Organising Class 12 Notes: Process, Structures, Delegation

These organising class 12 notes revise Chapter 5, Organising, from the NCERT Class 12 Business Studies textbook (Part I) in a compressed, table-first format. Everything below follows the 2026-27 session and the rationalised NCERT edition, so the concepts and page references match the book you are studying. You can verify any definition against the official chapter PDF published by NCERT.

Organising is the management function that follows planning: planning sets the goal, and organising builds the structure that converts the plan into action. The chapter is one continuous argument.

You will revise the meaning and importance of organising, the two types of organisation structure (functional and divisional), the formal and informal organisations that coexist in every enterprise, and the related ideas of delegation and decentralisation.

If you need the earlier step, our planning notes cover the function immediately before this one, and the wider subject sits in the Business Studies Class 12 notes hub.

Use this page in two ways: read the sections in order for a full revision, or jump straight to the comparison tables, worked examples and the final revision table when you are revising quickly before the exam. Every heading below is linked from the contents.

Organising: The Process That Turns Plans into Action

The chapter opens with Wipro’s restructuring (NCERT, p. 109): the company split itself into product-line subsidiaries, shifted from a centralised to a decentralised management system and removed an entire layer of executives to become more customer oriented. That story is the chapter’s thesis in miniature — planning gave Wipro the goal of global-scale customer orientation, and organising is what implemented it.

The school fete example makes the same point at a smaller scale (NCERT, p. 110). The work is divided into task groups — a food committee, a decoration committee, a ticketing committee — under one overall coordinator, with coordinating relationships established among the groups. Dividing, grouping and coordinating that work is the organising function.

In student-friendly words: organising is the process of identifying and grouping the work to be done, assigning duties to people and creating authority relationships between them so that plans turn into results. The textbook states it as the process that initiates implementation of plans by clarifying jobs and working relationships and deploying resources towards identified goals (NCERT, p. 111).

Four Steps of Organising: Divide, Group, Allot, Link

The textbook demonstrates the process with twelve students asked to unload a book shipment (NCERT, p. 111). If all twelve work in their own way, the result is mass confusion. With one supervisor who groups the students, divides the work, assigns each group its quota and fixes reporting relationships, the job is done faster and better.

The unsupervised version is organising absent; the supervised version is organising in action.

1. Identification and division of work. The first step is to identify the work that the plans require and divide it into manageable activities, so that duplication is avoided and the workload is shared among employees (NCERT, p. 111).
2. Departmentalisation. Activities that are similar in nature are grouped into departments, and such sets facilitate specialisation. Popular bases for departments are territory (north, south, west) and product (appliances, clothes, cosmetics) (NCERT, p. 112).
3. Assignment of duties. Each department is placed under a person in charge, and jobs are allotted to its members according to their skills. Effective performance requires a proper match between the nature of a job and the ability of the individual (NCERT, p. 112).
4. Establishing authority and reporting relationships. Every individual must know from whom to take orders and to whom they are accountable. These clear relationships create a hierarchy and enable coordination among departments (NCERT, p. 112).

Memory device: Divide, Group, Allot, Link. Divide the work, group it into departments, allot jobs to people, link them through reporting relationships. Warning: the accurate first step in the textbook is named identification and division of work — use the device to recall the sequence, but write the full textbook step names in an answer.

Why Organising Matters: Seven Payoffs

The textbook lists seven ways organising helps an enterprise (NCERT, pp. 112-114). Each payoff is stated below with the mechanism that produces it.

The textbook itself raises one risk in this list (NCERT, p. 114): repetitive specialisation can turn into monotony, stress, boredom and absenteeism. The open ‘Think About It’ question is answered in practice by job rotation, task variety and worker participation in decisions — keeping the benefit of specialisation without the burnout.

Answer-writing caution: division of work is a step in the process, not an importance point. The textbook’s importance point is the benefit of specialisation that flows from division of work — write that phrase when you are asked why organising matters.

Organisation Structure and Span of Management

The outcome of the organising process is the organisation structure — the framework within which managerial and operating tasks are performed. It specifies the relationships between people, work and resources and is normally shown in an organisation chart (NCERT, pp. 114-115).

‘Organisation structure is an indispensable means; and the wrong structure will seriously impair business performance and even destroy it.’ – Peter Drucker (NCERT, p. 114)

The quote matters for revision because it explains why structure is not bureaucracy for its own sake: a sound structure lets people and resources combine effectively, while a wrong one blocks coordination and can destroy the business. The textbook adds that enterprises which never change their structure stagnate and may cease to grow (NCERT, p. 114).

Sunita’s travel agency gives a compact illustration (NCERT, p. 115): she divided the agency’s work into operations, sales and administration, which produced a structure with a clear line of authority and responsibility running through it. A small firm, but the same logic a large enterprise uses.

The span of management gives the structure its shape. It is the number of subordinates a superior can effectively manage, and it determines the levels of management in the structure (NCERT, p. 115): the wider the span, the fewer levels a given workforce needs; the narrower the span, the more levels appear.

Functional Structure: Departments of Specialists

A functional structure groups jobs of similar nature into departments. In a manufacturing concern the key functions are typically production, purchase, marketing, accounts and personnel, each forming a department that reports to a coordinating head, and departments may be split further into sections (NCERT, pp. 115-116). It is an organisational design that groups similar or related jobs together.

Advantages of functional structure (NCERT, p. 116)

• Occupational specialisation: employees perform similar tasks within a department and improve with practice, so manpower is used efficiently.
• Control and coordination within a department become easier because the tasks are similar.
• Managerial and operational efficiency rise, which increases profit.
• Minimal duplication of effort produces economies of scale and lowers cost.
• Training is easier, since the focus is only a limited range of skills.
• Every function gets due attention.

Disadvantages of functional structure (NCERT, pp. 116-117)

• Functional empires: the importance of one function may be overemphasised, and departmental interests may be pursued at the cost of organisational interests.
• Coordination problems, because information has to move across functionally differentiated departments.
• Inter-departmental conflicts — for example, sales insisting on a customer-friendly design that creates difficulties in production.
• Inflexibility: people sharing the same skills and knowledge base may develop a narrow perspective.
• Functional heads do not gather the diverse experience needed for top management positions.

Suitability: in short, a functional structure suits a large organisation with diversified activities and operations that require a high degree of specialisation (NCERT, p. 117).

Divisional Structure: Self-Contained Product Units

A divisional structure is built around product lines. The organisation is split into separate business units or divisions — the textbook’s example is a large company with a cosmetics division and a clothing division (NCERT, p. 118).

Each division is multifunctional, because production, marketing, finance and purchase are performed within it; it is self-contained, because it develops expertise in all functions related to its product line; and it works as a profit centre, with the divisional head responsible for the division’s profit or loss (NCERT, pp. 117-118). Within each division, a functional structure tends to be adopted.

Advantages of divisional structure (NCERT, p. 118)

• Product specialisation: the divisional head gains experience in all functions of a product, developing varied skills that prepare them for higher positions.
• Profit accountability: the revenues and costs of a division can be identified, giving a clear basis for performance measurement.
• Flexibility and initiative: each division functions as an autonomous unit, so decisions are faster.
• Easier expansion: new divisions can be added without interrupting existing operations.

Disadvantages of divisional structure (NCERT, pp. 118-119)

• Conflicts among divisions over the allocation of funds; a division may try to maximise its own profit at the cost of others.
• Higher costs, because activities and resources are duplicated across divisions.
• A divisional manager who accumulates power may, in time, ignore organisational interests.

Suitability: a divisional structure suits enterprises that manufacture a large variety of products using different productive resources, and organisations that are growing in employees, departments and management levels (NCERT, p. 119).

Functional vs Divisional Structure: Comparison and a Decision Rule

The textbook’s comparison on six bases (NCERT, p. 119) is the most reusable table in the chapter — learn both directions of every row.

Decision rule for case questions. A single product, or a limited product line operated on a large scale, points to a functional structure. Multiple product lines, diversification, or products that need different productive resources point to a divisional structure. This rule is simply the textbook’s two suitability paragraphs placed side by side (NCERT, pp. 117 and 119).

The chapter rounds off the comparison with a warning: business operates in a dynamic environment, so the structure must be reviewed periodically and modified whenever it stops serving the enterprise’s objectives (NCERT, p. 120).

Case in the Textbook: ONGC Restructures with McKinsey

The ONGC case (NCERT, p. 121) shows a giant enterprise restructuring.

The old structure, run by functional heads, created four problems: urgent field decisions could be delayed by more than a year; responsibilities shared between business groups at production platforms degenerated into wrangling; group loyalties often took precedence over the task; and performance evaluation based on business groups clashed with what the field actually required.

McKinsey recommended an asset-based approach with clearly defined responsibilities. Once the recommendations were accepted, control over all service personnel working with asset teams was vested in asset managers — on the reasoning that managers responsible for a strategic business unit’s performance should control the people working with it — and even procurement powers were devolved.

The new structure finally rolled out as 14 assets and 11 centralised services (NCERT, p. 121).

Look at the organisation chart of ONGC on page 120 of the textbook while revising this case; it shows how lines of authority actually look in a large diversified company. The chart is printed in the book and is not redrawn here.

Two chapter ideas explain why the restructuring worked. Asset managers received authority to match their responsibility — the authority-responsibility balance. And decision making moved down to the assets rather than staying with functional heads — which is precisely what decentralisation means.

Formal and Informal Organisation: Designed vs Spontaneous

Every enterprise runs two structures at the same time: the formal organisation that management designs, and the informal organisation that grows out of people interacting.

Formal organisation

The formal organisation is the structure deliberately designed by management to accomplish a particular task. It specifies the boundaries of authority and responsibility and coordinates activities systematically toward organisational goals (NCERT, pp. 121-122).

It clarifies who reports to whom, lays down the rules and procedures needed to achieve plan objectives, integrates the efforts of departments and places more emphasis on work than on interpersonal relationships.

Advantages (NCERT, p. 122):

• Easier to fix responsibility because mutual relationships are clearly defined.
• No ambiguity in roles; specified duties also avoid duplication of effort.
• Unity of command is maintained through the chain of command.
• Effective accomplishment of goals, since every employee knows the role they play.
• Stability, because rules make employee behaviour fairly predictable.

Limitations (NCERT, pp. 122-123):

• Procedural delays, because the chain of command must be followed before decisions are made.
• Creative talent may not get adequate recognition, since rigid policies allow no deviations.
• It emphasises structure and work, so it cannot show the complete picture of how the organisation really works.

Informal organisation

The informal organisation is the network of social relationships that arises when employees interact beyond their officially defined roles — the group that plays cricket on Sundays or meets in the cafeteria for coffee (NCERT, p. 123). It has no written rules, is fluid in form and scope, and has no fixed lines of communication.

Features (NCERT, p. 123):

• Originates from within the formal organisation through personal interaction.
• Standards of behaviour evolve from group norms, not official rules.
• Members develop independent channels of communication with no specified direction of flow.
• It emerges spontaneously and is not deliberately created by management.
• It has no definite structure — it is a complex network of social relationships.

Advantages (NCERT, p. 124):

• Faster spread of information and quick feedback, because prescribed channels are not followed.
• Fulfils the social needs of members and gives a sense of belongingness, which raises job satisfaction.
• Compensates for inadequacies in the formal organisation — for example, employees’ reactions to plans can be tested through the informal network.

Disadvantages (NCERT, pp. 124-125):

• When it spreads rumours, it becomes a destructive force against the formal organisation’s interest.
• It may resist management’s changes and delay or restrict growth.
• It pressurises members to conform to group expectations, which can harm the organisation if group norms run against its interests.

Students often call the informal communication channel the ‘grapevine’. That is student shorthand, not the NCERT term — the chapter speaks of independent channels of communication without a specified direction of flow (NCERT, p. 123).

The textbook’s conclusion: the informal organisation cannot be altogether eliminated, so management should recognise its existence, identify the roles its members play and draw on its support instead of confronting it (NCERT, p. 125).

Delegation: Authority, Responsibility and Accountability

Delegation is the downward transfer of authority from a superior to a subordinate (NCERT, p. 125). It is a prerequisite for efficient functioning: no manager, however capable, can do everything alone. Delegation also satisfies the subordinate’s need for recognition and gives room to develop initiative (NCERT, p. 125).

Two limits matter for answers — delegation is not abdication, so the manager remains accountable for the assigned tasks even after transferring authority, and the authority granted can be taken back and redelegated (NCERT, p. 125). The chapter adds a one-line warning: no delegation leads to delays in decision making (NCERT, p. 126).

Authority

Authority is the right of an individual to command subordinates and take decisions within the scope of their position. It originates from the formal position in the scalar chain, is highest at the top and reduces as we go down, so it flows downward. It is restricted by the laws and rules of the organisation (NCERT, pp. 126-127).

Responsibility

Responsibility is the obligation of a subordinate to properly perform the assigned duty. It arises from the superior-subordinate relationship and flows upward — a subordinate is always responsible to the superior (NCERT, pp. 127-128).

Accountability

Accountability is being answerable for the final outcome. Once authority is delegated and responsibility accepted, accountability cannot be denied; it cannot be delegated at all and it flows upward. It is generally enforced through regular feedback on the work accomplished (NCERT, p. 128).

Flow rules — the chapter’s working formula. Authority is delegated, responsibility is assumed, accountability is imposed. Authority flows downward while responsibility and accountability flow upward. Along with direction comes a balance rule: for effective delegation, authority must be commensurate with responsibility. If authority exceeds responsibility, it may be misused; if responsibility exceeds authority, the person is rendered ineffective (NCERT, p. 128).

Importance of delegation (NCERT, pp. 129-130)

• Effective management: empowering employees frees the manager for high-priority matters.
• Employee development: subordinates use their talent, build complex-task skills and become better future managers.
• Motivation of employees: entrusting work builds the subordinate’s self-esteem and confidence — it involves the superior’s trust and the subordinate’s commitment.
• Facilitation of growth: a trained workforce is ready to take up leading positions in new ventures.
• Basis of management hierarchy: delegation establishes superior-subordinate relationships, which decide who reports to whom.
• Better coordination: defined powers, duties and answerability avoid overlapping and duplication of effort.

Decentralisation: Pushing Decisions Down the Hierarchy

Decentralisation is the delegation of authority throughout all levels of the organisation. Decision-making authority is shared with lower levels and pushed down the chain of command, so it sits nearest the points of action (NCERT, p. 130). A centralised organisation keeps decision making with the top management; a decentralised one shares it with lower levels.

When decisions taken by lower levels are numerous as well as important, the organisation is greatly decentralised (NCERT, p. 130).

Now the edge case that appears in short-answer questions: complete centralisation would concentrate all decision making at the apex, which would remove the need for a management hierarchy; complete decentralisation would push every decision to the lowest level, which would remove the need for higher managerial positions. Both extremes are unrealistic.

Every organisation is therefore a balance of centralisation and decentralisation, and the balance tends to shift toward decentralisation as the organisation grows (NCERT, pp. 130-131).

Importance of decentralisation (NCERT, pp. 131-133)

• Develops initiative among subordinates: freedom to decide builds self-reliance and confidence and identifies potential leaders.
• Develops managerial talent for the future: independent assignments create a reservoir of qualified manpower for promotion.
• Quick decision making: decisions are taken nearest to the action with fewer approvals, so the process is faster and less information gets distorted.
• Relief to top management: managers are freed from operational decisions and can concentrate on policy.
• Facilitates growth: departmental autonomy fosters healthy competition, raises productivity and generates returns for expansion.
• Better control: performance can be evaluated at each level and each department held accountable for its results.

The textbook’s example is McNeil Consumer Healthcare, a Johnson & Johnson company (NCERT, pp. 133-134): instead of operating as one giant corporation, Johnson & Johnson operates as about 190 smaller companies, each focused on a specific product or geographic franchise. The point of the case: decentralisation combines the advantages of being big with the agility and focus of smaller firms.

The chapter also gives the warning: decentralisation can lead to organisational disintegration if departments start operating on their own guidelines against the organisational interest, so it must be balanced with centralisation in major policy decisions (NCERT, p. 133).

This pairing is the examinable difference: delegation is compulsory, while decentralisation is an optional policy decision (NCERT, p. 134). The chapter’s summary keeps them distinct — delegation transfers authority from superior to subordinate; decentralisation is delegation of authority throughout the organisation (NCERT, pp. 135–136).

Worked Examples: Structure and Delegation in Action

Both cases below are original practice built on the chapter’s concepts; they are not NCERT exercise questions. Work them yourself first, then check the reasoning.

Case 1: Annapurna Foods chooses a structure as it diversifies

Method applied: suitability analysis for choosing an organisation structure.

Annapurna Foods currently makes packaged spices in one large plant using a functional structure. It plans to add ready-to-eat meals and cold-pressed oils as separate brands.

1. Identify what changed. The firm moves from one product category to multiple product lines, which will need different productive resources and separate marketing.
2. Recall the suitability condition. A divisional structure suits enterprises manufacturing a large variety of products using different productive resources (NCERT, p. 119).
3. Recommend the structure. Adopt a divisional structure with a separate division for each product: packaged spices, ready-to-eat meals and cold-pressed oils.
4. Defend with divisional advantages. Product specialisation develops varied skills in each divisional head; profit accountability gives a clear performance measure; autonomy brings flexibility and faster decisions; and new divisions can be added later without disturbing existing operations (NCERT, p. 118).

Conclusion: adopt a divisional structure, because the trigger is diversification into multiple product lines that need different resources — a functional structure would struggle to coordinate them.

Case 2: Ravi and Priya — delegation without matching authority

Method applied: the authority-responsibility balance and the rule that delegation is not abdication.

Ravi, the marketing head, asks Priya to run a festival campaign but keeps approval of the advertising budget with himself. The campaign fails for want of timely approvals, and Ravi blames Priya.

1. Identify the missing element. Authority for the budget was not delegated — Priya had the responsibility for the campaign but not the power to obtain approvals on time.
2. Apply the balance rule. For effective delegation, authority must be commensurate with responsibility (NCERT, p. 128). Priya was given more responsibility than authority, so she was set up to fail.
3. Apply the no-abdication rule. Delegation is not abdication — the manager remains accountable for the performance of assigned tasks (NCERT, p. 125). Ravi, not Priya, carries the final accountability.

Conclusion: Ravi cannot fairly blame Priya. The responsibility-authority mismatch made the task impossible, and as the delegating manager he remains answerable for the result.

Common Mistakes in Organising (and the Correct Version)

Writing Complete Answers to the Textbook Questions

The chapter’s exercises (NCERT, pp. 136-138) fall into four types. No question is reproduced below — only the shape a complete answer should take.

• Very short answers (p. 136): define the concept in one or two lines and name it before you explain. Give the definition first, then one distinction or feature that proves you know what it is.
• Short answers (pp. 136-137): use the structure definition → main points, each with a one-line explanation → one small example. For ‘distinguish’ questions, use a table with a column for the basis and one column for each concept.
• Long answers (pp. 137-138): open with a definition, build the body in the same order the question lists the elements, advantages or limitations, and close with a conclusion tied back to organising. Every advantage you name should carry its mechanism — not just the label.
• Case-based questions (pp. 136-138): first identify the trigger in the case — growth, diversification, delays, low motivation, conflict. Then recommend the structure that answers that trigger and attach each benefit you list to the company’s stated problem. A benefit not connected to the case adds nothing.
• Diagram questions: when a question asks for a diagram of a structure, draw a labelled organisation chart — the coordinating head or divisional head at the top with the departments below — because that is what the chapter means by structure.

One wording warning: keep delegation and decentralisation distinct. The chapter’s summary defines decentralisation as delegation of authority throughout the organisation (NCERT, p. 136). An answer that calls them identical misses the point of the comparison table.

Organising at a Glance: Revision Table

The whole chapter runs as one chain (based on the NCERT summary, pp. 135-136): organising is a process; its outcome is the organisation structure; that structure is functional or divisional; in every enterprise a formal and an informal organisation coexist; delegation transfers authority through its three elements; and decentralisation spreads delegation through all levels.

One direction rule carries you through the second half of the chapter: authority flows down, while responsibility and accountability flow up.

If you are revising the whole subject, this page sits inside our Class 12 notes collection, part of the complete CBSE notes library. The two functions that build directly on the hierarchy organising creates are covered in the staffing notes and the directing notes.

FAQs: Organising Class 12 Doubts

What is the difference between delegation and decentralisation?

Delegation is the compulsory downward transfer of authority from a superior to an immediate subordinate, and its purpose is to lighten the manager’s burden. Decentralisation is an optional policy decision by top management that spreads delegation through all levels, giving subordinates more autonomy.

The practical difference is scope: delegation is narrow (one superior, one subordinate), while decentralisation is wide and extends to the lowest level (NCERT, p. 134).

Why can accountability never be delegated even when authority is delegated?

Because accountability is answerability for the final outcome, and it arises from responsibility, which the delegating manager keeps. Delegation is not abdication — the manager grants authority but remains accountable to the same extent as before (NCERT, pp. 125 and 128).

How do I decide between functional and divisional structure in a case study?

Look at the product range. A single product or a limited product line operated on a large scale points to a functional structure, which suits large organisations with diversified activities needing a high degree of specialisation (NCERT, p. 117). Multiple product lines, diversification, or products made with different productive resources point to a divisional structure (NCERT, p. 119).

What does span of management mean and why does it shape the organisation?

Span of management is the number of subordinates a superior can effectively manage (NCERT, p. 115). It gives shape to the organisation structure because it determines the number of management levels — a wide span needs fewer levels, while a narrow span needs more.

Can informal organisation be eliminated?

No. The informal organisation emerges spontaneously from social interaction, so it cannot be altogether eliminated (NCERT, p. 125). The sensible approach is to recognise its existence, identify the roles its members play and use its support for communication and change.

Reference: NCERT Class 12 Business Studies textbook, chapter Organising.

Official source: download the NCERT textbook free from ncert.nic.in.