All questions of Organising for Commerce Exam

Sometimes an organisation has more than one product line. Under such a scenario the organisation groups the activities on the basis of the product line. Such a grouping of activities on the basis of product line is known as divisional organisation. Each division further has its own sub-departments such as production, finance, etc.

Authority can be delegated but responsibility can never be delegated. Responsibility of subordinates is “performance” and that of managers is “responsibility for the action of their subordinates”. One cannot be held responsible for a task if he has only limited authority.

Delegation is the assignment of any responsibility or authority to another person to carry out specific activities. It is one of the core concepts of management leadership. However, the person who delegated the work remains accountable for the outcome of the delegated work.

Span of control is the term now used more commonly in business management, particularly human resource management. Span of control refers to the number of subordinates a supervisor has.

Authority as a Superior-Subordinate Relationship

Definition of Authority:
Authority refers to the power or right to give orders, make decisions, and enforce obedience. It is a formal power vested in individuals or organizations to make decisions, direct others, and take action.

Superior-Subordinate Relationship:
Authority is a superior-subordinate relationship where the superior has the power to direct and control the actions and decisions of the subordinate. The superior possesses the ability to make decisions and the power to enforce them, while the subordinate has the obligation to follow the orders and directions of the superior.

Flow of Authority:
The flow of authority is from top to bottom. The superior is at the top of the hierarchy and has the ultimate authority, while the subordinate is at the bottom of the hierarchy and has limited authority. The authority flows down the hierarchy, and the subordinate is accountable to the superior for their actions and decisions.

Significance of Authority:
Authority is essential for the smooth functioning of organizations. It ensures that the decisions are made at the right level, and the work is carried out efficiently and effectively. It helps to maintain discipline, establish order, and promote coordination and cooperation among the members of the organization.

Therefore, the correct answer is option 'C' - Authority.

In philosophy, moral responsibility is the status of morally deserving praise, blame, reward, or punishment for an act or omission, in accordance with one's moral obligations. Deciding what counts as "morally obligatory" is a principal concern of ethics.

Delegation of authority in an organization leads to the transfer of power to make decisions and take actions from a higher-level position to a lower-level position. This transfer of power leads to the emergence of responsibility for the delegated tasks.

Responsibility as a Result of Delegation of Authority:

When authority is delegated, corresponding responsibility emerges. The person or department to whom the authority is delegated becomes responsible for the task or decision they are accountable for. This means that the individual or department must ensure that the task is carried out efficiently, effectively, and in a timely manner. They are answerable for their actions to their superior, and failure to carry out the task appropriately can lead to negative consequences.

Importance of Responsibility in Delegation of Authority:

Responsibility is an essential component of delegation of authority because it ensures that the delegated task is completed effectively and efficiently. It also helps to maintain a clear chain of command in the organization, as each person is responsible for the tasks delegated to them.

Conclusion:

In conclusion, delegation of authority leads to the emergence of responsibility, which is essential for the effective functioning of an organization. Responsibility ensures that the delegated tasks are completed efficiently, and it helps to maintain a clear chain of command in the organization.

Business risks are the unexpected changes that occur without the knowledge of business man which can cause profit or even losses to the firm.
for eg: change in trend

Rumours are a result of informal organisation. They can have adverse effect on the working environment. It may result in arguments or conflicts among the people of the organisation. For example, a rumour about the boss may pop up during a communication among a group of employees, which may affect the superior-subordinate relationship.

The last step in the organizing process is establishing reporting relationships. This step involves creating a clear and formal system of communication and reporting within an organization. It ensures that there is a structured flow of information, authority, and responsibility from top to bottom and vice versa.

Establishing reporting relationships is crucial for effective coordination and control within an organization. It helps in defining the hierarchy and chain of command, clarifying roles and responsibilities, and facilitating decision-making processes.

Here is a detailed explanation of the last step in the organizing process:

1. Importance of establishing reporting relationships:
- Provides a clear line of authority and accountability: By establishing reporting relationships, it becomes clear who reports to whom and who is responsible for what. This clarity helps in avoiding confusion and conflicts regarding roles and responsibilities.
- Facilitates effective communication: A well-defined reporting system ensures that information flows smoothly and timely between different levels of the organization. This facilitates effective coordination and decision-making.
- Enables efficient decision-making: When reporting relationships are established, it becomes easier to involve the right people in the decision-making process. This ensures that decisions are made by those who have the necessary knowledge and authority.

2. Steps involved in establishing reporting relationships:
- Identifying reporting relationships: This step involves determining the reporting structure based on the organization's hierarchy and functional requirements.
- Designating supervisors: Once the reporting relationships are identified, supervisors or managers are assigned to oversee and guide the work of their subordinates.
- Defining reporting channels: Reporting channels are established to ensure that information flows in a systematic manner. This includes determining who reports to whom and how often.
- Establishing communication protocols: Clear guidelines and protocols are set to ensure effective communication within the organization. This may include regular meetings, reports, and feedback mechanisms.

3. Benefits of establishing reporting relationships:
- Improved coordination and teamwork: Clear reporting relationships help in fostering collaboration and coordination among different departments and individuals within the organization.
- Enhanced accountability: When reporting relationships are established, individuals are held accountable for their actions and performance, as they know who they are reporting to and who is responsible for evaluating their work.
- Streamlined decision-making: With clear reporting relationships, decision-making becomes more efficient as the right people are involved at the appropriate levels of authority.

Overall, establishing reporting relationships is a crucial step in the organizing process as it provides a structured framework for communication, coordination, and decision-making within an organization. It ensures that there is clarity regarding roles, responsibilities, and authority, leading to improved efficiency and effectiveness.

Centralisation refers to the retention of decision making authority. Centralisation implies a situation where the decision making power is retained by the top level management. Under such a system, other levels of management do not have a right to intervene in policy making. The power and the authority, in such a system, remains concentrated in a few hands.

Delegation helps in the expansion of an organisation by providing a ready workforce to take up leading positions in new ventures. Trained and experienced employees are able to play significant roles in the launch of new projects by replicating the work ethos they have absorbed from existing units, in the newly set up branches.

Establishing Relationship Between People, Work, and Resources

Organizations are established to achieve specific goals and objectives. For this purpose, they bring together people, work, and resources to create value for their customers. In this context, establishing a relationship between people, work, and resources is essential for the success of any organization.

People:

People are the most valuable asset of an organization. They bring skills, knowledge, and experience to the workplace, which are essential for the organization's success. Establishing a relationship with people involves creating a work environment that supports their growth, development, and well-being. This includes providing training and development opportunities, recognizing and rewarding their contributions, and promoting a culture of respect and inclusion.

Work:

Work refers to the tasks and activities that people perform to achieve organizational goals. Establishing a relationship with work involves ensuring that the work is meaningful, challenging, and aligned with the organization's objectives. This includes setting clear expectations, providing the necessary resources and support, and promoting a culture of continuous improvement.

Resources:

Resources refer to the physical, financial, and technological assets that organizations use to support their operations. Establishing a relationship with resources involves ensuring that they are used effectively and efficiently to achieve organizational goals. This includes developing and implementing processes and procedures to manage resources, monitoring their use and performance, and making adjustments as needed.

Conclusion:

Establishing a relationship between people, work, and resources is essential for the success of any organization. By creating a work environment that supports people's growth, providing meaningful and challenging work, and using resources effectively, organizations can create value for their customers and achieve their goals and objectives.

Understanding Situation 4: Minimum Duplication of Efforts
In Situation 4, the organization has structured its departments functionally, which has led to minimum duplication of efforts. This organizational structure directly contributes to a reduction in costs for several reasons:
1. Streamlined Processes
- Employees within the same department perform similar tasks, allowing for a more focused approach to work.
- This reduces the time and resources spent on coordinating activities across different departments.
2. Enhanced Efficiency
- Functional departments can specialize in their respective tasks, leading to higher productivity and efficiency.
- With clear roles and responsibilities, employees can work more efficiently without overlapping duties.
3. Cost Savings
- By minimizing duplication, the organization avoids unnecessary expenditures associated with redundant tasks and resources.
- For example, if two departments were previously handling the same marketing function, consolidating that function leads to fewer marketing materials and lower operational costs.
4. Better Resource Allocation
- Resources, including time, manpower, and finances, can be allocated more effectively when departments focus on single functions.
- This allows the company to invest in growth areas rather than spread resources thinly across multiple overlapping functions.
Conclusion
Overall, the results of having a well-structured functional organization, as seen in Situation 4, directly lead to a reduction in costs. This efficiency not only maximizes operational effectiveness but also contributes to the company's profit margins, allowing for reinvestment in further innovation and expansion.

Divisional heads are accountable for profits, as revenues and costs related to different departments can be easily identified and assigned to them. This provides a proper basis for performance measurement. It also helps in fixation of responsibility in cases of poor performance of the division and appropriate remedial action can be taken.

Since the ultimate responsibility and accountability lies with superiors, it is the right of superiors to analyse the performance of their subordinates and if it is felt that there is misuse of authority and responsibility is not carried out as expected, the delegated authority can be taken back and may be re-delegated ...

Avoidance of duplication of work helps in preventing confusion and minimising the wastage of resources and efforts.

Yes generally product specialisation is concerned with divisional structure....eg henry Ford's assembling line method which made a revolution in car industry.... By this method assembling car by dividing assembling car as small divisional structure.. ....

By empowering the employees, the managers are able to function more efficiently as they get more time to concentrate on important matters. Freedom from doing routine work provides them with opportunities to excel in new areas.

Responsibility is the obligation of a subordinate to properly perform the assigned duty. It arises from a superior–subordinate relationship because the subordinate is bound to perform the duty assigned to him by his superior. Thus, responsibility flows upwards, i.e., a subordinate will always be responsible to his superior.

Explanation:
Under accountability, a person is answerable for the final outcome of the assigned task. This means that the person is responsible for the results of the task and will be held accountable for any success or failure. There are several reasons why accountability is important in a business context:

Ensures responsibility: Accountability ensures that each person is responsible for their actions and decisions. This helps to promote a culture of responsibility and ownership in the workplace.

Encourages transparency: When people are held accountable, they are more likely to be transparent about their actions and decisions. This helps to promote trust and open communication in the workplace.

Promotes learning: When people are held accountable for their actions and decisions, they are more likely to learn from their mistakes and improve their performance in the future.

Boosts productivity: Accountability helps to ensure that people are working towards a common goal and are focused on achieving results. This can help to boost productivity and improve overall performance.

In conclusion, accountability is an important aspect of business that helps to promote responsibility, transparency, learning, and productivity. By holding people accountable for their actions and decisions, businesses can create a culture of excellence and achieve success.

Assignment of Duties: The work is assigned according to the ability of individuals. Employees are assigned duties by giving them a document called job description. This document clearly defines the contents and responsibilities related to the job.

Group norms are ground rules that can encourage a group to work efficiently and discourage behaviors that hinder its effectiveness. Although unwritten, they govern how group members interact with each other, work as a team, make decisions, and even how they dress.

Once departments have been formed, each of them is placed under the charge of an individual. Jobs are then allocated to the members of each department in accordance to their skills and competencies.

Organising provides a clear description of jobs and related duties. This helps to avoid confusion and duplication. Clarity in working relationships enables proper execution of work.

Authority refers to the right of an individual to command his subordinates and to take action within the scope of his position. The concept of authority arises from the established scalar chain which links the various job positions and levels of an organisation. Accountability implies being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot deny accountability.

Advantages of Decentralization highlighted in the given case:

1. Development of initiative among subordinates:
   - By handing over decision-making authority to the lower level employees, Alpha Tonics promoted the development of initiative among its employees.
   - This allowed employees to take the first step in managing things on their own, leading to a sense of ownership and increased motivation.
   
2. Developing managerial talent for the future:
   - The policy decision to decentralize power also helped in developing managerial talent for the future.
   - By empowering the operations manager in the manufacturing branch, the company recognized the need for stronger leadership at lower levels.
   - This not only improved the performance of the branch but also prepared potential future leaders within the organization.
   

Therefore, both the advantages of decentralization - development of initiative among subordinates and developing managerial talent for the future - were highlighted in the given case of Alpha Tonics.

When duties are assigned to subordinates then the required authority must also be conferred to him. The delegatee is fully answerable to his superior for performance of the task assigned to him. Thus, the superior ensures performance through accountability by his subordinate.

The organisation structure can be defined as the framework within which managerial and operating tasks are performed. It specifies the relationships between people, work and resources.

The organising function begins with the division of total work into smaller units. Each unit of total work is called a job. The division of work into smaller jobs leads to specialization because jobs are assigned to individuals according to their qualifications and capabilities.

Once work has been divided into small and manageable activities then those activities which are similar in nature are grouped together. Such sets facilitate specialisation. This grouping process is called departmentalisation.

A functional organization is a common type of organizational structure in which the organization is divided into smaller groups based on specialized functional areas, such as IT, finance, or marketing.

A functional structure leads to occupational specialisation since emphasis is placed on specific functions. This promotes efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve performance.

The process of organising involves identifying and dividing the work that has to be done in accordance with previously determined plans. The work is divided into manageable activities so that duplication can be avoided and the burden of work can be shared among the employees.