Business Studies Test - 9

The correct answer is Complexity

Key PointsFollowing are the important advantages of functional organizational structure:
1. Specialization

• The functional organizational structure helps in achieving the benefits of specialization of work.
• Every functional in charge is an expert in his area and can help the subordinate to perform better in his area.

2. Production of Workload

• It reduces the burden on the top executives.
• There is pointed supervision in the enterprise, and every function in charge looks after his functional area only.

3. Executive Development

• A functional manager is required to have expertise in one function only.
• This facilitates better executive development.

4. Scope of Expansion

• It offers greater scope for expansion as compared to line Organisation.
• It does not face the problem of the Limited capabilities of a few line managers.

5. More Efficiency

• It creates a high degree of efficiency as the groups of employees and the functional heads perform their Limited and specialized operations.
• Thus, Thereby bringing expertise in performance and reduction in costs.

6. Better Control

• The expert knowledge of the functional managers facilitates better control and supervision in the Enterprise.

The correct answer is Grouping of activities

Key Points

• The total work to be done should be divided into specific jobs as according to predetermined plans.
• Job a set of related tasks that can be performed by an individual.
• It should have specific and definite tasks to be performed. As far as possible, it should define expected results along with the job.
• Division of work → specialization of efforts and skills + avoids duplication of work.
• Management must ensure that all the activities required to achieve organizational objectives are identified.​

• Grouping similar and related jobs into larger units called departments, divisions or sections and placing them under a department head. It facilitates specialization.
• The departments are linked together and interdependent.
• Aims at achieving co-ordination and facilitate unity of action.​

Departmentation can be done on the basis of:

1. Functions: marketing, personnel, finance etc.
2. Products: Textiles, chemical, power division etc.
3. Territories: Western, northern, central, eastern etc.

• Define the work of different job positions and allocate work accordingly.
• Once departments are formed, the dept is placed under the charge of an individual.
• Jobs are assigned to an individual best suited to perform it.
• Qualifications, experience, ability and aptitudes of people should be matched with duties.
• E.g. activities of finance should be assigned to persons having qualifications and experience in finance e.g. C.A‘s.

• Granting requisite authority to enable employees to perform the job satisfactorily.
• Superior subordinate relations between different people and job positions created, so that everybody knows from whom he is to take orders and to whom he can issue orders.
• Creates management hierarchy = a chain of command from the top manager to the individual at the lowest level.
• This helps in coordination.

The correct answer is Absoluteness.

Key Points

• Responsibility is the commitment of a subordinate to perform the appointed duty appropriately. 
• It emerges from a superior-subordinate relationship on the grounds that the subordinate will undoubtedly perform the duty doled out to him by his boss. Obligation streams upward.
• Being accountable means remaining by actions, decisions, and the general prosperity of projects or tasks. 
• Accountability is likewise an administration cycle that guarantees workers respond to their boss for their activities and that managers act mindfully also.
• Accountability cannot be fully delegated, but it can be shared or assigned to others. The ultimate accountability for a task or decision rests with the person who is responsible for it, but they may delegate some aspects of that responsibility to others. 
• The delegator is still accountable for the overall outcome, but the delegated parties are accountable for their specific roles or tasks within the larger responsibility.

Hence, it can be concluded that Absoluteness cannot be delegated.

Additional Information

• Example: A Chief Manager assigns jobs to a Departmental Manager who in turn assigns it to his subordinate. Departmental manager along with assigning the job, will also delegate authority but this will not terminate his accountability. He will always be answerable to his boss for the work performance of his subordinates. On the basis of this, there would be no anomaly to say that just authority can be delegated but not accountability. Thus, accountability is always of the person who delegates authority.
• Absoluteness refers to the quality of being absolute or complete, and cannot be delegated as it is an inherent characteristic of a situation or entity.

The correct answer is Functional structure

Key Points

• Every company needs an organizational structure, it basically defines the hierarchy of the company.
• It defines who works for whom and who reports to who.
• Without this structure, there would be chaos and inefficiency.
• Now one of the most common forms of formal organization is the functional organizational structure.
• In a functional organization structure, the entire organization is divided into smaller groups or departments based on specialized functions.
• This allows for greater cohesiveness and efficiency in the work of the employees.
• Since the work is divided into smaller sectors, so is the management.
• The management is also sub-divided according to the type of work being done.
• So every department has their own head or executive
• He reporting structure can also differ from department to department.

​Additional Information Examples of departments in a functional organization structure

• A sales department,
• A production department,
• A human resources department,
• An information technology department,
• A marketing department, and
• A legal department.
• In some large corporations, these departments are stratified into different geographical areas. In smaller companies, they may simply occupy different areas of the same office building.

The correct answer is Accountability

Key PointsMcFarland defines Accountability as, "the obligation of a person to register formally to their senior executives about the task to discharge the Responsibility." Accountability definition in management goes, "It is all about the liability created to handover the Authority".

• Accountability makes an individual answerable about the task or job he/she has done. 
• Hence, it makes an employee answerable for the performance of the assigned work. 
• An individual who has accepted Authority, he/she deems to approve Accountability and Responsibility at that time itself.

The correct answer is Departmentalisation

Key Points

• Departmentalization or Departmentation is a process wherein jobs/teams are combined together into functional units called as departments on the basis of their area of specialization, to achieve the goals of the organization. So, in this way, the entire organization is divided into parts, i.e. departments which comprise of a group of employees, who carry out activities of similar nature.
• Objectives of Departmentalization

1. To specialize activities.
2. To simplify the process and operations of the organization
3. To maintain control

The correct answer is Informal organization

Key Points

• An informal organization is a group of people who share a common identity and are committed to achieving a common purpose. 
• Informal organizations are created by the will and shared identity of their members. The operation of an organization, in reality, is known as an informal organization as opposed to a formal organization, which is based on roles and responsibilities.
• Informal organizations emerge from the interaction or communication between employees irrespective of their designations and hierarchies. It runs parallel to a formal organization.

The correct answer is Structuring

Key Points

• Formal organisations are more structured and rely on authority based on chains of command.
• Informal organisations do not require hierarchies of authority or structured internal processes. 
• They are not formed in order to reach specific goals like a formal organisation.

The correct answer is Performance appraisal

Key PointsImportance of Organising:

Benefits of Specialisation

• Organisation assigns work in a systematic manner to the diverse employees within an organisation.
• It ensures that suitable work is handed out repetitively to an employee who is a good performer in his field.
• An employee working regularly in a specific area gains invaluable experience in the long run. Consequently, this leads to specialization.

Clarity in Working Relationships

• As discussed before, organisation induces accountability by defining relationships among the employees within an enterprise.
• This is done by defining to whom an employee is accountable to. In effect, it provides an ordered flow of information and instructions.
• Furthermore, this also helps in clarification of the extent of authority, responsibility and provides for a hierarchy.

Optimum Utilisation of Resources

• Organisation helps in optimum utilisation of financial and human resources.
• It not only aids in the proper assignment of jobs to suitable employees but also keeps track that there is no waste of resources and efforts due to duplication of work.

Effective Administration & Governance

• Another important feature of organising is that it ensures that the jobs are clearly defined within an enterprise such that there is no duplication and wastage. Coupled with, facilitating the clarification of work relationships, it promises effective administration.

Development of Personnel

• Assignment of jobs to suitable personnel is an important step for the organisation
• This delegation of jobs helps in the induction of creativity in managers.
• This happens because, with the help of delegation, a manager not only looks to reduce the workload but also discovers new ways of getting the tasks done.
• Further, this gives them the tie to explore areas for growth of the company.
• From the employee’s perspective, it generates experience and prepares him to face new challenges which effectively helps him to realise his full potential.

Growth and Expansion

• Organisation ensures that the enterprise undertakes new challenges. As a result, the company grows and diversifies.

The correct answer is ​Louis Allen

Key Points

• Louis Allen was an African-American businessman in Liberty, Mississippi, who was shot and killed on his land during the civil rights era.
• According to Louis Allen, the organisation is a process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.
• He had previously tried to register to vote and had allegedly talked to federal officials after witnessing the 1961 murder of Herbert Lee, an NAACP member, by E. H. Hurst, a white state legislator.
• Civil rights activists had come to Liberty that summer to organise for voter registration, as no African-American had been allowed to vote since the state's disenfranchising constitution was passed in 1890.