Organizing — NCERT Solutions

No, the production manager cannot blame the foreman.

Reason:

• The foreman was given responsibility to achieve $200$ units per day.
• But he was not given authority to requisition tools and materials.
• For effective delegation, authority must be commensurate with responsibility.
• If responsibility is more than authority, the person becomes ineffective.

Therefore, without sufficient authority, the foreman cannot be held fully responsible for failure to meet the target.

Delegation is essential for effective organising because it:

• Reduces the manager’s workload and allows concentration on important work.
• Improves effective management.
• Helps in employee development by giving subordinates chances to use their abilities.
• Increases motivation and confidence among employees.
• Facilitates growth by preparing a trained workforce for future responsibilities.
• Improves coordination by clearly defining authority, responsibility and accountability.

Thus, delegation makes organising practical and efficient.

A divisional structure is an organisational structure in which the enterprise is divided into separate business units or divisions. Each division is responsible for a particular product line or category and usually has its own functions like production, marketing, finance and purchase.

Advantages:

• Product specialisation and development of varied skills in divisional heads.
• Easy accountability for profit or loss.
• Flexibility and initiative because each division works as an autonomous unit.
• Helps expansion and growth by adding new divisions without disturbing existing ones.

Limitations:

• May create conflict among divisions over funds.
• Can increase costs due to duplication of activities.
• Divisional managers may become too powerful and ignore organisational interests.

An organisation would choose decentralisation because it provides several benefits:

• Develops initiative and self-reliance among subordinates.
• Develops managerial talent for the future through experience.
• Enables quick decision making since decisions are taken near the point of action.
• Gives relief to top management so it can focus on policy matters.
• Facilitates growth by giving departments autonomy.
• Improves control by allowing performance to be evaluated at each level.

Hence, decentralisation is chosen to make the organisation faster, more capable and more responsive.

Centralisation and decentralisation are opposite ways of distributing decision-making authority.

• In centralisation, decision-making authority is retained by higher management levels.
• In decentralisation, decision-making authority is delegated to lower levels.

Distinction:

• Authority: Centralisation keeps authority at the top; decentralisation spreads it downward.
• Freedom: Centralisation gives less freedom to subordinates; decentralisation gives more freedom.
• Scope: Centralisation has narrow scope; decentralisation has wider scope.
• Purpose: Centralisation keeps control at the top; decentralisation increases the role of subordinates and helps them grow.

Both are relative terms and every organisation has some of each.

A functional structure is different from a divisional structure in the following ways:

• Basis of formation: Functional structure is based on functions; divisional structure is based on product lines.
• Specialisation: Functional structure gives functional specialisation; divisional structure gives product specialisation.
• Responsibility: In functional structure, responsibility is harder to fix; in divisional structure, it is easier to fix.
• Coordination: Functional structure has more coordination problems in multi-product firms; divisional structure has easier coordination because all related functions are in one division.
• Cost: Functional structure is more economical because there is no duplication; divisional structure is costlier because activities may be duplicated.
• Managerial development: Functional structure gives less general management experience; divisional structure helps develop managers more broadly.

So, the main difference is the basis of grouping and the way responsibility and coordination are handled.

The company should adopt a divisional structure.

Reasons:

• It is diversifying into a new product line: electronic toys.
• A divisional structure is suitable for organisations with varied products.
• Each division can focus on one product line and work as a self-contained unit.
• It enables product specialisation, faster decision making, greater accountability, flexibility, and easier expansion.
• It also allows the company to use its brand name while giving attention to the needs of the new market.

This structure will help the company respond better to the new business opportunity.

The company should move away from a purely rigid formal organisation and make its structure more flexible by encouraging a better balance of formal and informal organisation along with greater decentralisation.

Reasons and benefits:

• Formal organisation alone causes procedural delays and slow decision making.
• Greater use of decentralisation will allow decisions to be taken closer to the point of action, helping the firm adapt to changes.
• Recognising informal organisation will improve employee satisfaction, communication and morale.
• Informal groups can help spread information quickly and reduce resistance to change.
• A more flexible structure will reduce red tape, improve motivation, and help the company respond to the changing business environment.

This would likely improve decision speed, employee morale and market performance.

The company should move from a highly centralised model to a more decentralised organisation structure, suitable for an FMCG business.

What changes should be made:

• Delegate more decision-making authority to divisional and lower levels.
• Give greater autonomy to managers closer to the market and customers.
• Reduce overdependence on directors for even minor decisions.
• Use decentralisation to improve speed, initiative and responsiveness.

How this will help:

• Quick decision making: decisions will be taken near the point of action.
• Relief to top management: directors can focus on policy decisions.
• Better control and accountability at each level.
• Growth and flexibility: divisions can respond faster to changing consumer preferences and competition.
• Improved market share: the company will be more responsive in the competitive FMCG sector.

So, decentralisation with delegated authority is needed to make the company more competitive.