Chapter 5 Organising Solutions
Question - 11 : - Neha runs a factory wherein she manufactures shoes.┬а
Answer - 11 : - The business has been doing well and she intends to expand by diversifying into leather bags as well as western formal wear thereby making her company a complete provider of corporate wear. This will enable her to market her business unit as the one stop for working women. Which type of structure would you recommend for her expanded organisation and why?
Answer
The organisation structure that Neha can follow is that of divisional organisation structure. Under this system there will be separate departments which will be taking care of different products. There will be separate personnel for managing the departments.
The divisional structure is recommended for the following reasons:
1. Each of the department will have a head who will be accountable for the overall performance of the department. The performance of individual departments can be determined easily and the best and worst performers can be identified and necessary steps can be taken.
2. Decision making will be quick as each department has a specialist to manage it.
3. Having a divisional structure allows adding more divisions without impacting the functions of the organisation.
Answer - 12 : - No, in this case production manager cannot blame the foreman as foreman was provided with responsibility, but he was not given authority. With responsibility there should be authority also, which is essential for a task to complete.
Question - 13 : - Why delegation is considered essential for effective organising?
Answer - 13 : -
Delegation is the transfer of authority from a superior to a subordinate. It helps in reducing the work load on the manager so that manager can give focus on areas that needs more attention. It also provides subordinates to become more responsible and make way for more growth opportunities.
Following points shows the importance of delegation which is effective in organising
1. By delegating work to the subordinateтАЩs managers can focus on other areas, it improves efficiency of the managers.
2. Employees also get the chance to perform well and improve their skills. It helps in developing the skillset of the employees.
3. The act of delegation gives employees responsibility and it also provides motivation to the employees as they feel that they belong to the organisation and their contributions are recognised.
4. Delegation helps in career development of many managers as they take up more roles in the organisation. It also helps workers to gain more experience which helps in career growth.
5. It helps in forming an organised structure in the organisation. The lines of hierarchy are well defined which makes processes smooth.
6. It increases coordination among managers and workers. There is a well-defined working relationship which makes things more organised in the company.
Question - 14 : - What is divisional structure? Discuss its advantages and limitations.
Answer - 14 : -
Divisional structure is a system where work is divided into different departments. There is a separate head for each department and there is no overlapping of responsibilities in such a structure. The field of work is clearly defined.
Here are some of the advantages of a divisional structure
1. Managers and workers get ample opportunity to grow among their department and become specialist in the product. It is helpful in increasing efficiency of the workforce.
2. Each division or department can be tracked individually for their performance. It leads to identification of best and worst performing divisions.
3. The divisions are independent to take their own decisions which makes the decision-making process quick. The rapid decision making enables faster implementation which is beneficial for the organisation.
4. Having a divisional structure allows adding more divisions without impacting the functions of the organisation
The disadvantages can be highlighted as:
1. There can be conflicts among departments with regards to allocation of funds and resources.
2. There can be rise in cost due to duplication of work among departments. There might be some activities that are common across all departments and employing separate personnel for each department for these activities can drive the cost higher.
3. There can be a chance that due to more focus on improving the individual departments the growth of organisation as a whole can get hampered.
Question - 15 : - Decentralisation is an optional policy. Explain why an organisation would choose to be decentralised.
Answer - 15 : -
Decentralisation is the delegation of authority among various levels in an organisation ranging from top level to lower level. It is not mandatory for an organisation to follow decentralisation, but it is beneficial in the long run. Here are a few points that will support the statement why an organisation wants to be decentralised.
1. Decentralisation allows the lower level managers an independence to make their decisions. It gives more confidence and feeling of responsibility to the managers.
2. Decentralisation provides the managers with an opportunity to grow and be a part of the growth of the organisation. It helps in skill development and the ability to tackle new challenges. It also provides a platform to showcase their talent and get noticed for more responsible positions.
3. Decentralisation helps analyse the performance of every department and also determine how each one of them are helping the organisation in fulfilling the objectives.
4. Decision making is faster in a decentralised organisation. There is no need to take approval from top level to perform basic level functions, it helps avoiding delay in decision making.
5. The decentralisation system offers growth opportunities for the managers at lower levels. There is a tendency to outperform each other which results in more productivity and indirectly leads to growth of the individuals.
6. Decentralisation makes work load of top-level management less. They can concentrate more on the policy making for organisation growth.
Question - 16 : - Distinguish between centralisation and decentralisation.
Answer - 16 : - The points of difference between centralisation and decentralisation are as follows:
| Basis of Difference | Centralisation | Decentralisation |
| Authority | Authority remains concentrated only in few hands at the higher level of management. | Authority is delegated to lower levels of management. |
| Creativity | Restricts creativity of middle and lower level managers. | Promotes creativity and innovation at all the levels. |
| Work Load | Higher work load on the top level managers. | Lesser workload as sharing of authority and responsibility is done. |
| Scope of Delegation | Scope of delegation is limited as power is concentrated in a few hands. | Wider scope of delegation as authority can be transferred. |
| Subordinate Initiative | Limits the scope of initiatives by subordinates as the workers have to work on the pre-decided path. | Encourages the subordinates to come forward and take initiative as they are allowed the needed freedom for working. |
| Decision Making | The decision making is slowed down as the power lies only with the top management. The problem has to pass through different levels before an action is taken. | The decision making is quick as the authority lies near the actual action. |
Answer - 17 : - The following points highlight the difference between a functional structure and a divisional structure.
| Basis of Difference | Functional structure | Divisional structure |
| Creation | These are created on the basis of functions. | These are created on the basis of product-lines along with the functions. |
| Costs | It is economical. | It is not very economical because all the resources are required in different departments. |
| Decision Making | Decision making is centralised as the decisions are taken by the coordinating head for various departments. | Decision making is decentralised as each division of the product line have their own decision making authority. |
| Duplication of work | Due to functional specialisation overlapping of work is minimised. | Due to each product department having the same functions, overlapping of work is increased. |
| Suitability. | It is suitable for all types of organisations. | It is suitable for multiproduct or diversified firms. |
| Accountability and responsibility | Difficult to make accountable as departments are interdependent | Easy to fix the accountability as departments work independently. |
| Coordination | Compared to Divisional less when company is producing more product. | Better coordination because all the activities related to one product are in one department only. |