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The goal of the organization is decided by planning process. Planning is the first as well as most important part of the business.

• The success of management does not come by just planning but also on the effective implementation of planning.
• After planning comes the organization. The success and goal achievement of any unit/work depends on proper division of work, distribution of authority and responsibility, delegation of authority among the employees. All these tasks are done under organizing.
• So, in a way we can say that planning is the soul of business whereas the work is done under organizing and so organizing works as the body.

Steps for process of organizing:

1. Clarification of objectives: The first and foremost step of organizing is to have a clearly defined goals and their proper understanding. It is important to properly understand what the main goals are and what are the sub-goals. It is also important to understand the basis or structure on which the organization is formed.

2. List of functions: Once the goals are defined properly, the list of work to be done is prepared.

• While preparing the list it should be taken care that neither a task is left nor it is repeated.
• To check these things, the list of functions is prepared by properly considering the functions.

3. Departmentalization of functions:

• After preparing the list of functions, the works that are similar in nature are classified and similar functions are placed together. Then the division of work is done accordingly.
• For example, work related to purchase is put under purchase department, work related to sales is put under sales department, work related to finance is put under accounts department and so on.
• After this division, specialization needed for each work is planned.
• The division is planned on the basis of nature of unit, geographical area, work area, etc. For example, sales of western India would be taken care by Gujarat zone, sale of central India would be taken care by Madhya Pradesh centre, etc.
• Similarly, work distribution such as advertisement and promotion work, packaging and distributing work, etc. is done as per the department.

4. Determining departmental positions and abilities:

• Once the works are divided into various departments, the type of persons that will handle the responsibilities in each department is decided. The unit also decides the abilities that these people should hold.
• For example, sales officer will be needed for handling the sales department, quality check will be handled by quality inspector, etc.
• Similarly, sub-posts or categories are also decided.

5. Delegation of power and responsibilities:

• Divisional heads, sub-divisional heads and skill based heads are finalized and then all the heads are given power and responsibilities so that they can perform their work well. .
• In addition to this the post of each person is also clarified. His role, authority and responsibility in the organization is also decided
• Over and above all these, the power and responsibilities are divided and balanced among employees of various posts.

6. Establishment of inter-relationship:

• After the proper distribution of work, and delegation of power and responsibilities among different departmental personnel, how all these will be inter-related or will interact is decided. For example, how will sales team and production team inter-relate, how will quality control department and production department inter-relate, etc.
• Through departmentalization, the power and responsibilities are decentralized and at the same can be centralized by forming inter-relations.

7. To prepare organizational chart:

• In order to provide people the perfect idea of positions of each person a proper organizational chart is prepared.
• Such a chart should be properly prepared and should be displayed on the notice board.

Characteristics of organizing:

1. Goal oriented activity:

• The main objective of organizing is to achieve business goals.
• The business defines the main objective as well as departmental objectives or sub-goals. It also defines individual goals of the employees.
• Organizing is a linear structure that co-ordinates with the goals of business, departmental goals and goals of individual employees. Hence organization is called a goal oriented activity.

2. Planning based:

• Planning is the first step of management. Organization is done on the basis of planning and objectives developed by the management.
• Hence it can be said that organization is based on proper planning.

3. Delegation of authority and responsibilities:

• The workers of the business unit work for the business goals given to them.
• These people are allotted work as per their capabilities and their skills.
• A person is delegated authorities on the basis of his designation.
• Hence organizing is a structure that establishes relationship of authority and responsibility among the people.

4. Gives importance to human element:

• Human beings are at the centre of organizing.
• The success of an organization depends on its employees.
• Effective organizational structure is based on developing effective human relationships.

5. Flexibility:

• After forming the organization the management may come across situations where in they would have to make changes in the organization.
• It is possible that unit may experience major changes in business environment, technological’ advancement, etc. As a result, the organization will have to change based on these situations. Hence, organizing is flexible.

6. Establishment of inter-relationships:

• Organizing establishes inter-relationship among work, positions or departments.
• Organizing clarifies the relationships of one work with the other work and one department with the other department.

7. Monitoring and control:

• Monitoring, controlling and coordinating are the basic requirements of an organization.
• Under monitoring and controlling, organizing checks matters such as whether the employees are performing their task as per the powers and responsibilities assigned to him or not.

8. Group activities:

• in an organization, many people work together for the accomplishment of a common goal.
• Organizing provides such a structure which enables smooth functioning of group activities.

9. Controlled administrative structure:

• Organizing is a specific type of controlled administrative structure.
• In any business unit, rules and controls are required in order to define relationships. Organizing also does the same.

Correct option is (D) Delegation of accountability

Whenever organization is to be formed on small scale, business secret to be maintained very strictly, there is absence of implementation of common policy and there is lack of co-ordination; the decentralization does not succeed.

1. Quick decisions,
2. Less work load on top level,
3. Increased motivation,
4. Increase in management abilities,
5. Effective control and
6. Harmony is created.

The success of management mainly depends upon proper delegation of authority and responsibility. Because of limitations of centralization, for proper delegation of authority and responsibility, the concept of decentralization became popular.

Important points of Decentralization:

• Quick Decisions
• Less Work Load on Top Level
• Increased Motivation
• Development of Managerial Abilities
• Effective Control and
• Harmony is created.

Responsibility is the duty assigned by the top level officer to the subordinates for a particular work.

Delegation of authority is such a kind of process in which the administrator gives a part of the powers to his sub-ordinates along with duties and the helpers, with the help of others, for the purpose of work . performance, accepts such powers consciously.

Matrix organization is a modern kind of organization, which has two different types of structures. One is the simple kind of structure, which is a part of decision making process and the other is a structure solving technical problems and is called project structure. This combination results in matrix organization.

1. Linear Organization:

• Linear organization is the most simple and ancient type of organization.
• This format of organization is used in Army since a very long time and so it is also known as Army organization.
• In linear organization, the top level holds the maximum power. In other words, the power is centralized at the top level.
• The distribution of power and responsibilities is done in straight line from top level to bottom level. .
• Since, the distribution of power is in a straight line from top to bottom level, it is called linear organization.

Formation of linear organization:

• In a linear organization, the greatest power is with the Board of Directors. They take policy based decisions for the organization.
• The Board of Directors empowers the General Manager.
• The General Manager is the main Administrative Head. It is his work to ensure that the lower employees follow the task and decisions taken by the Board of Directors.
• Below the General Manager are the various departments such as production department, administrative department and sales department.
• For each department there is a department head. The department head is responsible for the work going on his entire department.
• Under each department head there are several officers. For example, there will be purchase officer and production officer in the production department. Similarly there will be administrative officer and accounts officer in the administrative department, etc.
• Under such officers, supervisors, foreman and clerks, etc. work. Finally, the workers work under the foreman. ‘

2. Functional Organization:

• Linear organization gives more importance to department than work. This is the greatest limitation of this kind of structure.
• Keeping this limitation in mind, the ‘work based’ or say ‘function based’ organization came into existence.
• An organization with a functional structure is divided based on functional areas, such as IT, finance, or marketing. ’
• In this structure, the experts with specialized knowledge are given special responsibilities for areas of their expertise. This type of structure is called functional organization. For example, Human Resource Manager will look after the recruitment, transfer, promotions, etc.

Formation of functional organization:

• The core of functional organization lies in giving special importance to work distribution on the basis of specialization.
• Specialized experts are appointed for each kind of work. These experts do not serve only as advisors but they are also administrative heads of their work areas. They are fully responsible for the task assigned to them. For example, the purchase officer is fully responsible for ail type of purchase-related work.
• The Chief Executive Officer is at the top and holds the supreme powers of the functional organization.
•  A unit can be divided into two (or more) parts. Each unit has its assigned list of activities and works.
• The units then assign the tasks and works to different officers. For example, the factory unit (or department) will assign the work to Quality Control Officer, Chief Maintenance Engineer and so on.
• Each officer then gives orders to the employees under him to perform the task.

3. Formal Organization:

• In order to achieve the predefined goals, the formal structure of relationship established among persons and work is called formal organization.
• Linear organization and functional organization are types of formal organization.
• In formal organization, necessary powers are given to enable the person to perform certain kind of responsibilities.
• The organization also clarifies matters related to delegation of authority among superior officers.

4. Informal Organization: In the formal organizational structure, individuals are assigned various job positions. While working at those job positions, the individuals interact with each other and develop some social and friendly groups in the organization. This network of social and friendly groups forms another structure in the organization which is called informal organizational structure.

• The informal organizational structure gets created automatically and the main purpose of such structure is getting psychological satisfaction.
• The existence of informal structure depends upon the formal structure because people working at different job positions interact with each other to form informal structure. So, if there is no formal structure, there will be no job position and there will be no informal structure.
• The members while doing the formal work also interact at social level, bring their own values and assumptions during work discussion. The members of informal organization develop friendship, alliances, trusted sources of information and share preferences on how work should be done.

5. Matrix Organization:

• The organizational structure in which people with similar skills are pooled for work assignments, resulting in more than one manager is called a matrix organization.
• Matrix organization is a combination of work based (functional organization) and project based organization.
• For example, all engineers may be in one engineering department and report , to an engineering manager (i.e. part of functional organization structure), but these same engineers may be assigned to different projects and report to a different engineering manager or a project manager while working on that project. Therefore, each engineer may have to work under several managers at same point of time.

Formation of matrix organization:

• In this type of organization, several project managers are appointed for various projects and each project manager is given different type of work responsibilities.
• The responsibility of the project manager is to successfully complete the project assigned to him that too on time.
• For each project, a pool of employees is made from different areas of the company. Each of these employees holds some specific skill which is needed by the project.

Informal organization is the formation of internal relations formed on its own, in order to provide contribution to some result achievements, formed without any formal planning.

Characteristics informal organization:

1. As the name suggest, the structure of this type of organization is informal.

• It develops from inter-relationships and interactions.
• This kind of structure is naturally formed when the employees working together work for a commonly defined goal.

2. Based on human relations:

• This kind of structure is based on human relations.
• It is formed between people who share similar feelings, interests, values, hobbies, habits and beliefs.

3. Ever-changing:

• The informal structure is ever changing.
• When an employee leaves one group and joins another work group, the new informal structure is created or changed, as per the change in work environment.

4. Universal:

• This structure is universal i.e. it is not only found in businesses.
• It is found in all places wherever human activities take place.

5. Informal communication:

• The channel of communication is informal i.e. the communication is done informally and mainly orally.
• As a result, there are chances to have more opinions and fewer facts in it. This kind of communication is very fast.

6. Small size:

• The size of this organization is mostly small because it forms due to individual relationships, exchange of ideas, sharing same wave-length, etc.
• A large organization can have several such informal organizations but members in each would mostly less.

7. Lack of control: These organizations are formed on the basis of circle and mindset of ‘ individuals. Hence, no control can be maintained within an informal
organization.

8. Complements formal structure:

• Since informal organization emerges from formal organization it is said that informal organization complements formal organizations.
• In the modern times, informal fcommunication structure is used widely. This helps to reduce industrial disputes and maintain discipline. Hence this structure is more popular.

Correct option is (B) Sales department

Organizing is the body of the organization

Correct option is (A) Informal organization

Planning decides the goal of the organization

Correct option is (B) Functional

Correct option is (C) Linear

Correct option is (B) Organization

Correct option is (B) Responsibility

Correct option is (A) Specialization

• The decision of decentralization largely depe’nds on the size of the unit and the approach of the administrators.
• It is a policy matter and so it can be possible only if the management decides to go for it.
• A large scale unit raises the need of decentralization.

• The structure formed in order to enable delegation of authority and responsibility towards the people actively engaged for common goal is known as organizing. Organizing is also called arrangement.
• For smooth and effective administration and management there should be proper organization in the unit.
• Most of problems of management arise due to ineffective organization in the management.
• Proper organizing can enable the unit to achieve its goals that too in desired time. It also enables optimum use of resources, time, energy and money.

The role of the General Manager is that of an administrative head in departmental organization. General Manager’s work is to ensure that the lower employees follow the task and decisions taken by the Board of Directors.

Importance of decentralization: The idea of decentralization is becoming popular in modern times owing to several advantages it holds.

Its importance can be understood through the following points: 

1. Quick decisions: In decentralization, the person who has the power to take the decision is actively involved in his area of decision making. As a result, decisions are taken quickly and effectively.

2. Less work load on top level:

• The top level is the level where most of the policy matter related decisions are taken.
• By adopting decentralization, the decision making powers are given to middle or lower level. Hence, the work load on upper level is reduced.

3. Increases motivation:

• Under decentralization, employees of middle level and lower level are given ^ certain decision making independence.
• These employees become more motivated because they get a feeling that their seniors trust them and their decisions.
• Moreover, when the decisions become correct, they get more motivated and confident.

4. Increase in management abilities:

• Under decentralization, employees of middle level and lower level are given certain decision making independence.
• Hence, these employees become efficient leaders. They develop skills to work in coordination.
• They develop good administrative skills and they learn the methods of controlling the staff.
• Ail this improves management abilities of these employees and the company produces managers for the future.

5. Effective control:

• Under decentralization, the managers of all the levels have enough power to manage, make decisions and control their respective areas.
• As a result, they can exercise control over the employees, can take decisions if employees makes mistakes and can take disciplinary actions. This makes management easy and controlling effective.

6. Harmony is created:

• Due to decentralization, employees of all levels are included in the decision making process and hence are given importance.
• All the levels of officers and employees i.e. the decision makers and the followers discuss business matters and then take proper decisions.
• This increases interaction among people, feeling of onenesls and harmony.

Importance of delegation of power can be understood from the following points:

1. Work-efficient management:

• Due to delegation of power, the officers working on higher level can free themselves from routine and basic work. This helps them to focus more on important areas.
• This also helps to accomplish business objectives easily due to which the business unit gets work-efficient management.

2. Development of employees: Delegation empowers various employees working in the organization to take decisions on several matters. This improves their decision making ability, confidence and overall development.

3. Motivation:

• Delegation of power enables the employees to develop their abilities.
• When the higher administrator delegates the power to the subordinates, such subordinates not only get the work accomplished but at the same time also gets motivated due to such work accomplishment and the responsibility and power vested on them.

4. Benefit of specialization:

• Different individuals have different abilities and specialization. The administrator may be specialized in marketing but not in finance.
• The administrators can identify specialists from various areas of the organization and delegate them powers based on their specialization. Hence, the organization gets the benefit of specialized skills.

5. Co-ordination:

• Delegation improves the relationship of helper and upper officers.
• The middle and lower level employees get the chance to take their decisions independently. In this way, their opinions are respected and they are able to develop inter personal relations in the organization.
• These things help to improve co-ordination in the unit.

6. Scope for expansion:

• Due to delegation of power, the upper level officers become free from several works.
• Hence, they can focus on expansion of the business.

importance of Delegation of Authority:

• Work Efficient Management
• Development of Employees
• Motivation
• Benefit of Specialization
• Co-ordination and
• Scope for Expansion.

Formal organization:

• In order to achieve the predefined goals, the formal structure of relationship established among persons and work is called formal organization.
• Linear organization and functional organization are types of formal organization.
• In formal organization, necessary powers are given to enable the person to perform certain kind of responsibilities.
• The organization also clarifies matters related to delegation of authority among superior officers.

Characteristics of formal organization:

1. Formal structure: The administrators form the formal structure very cautiously to achieve the desired goals.
2. Lacking flexibility: In this kind of structure, the position assigned to the employees generally cannot be changed or altered. So, this structure is not flexible.
3. Delegation of power from upper to lower level: The delegation of power is done by superior officer and it flows from upper level to lower level.
4. Large size: Formal organization structure is a large size structure.
5. Particular relations: Since the formal organization is formed with proper method, the relations among the employees are particularly formed.
6. Communication: Communication is done only through a formal method. There is no scope for informal communication.

Difference between format and informal organization.

Informal organization:

• In the formal organizational structure, individuals are assigned various job positions. While working at those job positions, the individuals interact with each other and develop some social and friendly groups in the organization.
• This network of social and friendly groups forms another structure in the organization which is called informal organizational structure.
• The informal organizational structure gets created automatically and the main purpose of such structure is getting psychological satisfaction.
• The existence of informal structure depends upon the formal structure because people working at different job positions interact with each other to form informal structure. So, if there is no formal structure, there will be no job position and there will be no informal structure.
• Informal organization can be considered as a shadow of forma! structure of Organization. It can also be considered a subordinate structure to formal organization.
• The members while doing the formal work also interact at social level, bring ‘ their own values and assumptions during work discussion. The members of informal organization develop friendship, alliances, trusted sources of information and share preferences on how work should be done.
• One of the best examples of informal organization is the several group of friends formed within class 12. Although, school follows some specific structure of organization but groups of friends are informal organizations within this structure.

Correct option is (B) Informal organization complements formal organization

Characteristics of Informal Organization:

• Informal Structure
• Based on Human Relations
• Ever Changing
• Universal,
• Informal Communication
• Small Size,
• Lack of Control and
• Complement to Formal Structure.

When without any conscious objective, to contribute to group results, the structure of internal relations is developed on its own; it is called informal organization. Informal organization is a shadow of formal organization. Hence no proper chart can be prepared for the same.

Mainly the organization can have any of the following structures:

1. Linear Organization
2. Functional Organization
3. Formal Organization
4. Informal Organization
5. Matrix Organization

• By looking at the structure of the organization one can know the type of organization.
• What structures will the business follow depends on the nature, size and responsibilities of business unit and its classification.

• Linear organization flows from top to bottom with top having unlimited powers and bottom level, minimal.
• Linear organization gives more importance to department than work. This is the greatest limitation of linear organization structure.
• Linear organization does not have scope for specialized work because the stress is more on departments and less on functions.
• The administrators and officers in one unit have to perform many several types of tasks. Naturally, all of them are not experts in all the types of works.

Correct option is (A) More importance to departments than work

• Linear organization is the most simple and ancient type of organization.
• Linear organization is more favourable if the organization is of small size, the work area is limited and the problems of control and discipline are also limited.
• In such types of organization there is a unity of command which follows from top to bottom.
• These characteristics are quite suitable even for organizations which are pretty small size. As a result, linear organization is most commonly found organizational structure.

Forming an organizing is a scientific process.

• According to Peter F. Drucker, “The lack of proper formation of organization cannot sustain for longtime. Hence, the unit slowly gets destroyed.”
• Organizing gives a proper direction and flow to the business unit.
• Goals, roles, responsibilities and authorities are clearly understood by all the . employees if organizing is done properly.
• It is therefore necessary to see that organizing done by following proper steps and that the functional relations are established in proper manner.