Explore topic-wise InterviewSolutions in .

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

Divisional structure is an organisational structure comprising of separate business units or divisions.

It is suitable for those enterprises:

(i) Where two or more products are manufactured.

(ii) When an organisation grows and diversifies.

Advantages of divisional structure:

(i) Product specialization helps in the development of varied skills.

(ii) It helps in the fixation of responsibility as divisional heads who are accountable for profits, revenues and costs related to their departments.

(iii) It promotes flexibility, initiative and faster decision making as each division is an autonomous unit.

(iv) It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.

(v) It reduces the problem of co-ordination between departments as all activities concerning a particular product line are integrated together.

The importance of organising can be described as follows:

(i) Benefits of Specialization: In organising, the whole work is divided into manageable activities and systematic allocation of work is done. It increases productivity and the efficiency of workers. As a result due to repetetive work workers get experience in particular fields which Ieads to specialization.

(ii) Adaptation to changes: It facilitates business enterprise to accommodate changes in the workload caused by business environment. In case of change, organisation paves the way for revision of relationships at organisational levels.

(iii) Clarity in working relationships: Authority and responsibility are clearly defined in such a way that every person knows as to who is reporting to whom and for what, etc.

(iv) Optimum utilization of resources: Proper allocation of resources helps in avoiding overlapping work and ensures optimum use of al1 human, physical and financial resources.

(v) Effective Administration: By clearly describing the jobs related duties, duplication of work and confusion can be avoided in the organisation. Thus it ensures effective administration.

(vi) Development of the personnels: Delegation of authority reduces the work load of a manager and enables him to explore new areas of growth for his organisation. It enables the subordinates to effectively deal with the challenges and to realise their full potential.

(vii) Expansion and growth: Organising enables an enterprise to take up new, challenges. For example, more job positions, departments, new product lines, new geographical territories, etc. to increase sales/profits, market share and growth of the enterprise.

Functional Structure

a. Product specialisation 

b. Facilitates expansion and growth

Product specialisation

It refers to the division of the whole enterprise according to the major products to be manufactured by it.

(i) Adaptation to Change: The process of organising allows a business enterprise to adapt itself allows a business enterprise to adapt itself according to the changes in the business environment.

(ii) Effective Administration: In organisation structure, the jobs of managers and non-managers are clearly defined, clarity in working relationship enables the proper excecution of work. This brings effectiveness in adminstration.

It indicates about the importance of organisation.

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.

Distinguish between Centralisation and Decentralisation.

Correct option is a. Both Assertion (A) and reason (R) are true

Informal organisation is a network of personal and social relations not established by the formal organisation but arising spontaneously due to people associating themselves with one another.

Features of Informal Organisation are:

(a) Origin: It originates within the formal organisation.

(b) Formation: It emerges spontaneously and is not delibelately created by the management.

(c) Behaviour: The standards of behaviour evolve from group norms.

(d) Communication: Independent channels of communication are developed by group members.

(e) Structure: It has no definite structure or form.

Span of management refers to the number of subordinates that can be effectively managed by a superior.

On the basis of (i) Territory; (ii) Products

Presently the company has a functional structure since it is a uni-product company but now it will go for divisional structure since it is suitable for a multi-product company.

Yes, because it facilitates:

(i) Flexibility in informal group.

(ii) Availability of an extra channel of communication i.e., grapevine.

(iii) Less risk of confrontation.

(iv) Faster spread of information.

a. Benefits of specialisation.

b. Coordination is established.

It refers to the division of whole enterprise according to the major activities to be performed by it.

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

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

Correct option is (b) Departmentalisation

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.

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 refers to the delegation of authority i.e. decision making power throughout all the levels of the organisation.

Importance:

(i) Relief to top management

(ii) Develops managerial talent for the future

(iii) Quick decision making

(iv) Develops initiative amongst subordinates

Important of decentralisation is explained as follows:

(i) Relief to top management: In a decentralized organisation, top managers are not burdened by common day-to-day problems. They have enough time to plan ahead and develop new strategies.

(ii) Develops managerial talent for the future: In a decentralized organisation even lower level managers learn the art of exercising decision making authority. This prepares them for the promotion to the higher levels.

(iii) Quick decision making: In a decentralized organisation, decision making is not restricted in few hands only but decision power is entrusted with all the managers who perform the activities.

(iv) Develops initiative amongst subordinates: Decentralization helps to promote self-reliance and confidence amongst the subordinates. They learn to depend on their own judgement.

(v) Facilitates growth: Decentralization provides greater autonomy to the lower levels of management as well as divisional or departmental heads. This allows them to function in a manner best suited to their department. Consequently the productivity levels increase and the organisation is able to generate more returns which can be used for growth and expansion purposes.

(vi) Better control: Decentralization makes it possible to evaluate performance at each level. The departments can be individually held accountable for their results.

(a) Decentralisation.

(b) Importance:

(i) Relief to top management: Top managers are not burdened by common day-to-day Problems. They have enough time to plan ahead and develop new strategies.

(ii) Develops managerial talent for the future: Even lower level managers learn the art of exercising decision making authority. This prepares them for Promotion to higher levels.

(iii) Quick decision making: Since decisions are taken at levels which are nearest to the point of action without seeking approval from many levels, the Process is much faster.

(iv) Develops initiative among subordinates: It helps to promote self-reliance and confidence among the subordinates.

(v) Facilitates growth: It provides greater autonomy to the middle and lower levels of management. It leads to more productivity, higher return, growth and expansion.

(vi) Better control: It makes evaluation of performance at each level better. The departments can be individually held accountable for their results.

Delegation is the process of transferring authority from a superior to his subordinate. Delegation of authority is necessary for the smooth functioning of a business.

Grouping the activities on the basis of product is known as divisional Structure. The large organizations which have more than one product have this kind of organizational structure.