Class 12 Business Studies Organising: NCERT Solutions for Question 5
Decentralisation is extending delegation to the lowest level. Comment.
Decentralisation is extending delegation to the lowest level. Decentralisation explains the manner, in which decision-making responsibilities are divided among hierarchical levels. Decentralisation refers to delegation of authority throughout all the levels of the organisation.
Decision-making authority is shared with lowest levels and is consequently placed nearest to the point of action.
In other words, decision-making authority is pushed down the chain of command. Delegation is the process and decentralisation is the end result. For example, if the director gives the responsibility to the production head to complete the target of 32000 units and authorises him to hire the workers, the production head further shares his responsibility with the manager to select the workers. And the manager shares his responsibility with supervisors, who are dealing with workers, authorises them to select workers. Here, the responsibility is distributed at every level. That’s why we say systematic delegation leads to decentralisation.
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A company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, new liberalised environment has seen entry of many MNC’s in the sector. With the result the market share of X limited has declined. The company had followed a very centralised business model with Directors and divisional heads making even minor decisions. Before 1991 this business model had served the company very well as consumers had no choice. But now the company is under pressure to reform. What organisation structure changes should the company bring about in order to retain its market share? How will the changes suggested by you help the firm? Keep in mind that the sector in which the company is FMCG.
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Why delegation is considered essential for effective organising?
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A company manufacturing sewing machines set up in 1945 by the British promoters follows formal organisation culture in totality. It is facing lot of problems in delays in decision making. As the result it is not able to adapt to changing business environment. The work force is also not motivated since they cannot vent their grievances except through formal channels, which involve red tape. Employee turnover is high. Its market share is also declining due to changed circumstances and business environment. You are to advise the company with regard to change it should bring about in its organisation structure to overcome the problems faced by it. Give reasons in terms of benefits it will derive from the changes suggested by you.
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Decentralisation is an optional policy. Explain why an organisation would choose to be decentralised.
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Neha runs a factory wherein she manufactures shoes. 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?
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Identify the network of social relationships which arises spontaneously due to interaction at work.
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A company, which manufactures a popular brand of toys, has been enjoying good market reputation. It has a functional organisational structure with separate departments for Production, Marketing, Finance, Human Resources and Research and Development. Lately to use its brand name and also to cash on to new business opportunities it is thinking to diversify into manufacture of new range of electronic toys for which a new market is emerging. Which organisation structure should be adopted in this situation? Give concrete reasons with regard to benefits the company will derive from the steps it should take.
- Q:-
Can a large sized organisation be totally centralised of decentralised? Give your opinion.
- Q:-
The production manager asked the foreman to achieve a target production of 200 units per day, but he doesn’t give him the authority to requisition tools and materials from the stores department. Can the production manager blame the foreman if he is not able to achieve the desired target? Give reasons.
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How does informal organisation support the formal organisation?
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