13. E%,+!"a! h! '!p' &% h! p"()!'' (- ("$a%&4&%$1
OR
?O"$a%&4&%$ &' h! p"()!'' (- /!-&%&%$ a%/ $"(,p&%$ h! a)&0&&!' (- h! !%!"p"&'!
a%/ !'a5.&'h&%$ h! a,h("&9 "!.a&(%'h&p a+(%$ h!+@1 I% h! .&$h (- h!
'a!+!% !>p.a&% h! '!p' &% h! p"()!'' (- ("$a%&4&%$1
Ans: %he process of organizing is as follows:
1.
Identification and division of wor: %he first step in the process of organizing
involves identifying and dividing the wor that has to be done in accordance with
previously determined plans. %he wor is divided into manageable activities so
that duplication can be avoided and the burden of wor can be shared among the
employees.
2.
6epartmentalization: Once wor has been divided into small and manageable
activities then those activities which are similar in nature are grouped together.
7uch sets facilitate specialization. %his grouping process is called
departmentalization. 6epartments can be created using several criteria as a basis.
8'amples of some of the most popularly used basis are territory 3north, south,
west
etc4.
3.
Assignment of duties: It is necessary to define the wor of different $ob positions
and accordingly allocate wor to various employees. Once departments have
been formed, each of them is placed under the charge of an individual. 9obs are
then allocated to the members of each department in accordance to their sills
and competencies. It is essential for effective performance that a proper match is
made between the nature of a $ob and the ability of an individual. %he wor must
be assigned to those who are best fitted to perform it well.
4.
8stablishing reporting relationships: :erely allocating wor is not enough. 8ach
individual should also now who he has to tae orders from and to whom he is
accountable. %he establishment of such clear relationships helps to create a
hierarchal structure and helps in coordination amongst various departments.
1!. Sa! a%9 -(," -!a,"!' (- &%-("+a. ("$a%&4a&(%1
Ans:%he features are:
1. It originates from within the formal organizations as a result of personal
interaction among employees
2. %he standards of behavior evolve from group norms rather than officially laid
down rules
3. Independent channels of communication are developed by group members
4. It emerges spontaneously and is not deliberately created by management.
5 +a"2' 3,!'&(%'#
Page 3 of 12
1(. D&'&%$,&'h 5!=!!% -,%)&(%a. '",),"! a%/ /&0&'&(%a. '",),"!1
Ans:
Ba'&' A,%)&(%a. S",),"!
D&0&'&(%a. S",),"!
)ormation )ormation is based on functions. )ormation is based on product lines
and the supported by functions
7pecialization )unctional specialization +roduct specialization
&esponsibility 6ifficult to fi' on a department 8asy to fi' responsibility for
performance
:anagerial
development
6ifficult, as each functional
manager has to go to the top
management
8asier, autonomy as well as the
chance to perform multiple
functions helps in managerial
development
;ost )unctions are not duplicated hence
economical
6uplication of resources in various
departments hence costly.
;oordination 6ifficult for a multi#product
company
8asy, because all the functions
related to a particular product are
integrated in one department.
1*. 8ha &' +!a% 59 -,%)&(%a. '",),"! (- ("$a%&4a&(%7 E>p.a&% a%9 2 a/0a%a$!'
a%/ 2 .&+&a&(%' (- h&' '",),"!1
Ans: <rouping together the entire wor into ma$or functional departments and entrusting
these departments to functional specialists is nown as functional structure of the
organisation.
A/0a%a$!'#
+romotes division of wor which leads to specialisation
8nsures effective utilisation of worforce
7upervision and coordination becomes easy since each individual manager is
specialised in his $ob.
L&+&a&(%'#
As each function is separate and each departmental head is concerned with the
performance of his department, conflicts may arise and the overall ob$ectives of
the organisation suffer.
Page 4 of 12
In large functional organisations, taing -uic decisions = coordination becomes
difficult
It becomes difficult to hold a particular department accountable if any problem
arises.
For example, if a product fails the production, sales and research departments may point
accusing fingers at each other.
B +a"2' 3,!'&(%'#
1.. 8ha &' +!a% 59 -("+a. ("$a%&4a&(%7 E>p.a&% a%9 -&0! -!a,"!' (- -("+a.
("$a%&4a&(%1
Ans: %his structure is designed by the management to achieve organisational goals in
which the responsibilities, authority and mutual relationships among all the employees
woring in an enterprise are clearly defined. It can be functional or divisional.
A!a,"!' #-
1. It in deliberately created by the top management.
2. It is based on rules and procedures. >hich are in written form
3. It is impersonal # 6oes not tae into consideration emotional aspect.
!. It clearly defines the authority and responsibility of every individual.
(. It is created to achieve organisational ob$ectives.
S!)&(% B
1 +a"2 3,!'&(%'#
1/. ;I/!%&-9&%$ a%/ /&0&/&%$ h! =("2< &' h! -&"' '!p &% h! p"()!'' (- (%! (- h!
-,%)&(%' (- +a%a$!+!%1 I/!%&-9 h! -,%)&(%1
Ans: organizing.
12. 8h9 &' & !a'9 -&> "!'p(%'&5&.&9 &% -("+a. ("$a%&4a&(%7
Ans: It is easier to fi' responsibility in formal organization since mutual relationships are
clearly defined.
25. I/!%&-9 h! 9p! (- ',&a5.! ("$a%&4a&(%a. '",),"! -(" a .a"$! ')a.! ("$a%&4a&(%
ha0&%$ /&0!"'&-&!/ a)&0&&!' "!3,&"&%$ h&$h /!$"!! (- 'p!)&a.&4a&(% &% (p!"a&(%1
Ans: %he type of organizations structure suitable for a large scale organization having
diversified functions re-uiring high degree of specialization in operations is the
functional structure.
21. O"$a%&4&%$ h!.p' &% (p&+,+ ,&.&4a&(% (- "!'(,")!'1 8h&)h 9p! (- "!'(,")!' /(!'
& p"!-!"7
A%'1 ?uman, financial and material resources
22. I &' -("+!/ 59 $"(,p&%$ ($!h!" h! !%&"! =("2 ( 5! /(%! &%( +a6(" -,%)&(%a.
/!pa"+!%'1 Na+! &1
Ans: functional structure.
23. D&0&'&(%a. '",),"! &' +("! ',&a5.! -(" h! -&"+ ha0&%$ '!0!"a. p"(/,)' a%/ !a)h
p"(/,) ha' /&'&%) -!a,"!'1 D( 9(, a$"!!7 G&0! (%! "!a'(%1
Ans: @es, I agree with this statement as in the divisional structure, the organizations
structure comprises of separate business units for distinct products which helps in
Page 5 of 12
specialization.
2!. Na+! h! ("$a%&4a&(%a. '",),"! /!'&$%!/ a%/ !'a5.&'h!/ 59 h! +a%a$!+!%1
Ans: )ormal and organizational structure.
2(. Na+! h! p"()!'' (- $"(,p&%$ h! a)&0&&!' (- '&+&.a" %a,"!1
Ans: %he process is organizing.
2*. 8ha /!!"+&%!' h! %,+5!" (- .!0!.' (- +a%a$!+!% &% h! ("$a%&4a&(%
'",),"!7
Ans: span of management.
2.. 8h&)h ("$a%&4a&(%a. '",),"! p"(+(!' 5!!" )(("/&%a&(%7
Ans: 6ivisional 7tructure
2/. Na+! h! p"()!'' =h&)h 5"&%$' ("/!" (, (- )ha('* "!+(0!' )(%-.&) a+(%$ p!(p.!
(0!" =("2 a%/ )"!a!' a% !%0&"(%+!% ',&a5.! -(" !a+=("21
Ans: organizing.
22. 8h&)h 9p! (- ("$a%&4a&(%a. '",),"! &' ',&a5.! -(" h&$h /!$"!! (- 'p!)&a.&4a&(%7
Ans: functional structure.
35. 8h9 &' & 'a&/ ha +a%a$!+!% +,' )(%&%,(,'.9 "!0&!= &' p.a%'* (56!)&0!' a%/
("$a%&4a&(%a. '",),"!7
Ans: %he process of management is a series of continuous, composite, but separate
functions 3planning, organizing, directing , controlling 4. %hese functions are
simultaneously performed by all managers all the time. It is a dynamic function and has
to eep adapting to the changing environment.
31. Na+! h! 9p! (- ("$a%&4a&(%a. '",),"! =h&)h )(+p"&'!' (- '!pa"a! 5,'&%!''
,%&'1
Ans: %he organizational structure which comprises of separate business units is the
divisional structure.
32. Na+! h! 9p! (- ("$a%&4a&(% =h&)h /(!' %( p"(0&/! a )(+p.!! p&),"! (- h(= a%
("$a%&4a&(% =("2'1 8h97
Ans: %he formal organization does not provide a complete picture of how an
organization wors. %his is because it emphasizes on structure and wor rather than
human relationships.
: +a"2' 3,!'&(%'#
33. Sa! a%9 : )&"),+'a%)!' &% =h&)h -,%)&(%a. ("$a%&4a&(% &' +("! ',&a5.!1
Ans: %he three circumstances are:
a. 7ize of organization is large
b. ?as diversified activities
c. Operations re-uire a high degree of specialization
3!. Sa! a%9 : )&"),+'a%)!' &% =h&)h /&0&'&(%a. ("$a%&4a&(% &' +("! ',&a5.!1
Ans: when the organization wants to create more departments, add more
employees and increase the levels of management.
>hen large varieties of products are manufactured using different productive
resources.
>hen it is important to determine profit and loss made by each product line so
that the decisions can be taen to e'pand, continue or close a particular product
line.
4 +a"2' 3,!'&(%'#
Page 6 of 12
3(. Sa! a%9 =( a/0a%a$!' a%/ a%9 =( .&+&a&(%' (- &%-("+a. ("$a%&4a&(%1
Ans: %wo advantages of informal organization:
1.
+rescribed lines of communication are not followed. %hus the informal
organization leads to faster spread of information as well as -uic feedbac.
2.It helps to fulfill the social needs of the members and allows them to find lie#
minded people. %his enhances their $ob satisfaction since it gives them a sense of
belongingness in the organization.
%wo limitations of informal organizations:
1.
%he management me not be successful in implementing changes is the informal
organization opposes them. 7uch resolutions to change may delay or restrict
growth.
2. It pressurizes members to conform to group e'pectations. %his can be harmful for
the organization is the norms set by the group are against Organization interests.
3*. Sa! a%9 =( a/0a%a$!' a%/ a%9 =( .&+&a&(%' (- -("+a. ("$a%&4a&(%1
Ans: %he merits are:
1. It is easier to fi' responsibility as mutual relationships are clearly defined
2. 1nity if command is maintained through an established chain of command.
%he demerits are:
1. It may lead to procedural delays
2. +oor organisation practices may not provide ade-uate recognition to creative
talent.
5 +a"2' 3,!'&(%'#
3.. 8ha &' +!a% 59 ;/&0&'&(%a. '",),"!< (- a% ("$a%&4a&(%7 E>p.a&% &<' a/0a%a$!'
a%/ .&+&a&(%'1
Ans: >hen the organization is large in size and is producing more than one type of
product, then activities related to one product are grouped under one
department. %his is nown as the divisional structure.
Advantages:#
1.
+roduct specialization A All the activities related to on type of product are
grouped under one department only which brings integration and coordination in
the activities.
2.
)ast decision maing A %he decisions are taen much faster in divisional
structure because there is no dependence on other departments for taing
decisions.
3.
)le'ibility A )ast decision maing leads to fle'ibility.
6isadvantages:#
1.
8ach department will re-uire all the resources as every division will be woring
as an independent unit.
2.
8ach department focuses on their product and they fail to eep themselves as a
part of one common organization.
3. ;onflict on allocation of resources.
Page 7 of 12
3/. 8ha &' +!a% 59 &%-("+a. ("$a%&4a&(%7 E>p.a&% a%9 -(," -!a,"!' (- &1
Ans: Informal Organisation arises out of interaction amongst people at wor. Its
advantages are speed, fulfilment of social needs, fills inade-uacies of formal structure.
Its disadvantages are: disruptive force, resistance to change and priority to group
interests.
)eatures of informal organisation:
1.An informal organisation originates from within the formal organisation as a
result of personal interaction among employees.
2.%he standards of behaviour evolve from group norms rather than officially laid
down rules and regulations.
3.Independent channels of communication without specified direction of flow of
information are developed by group members.
4. It emerges spontaneously and is not deliberately created by the management.
32. D&--!"!%&a! 5!=!!% -("+a. a%/ &%-("+a. ("$a%&4a&(%1
Ans: A("+a. O"$a%&'a&(%
:eaning A 7tructure of authority relationships created by the management.
Origin A Arises as a result of company rules and policies.
Authority A Arises by virtue of position in management.
"ehaviour A It is directed by rules.
)low of ;ommunication A ;ommunication taes place through the scalar chain
Bature A &igid
Ceadership A :anagers are leaders
I%-("+a. O"$a%&'a&(%
:eaning A Betwor of social relationships arising out of interaction among employees
Origin A Arises as a result of social interaction
Authority A Arises out of personal -ualities
"ehavior A %here is no set behaviour pattern
)low of ;ommunication A )low of communication is not through a planned route. It can
tae place in any direction
Bature A )le'ible
Ceadership A Ceaders may or may not be managers. %hey are chosen by the group.
Ba'&' A("+a. O"$a%&'a&(% I%-("+a. O"$a%&'a&(%
:eaning 7tructure of authority
relationships created by the
management
Betwor of social
relationships arising out
of interaction among
employees
Origin Arises as a result of
company rules and policies
Arises as a result of social
interaction
Authority Arises by virtue of position
in management
Arises out of personal
-ualities
"ehaviour It is directed by rules %here is no set pattern
Page 8 of 12
Ba'&' A("+a. O"$a%&'a&(% I%-("+a. O"$a%&'a&(%
)low of
;ommunication
%aes place through scalar chain It is not through a planned route.
;an tae place in any direction.
Bature &igid )le'ible
S!)&(% C
1 +a"2 3,!'&(%'#
!5. Na+! h! 9p! (- ("$a%&4a&(% &% =h&)h#
a.
A"&!%/.9 "!.a&(%'h&p !>&'' a+(%$ h! +!+5!"'1
b.
O--&)&a. "!.a&(%'h&p !>&'' a+(%$ h! +!+5!"'1
Ans: a. )ormal b. Informal
!1. ;I $&0!' h! ("$a%&4a&(%a. '",),"!<1 Na+! h! !"+ =h&)h &' 5!&%$ "!-!""!/ (1
Ans: 7pan of management.
!2. ?I/!%&-9&%$ a%/ $"(,p&%$ a)&0&&!'@ &' a '!p &% h! p"()!'' (- =h&)h -,%)&(% (-
+a%a$!+!%7
Ans: Organizing
!3. ?D&0&'&(% (- =("2 &' h! -&"' '!p &% h! p"()!'' (- ("$a%&4&%$@1 E>p.a&%1
Ans: 6ivision of wor is the first step in the process of organization according to
predetermined plans. %he wor is divided so that duplication can be avoided and
worload is shared among the employees.
: +a"2' 3,!'&(%'#
!!. I%-("+a. ("$a%&4a&(% &' )(%'&/!"!/ 5!!" ha% -("+a. ("$a%&4a&(%1 D( 9(, a$"!!
=&h h&' 'a!+!%7 G&0! "!a'(%'1
Ans: @es, I agree.
1.
)ast communication A %his structure does not follow scalar chain so there can be
faster spread of communication.
2.
)ulfills social need A Informal communication gives due importance to
psychological and social need of employees which motivates the employees.
3.
;orrect feedbac A %hrough informal structure the top level managers can now
the real feedbac of employees on various policies and plans.
4 +a"2' 3,!'&(%'#
!(. A("+a. ("$a%&4a&(% &' )(%'&/!"!/ 5!!" ha% &%-("+a. ("$a%&4a&(%1 D( 9(, a$"!!
=&h h&' 'a!+!%7 E>p.a&%1
Ans: @es, I agree that formal organization is better than informal organization.
1.S9'!+a&) =("2&%$ A )ormal organization structure results in systematic and
smooth functioning of an organization
2.
A)h&!0!+!% (- ("$a%&4a&(%a. (56!)&0!'
A )ormal organization structure is
established to achieve organizational ob$ectives.
3.
C(("/&%a&(%
A )ormal organization structure results in coordinating the
activities of various departments.
Page 9 of 12
4.
C("! !+pha'&' (% =("2
A It lays more emphasis on wor than interpersonal
relationships.
!*. ?O"$a%&4&%$ p.a9' a% &+p("a% =h( &' &% a%9 5,'&%!'' !%!"p"&'!@1 E>p.a&% 59
$&0&%$ a%9 -(," "!a'(%'1
Ans: Organising is the process of identifying and grouping the wor to be performed,
defining and delegating responsibility and authority and establishing relationships for the
purpose of enabling people to wor most effectively together in accomplishing
ob$ectives.
I+p("a%)! (- O"$a%&'&%$ #-
1. B!%!-&' (- 'p!)&a.&'a&(%# - In organising every individual is assigned a part of total
wor and not the whole tas. 6ue to this division of wor into smaller units and
repetitive performance leads to specialisation. %hus organising promotes specialisation
which in turn leads to efficient = speedy performance of tass.
2. C.a"&9 &% =("2&%$ R!.a&(%'h&p# - It helps in creating well defined $obs and also
clarifying the limits of authority and responsibility of each $ob. %he superior, subordinate
relationship is clearly defined in organising.
3. E--!)&0! A/+&%&'"a&(%: It provides a clear description of $obs and related duties
which helps to avoid confusion and duplication. ;larity in woring relationships enables
proper e'ecution of wor which results in effective administration.
!. Op&+,+ U&.&'a&(% (- "!'(,")!': %he proper assignment of $obs avoids
overlappingDduplication of wor. %his helps in preventing confusion and minimizing the
wastage of resources and efforts
B +a"2' 3,!'&(%'#
!.. T",)2 +a%,-a),"&%$ )(+pa%9 ha' &' "!$&'!"!/ (--&)! &% D!.h& a%/ +a%,-a),"&%$
,%& &% Ch!%%a&1 Th! )(+pa%9 +a%,-a),"!' /&--!"!% 9p!' (- ",)2'1 I'
+a"2!&%$ /&0&'&(% &' .()a!/ a N(&/a1 S,$$!' a ',&a5.! ("$a%&4a&(%a. '",),"!
-(" h&' )(+pa%9 $&0&%$ "!a'(% &% ',pp(" (- 9(," a%'=!"1 A.'( !>p.a&% a%9 -&0!
a/0a%a$!' (- h&' '",),"! (- ("$a%&4&%$1
Ans: )unctional structure would be a suitable organizational structure for this company.
7ince this company has diversified activities and the operations re-uire a high degree of
specialisation. %he company has a manufacturing unit, a mareting division so $obs of
similar nature are functioning as separate departments. ?ence, functional structure
would be the most suitable form of organizational structure.
)ive advantages of functional organizational structure :
14 A functional structure leads to occupational specialisation since emphasis is placed
on specific functions. %his promotes efficiency in utilisation of manpower as employees
perform similar tass within a department and are able to improve performance.
24 It promotes control and coordination within a department because of similarity in
the tass being performed
34 It helps in increasing managerial and operational efficiency and this results in
increased profit.
!4 It leads to minimal duplication of effort which results in economies of scale and
this lowers cost.
(4 It maes training of employees easier as the focus is only on a limited range of
sills.
Page 10 of 12
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Ans: %he organization structure suitable for this company would be the divisional
structure. %his is because the company deals with various types of products. In the
divisional structure the organization structure comprises of separate business units or
divisions. 8ach unit has a divisional manager responsible for performance and who has
authority over the unit. <enerally, manpower is grouped on the basis of different
products manufactured. 8ach division is multifunctional because within each division
functions lie production, mareting, finance, purchase, etc. are performed together to
achieve a common goal. 8ach division is self#contained as it develops e'pertise in all
functions related to a product line.
A/0a%a$!'#
1. +roduct specialization helps in the development of varied sills in a divisional
head and this prepares him for higher positions. %his is because he gains
e'perience in all functions related to a particular product.
2. It promotes fle'ibility and initiative because each division functions as an
autonomous unit which leads to faster decision maing.
3. )acilitates e'pansion and growth as new divisions can be added without
interrupting the e'isting operations by merely adding another divisional head and
staff for the new product
D&'a/0a%a$!'
1. ;onflict may arise among different divisions with reference to allocation of funds
and further a particular division may see to ma'imize its profits at the cost of
other divisions.
2. It may lead to increase in costs since there may be a duplication of activities
across products.
3. It provides managers with the authority to supervise all activities related to a
particular division. In course of time, such a manager may gain power and in
a bid to assert his independence may ignore organisational interests.
S!)&(% D
4 +a"2' 3,!'&(%'#
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3a4 :utual understanding.
3b4 8mpathy.
3c4 ;aring.
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Page 11 of 12
3a4 &ecognition
3b4 &espect for seniority.
Page 12 of 12