According to the CBSE Class 12 Business Studies syllabus (2026–27), Chapter 5 Organising includes: concept and importance of organising, organising process, functional and divisional structure, formal and informal organisation, delegation, and decentralisation.
CBSE Class 12 Business Studies
Chapter 5: Organising
20 Important Questions and Answers
Q1. What is meant by Organising?
Answer:
Organising is the management function that involves identifying and grouping activities, assigning duties, establishing authority relationships, and allocating resources to achieve organisational goals effectively. It follows planning and helps in implementing plans in a systematic manner. Through organising, managers determine what work is to be done, who will do it, and how different activities will be coordinated. It creates a clear structure of roles and responsibilities within the organisation. Organising ensures optimum utilisation of resources, avoids duplication of work, promotes specialisation, and facilitates coordination among departments. Therefore, organising is essential for achieving efficiency and effectiveness in business operations.
Q2. State any four importance of organising.
Answer:
Organising is important because it provides several benefits to an organisation. First, it promotes specialisation by assigning specific jobs to employees according to their skills. Second, it ensures optimum utilisation of resources by avoiding wastage and duplication of work. Third, organising helps in adaptation to changes by making the organisation flexible and responsive to environmental changes. Fourth, it develops personnel by giving employees opportunities to take responsibility and grow professionally. In addition, organising establishes clear authority and responsibility relationships, leading to better coordination and smooth functioning of the enterprise. Thus, organising contributes significantly to organisational success and efficiency.
Q3. Explain the process of organising.
Answer:
The organising process involves a series of systematic steps. First, managers identify and divide the total work into specific activities. Second, similar activities are grouped into departments based on functions or products. Third, duties are assigned to individuals according to their qualifications and abilities. Fourth, authority and responsibility relationships are established to ensure accountability and coordination. Finally, resources are allocated to different departments and positions. This process creates a well-defined organisational structure and facilitates effective implementation of plans. Through organising, employees understand their roles clearly, which helps in achieving organisational objectives efficiently and systematically.
Q4. What is a Functional Structure?
Answer:
A functional structure is an organisational structure in which activities are grouped according to specialised functions such as production, marketing, finance, and human resources. Each department is headed by a functional specialist who supervises related activities. This structure promotes specialisation and operational efficiency because employees perform tasks in their area of expertise. It also facilitates better supervision and coordination within departments. However, it may lead to communication gaps between departments and delay decision-making. Functional structure is most suitable for organisations that produce a limited range of products and operate in a stable environment where efficiency is a primary objective.
Q5. Mention any four advantages of Functional Structure.
Answer:
Functional structure offers several advantages. First, it promotes occupational specialisation, leading to greater efficiency and expertise. Second, duplication of efforts is reduced because similar activities are grouped together. Third, it facilitates better supervision and control as specialists head each department. Fourth, training and development become easier because employees work with experts in their field. It also ensures efficient utilisation of resources and promotes career growth opportunities. Since responsibilities are clearly defined, employees understand their duties better. Therefore, functional structure is highly suitable for organisations aiming to achieve efficiency and specialisation in operations.
Q6. What is a Divisional Structure?
Answer:
A divisional structure is an organisational structure in which activities are grouped according to products, geographical areas, or customer segments. Each division functions as a separate unit with its own resources and departments. Divisional managers are responsible for the performance and profitability of their respective divisions. This structure is suitable for large organisations dealing with multiple products or markets. It allows quick decision-making, better focus on specific products, and improved accountability. However, it may lead to duplication of resources and increased operational costs. Despite these limitations, divisional structure supports expansion and growth effectively.
Q7. State any four advantages of Divisional Structure.
Answer:
Divisional structure provides many benefits to large organisations. First, it promotes accountability because each division is treated as a profit centre. Second, decision-making becomes faster as divisional managers have greater authority. Third, performance evaluation is easier because results of each division can be measured separately. Fourth, it facilitates expansion and diversification by allowing the addition of new product lines without disturbing existing operations. It also improves customer focus and flexibility. Since divisions operate independently, management can identify strengths and weaknesses more effectively. Therefore, divisional structure is widely used in diversified business enterprises.
Q8. Differentiate between Functional and Divisional Structure.
Answer:
Functional structure groups activities according to functions like marketing, finance, and production, whereas divisional structure groups activities according to products, territories, or customer groups. Functional structure promotes specialisation and is suitable for organisations with limited product lines. Divisional structure is suitable for large enterprises with diversified operations. In functional structure, coordination between departments may be difficult, while divisional structure provides better focus on specific products. Functional structure avoids duplication of resources, whereas divisional structure may involve duplication of resources across divisions. Thus, both structures have distinct features and are chosen according to organisational needs and objectives.
Q9. What is Formal Organisation?
Answer:
Formal organisation refers to the official structure of authority and responsibility deliberately created by management to achieve organisational goals. It specifies job positions, reporting relationships, duties, and communication channels. Formal organisation is based on rules, procedures, and policies established by the management. It ensures discipline, coordination, and accountability among employees. Since responsibilities are clearly defined, confusion and overlapping of work are minimised. Formal organisation also facilitates effective control and decision-making. It provides stability and consistency in organisational operations. Therefore, formal organisation serves as the backbone of a business enterprise by defining the official framework for work.
Q10. What is Informal Organisation?
Answer:
Informal organisation refers to the network of personal and social relationships that develop naturally among employees within a formal organisation. It arises due to interaction, common interests, friendships, and social needs of individuals. Unlike formal organisation, it is not deliberately created by management and has no written rules. Informal organisation facilitates quick communication, promotes cooperation, and improves employee morale. It helps satisfy social and emotional needs of employees. However, it may also spread rumours and create resistance to change. Despite its limitations, informal organisation complements the formal structure and contributes to organisational effectiveness.
Q11. State any four advantages of Informal Organisation.
Answer:
Informal organisation offers several advantages. First, it provides a sense of belonging and satisfaction to employees. Second, communication is faster because information flows freely among members. Third, it promotes teamwork and cooperation by strengthening interpersonal relationships. Fourth, it supports management by filling communication gaps that may exist in the formal structure. Informal organisation also encourages innovation and problem-solving through social interactions. Employees feel more comfortable sharing ideas and concerns. Although it operates without formal authority, it positively influences employee motivation and organisational climate. Hence, informal organisation plays an important role in improving workplace relationships and productivity.
Q12. Define Delegation.
Answer:
Delegation refers to the transfer of authority from a superior to a subordinate to perform specific tasks while retaining overall accountability. It enables managers to distribute work and responsibilities among employees for efficient functioning. Delegation does not mean complete transfer of responsibility because the superior remains accountable for final results. It helps reduce managerial workload and allows quicker decision-making at lower levels. Through delegation, employees gain confidence, experience, and opportunities for growth. Effective delegation improves organisational efficiency and develops future managers. Thus, delegation is a vital element of organising and managerial effectiveness.
Q13. Explain the elements of Delegation.
Answer:
Delegation consists of three important elements. First is Authority, which refers to the right to make decisions and give orders. Second is Responsibility, which means the obligation to perform assigned duties effectively. Third is Accountability, which refers to being answerable for the results of assigned tasks. Authority flows downward from superior to subordinate, while accountability flows upward because subordinates report to their superiors. Responsibility cannot be delegated completely. Effective delegation requires a proper balance among authority, responsibility, and accountability. These three elements ensure smooth functioning, coordination, and achievement of organisational objectives.
Q14. Why is Delegation important?
Answer:
Delegation is important because it improves organisational efficiency and managerial effectiveness. It reduces the workload of managers, enabling them to focus on strategic decisions. Delegation develops employees by giving them opportunities to learn, take responsibility, and improve decision-making skills. It facilitates quick decision-making because authority is distributed at different levels. Delegation also motivates employees by increasing their participation and sense of responsibility. Furthermore, it promotes effective supervision and coordination throughout the organisation. By creating a chain of command and accountability, delegation contributes to organisational growth and smooth functioning. Therefore, it is an essential management practice.
Q15. What is Decentralisation?
Answer:
Decentralisation refers to the systematic dispersal of decision-making authority among different levels of management. Instead of concentrating all authority at the top, managers delegate significant powers to lower-level employees and departments. Decentralisation allows managers at various levels to make decisions within their area of responsibility. It promotes employee participation and reduces dependence on top management. This approach improves responsiveness, flexibility, and efficiency in organisational operations. Decentralisation is generally adopted by large organisations with diversified activities. It enables better management of complex operations while ensuring faster and more effective decision-making across the enterprise.
Q16. State any four importance of Decentralisation.
Answer:
Decentralisation offers many benefits to organisations. First, it reduces the burden on top management by sharing decision-making responsibilities. Second, it develops managerial talent by giving lower-level managers opportunities to make decisions. Third, it ensures quick decision-making because decisions are taken closer to the point of action. Fourth, decentralisation motivates employees by increasing their involvement and responsibility. It also promotes better control and accountability at various levels. Additionally, decentralisation enables organisations to respond quickly to environmental changes and local market conditions. Therefore, it enhances efficiency, flexibility, and organisational effectiveness.
Q17. Differentiate between Delegation and Decentralisation.
Answer:
Delegation refers to the transfer of authority from a superior to a subordinate, whereas decentralisation refers to the systematic distribution of authority throughout the organisation. Delegation is essential for all organisations, while decentralisation is a policy decision adopted mainly by large organisations. Delegation involves a superior-subordinate relationship, whereas decentralisation extends authority across various management levels. Delegation may be temporary or limited, while decentralisation represents a broader organisational philosophy. Delegation is the basis of decentralisation because authority must first be delegated before it can be decentralised. Both concepts improve efficiency but differ in scope and purpose.
Q18. How does organising help in adaptation to change?
Answer:
Organising helps organisations adapt to changing business environments by creating a flexible structure that can respond effectively to new situations. Through proper division of work and delegation of authority, organisations can make quick decisions and implement changes efficiently. Organising allows management to restructure departments, redefine responsibilities, and allocate resources according to changing needs. It also promotes coordination among various units, ensuring a smooth response to technological, economic, and market changes. Employees become more capable of handling new challenges because responsibilities are clearly assigned. Therefore, organising enables businesses to remain competitive and successful in a dynamic environment.
Q19. How does organising lead to optimum utilisation of resources?
Answer:
Organising ensures optimum utilisation of resources by allocating tasks, authority, and resources in a systematic manner. It prevents duplication of efforts and reduces wastage of time, money, and manpower. By assigning work according to employees’ skills and expertise, organising promotes efficiency and productivity. It ensures that resources are used where they are most needed and can generate maximum output. Organising also improves coordination among departments, reducing conflicts and unnecessary expenditure. Through proper planning and allocation of responsibilities, organisations achieve better results with available resources. Hence, organising plays a crucial role in enhancing resource efficiency and organisational performance.
Q20. How does organising contribute to development of personnel?
Answer:
Organising contributes to personnel development by assigning responsibilities and authority to employees according to their capabilities. Through delegation and decentralisation, employees get opportunities to make decisions, solve problems, and gain practical experience. These opportunities help develop managerial and leadership skills. Organising also encourages specialisation, allowing employees to improve expertise in their respective fields. As employees perform challenging tasks, their confidence and competence increase. Proper organising creates career growth opportunities and prepares future managers for higher responsibilities. Thus, organising not only improves organisational performance but also supports the professional growth and development of human resources.