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Unit 3: Planning and Organizing - Most Important Questions
Section 1: MCQs Type Questions (1 Mark Each)
Which of the following is not typically a step in the strategic planning process? [GU BCom: 2023]
a) Environmental scanning
b) Formulation of strategy
c) Execution of employee performance reviews
d) Strategy implementation
Answer: c)A plan which provides guidance to repeatedly performed actions is called: [GU BCom: 2024]
a) Specific plan
b) Directional plan
c) Standing plan
d) Single-use plan
Answer: c)The process of converting the message into communication symbol is known as: [GU BCom: 2022]
a) Encoding
b) Decoding
c) Transmission
d) Recoding
Answer: a)The most complex form of modern organizational design is: [GU BCom: 2016]
a) Matrix organization
b) Network organization
c) Learning organization
d) Horizontal organization
Answer: b)Which one of the following ensures common administrative control? [GU BCom: 2014]
a) Service combination
b) Circular combination
c) Lateral combination
d) Horizontal combination
Answer: d)Planning involves an intellectual exercise. (True/False) [GU BCom: 2022]
Answer: TrueWhich of the following organizational structures is most suitable for managing complex projects?
a) Divisional
b) Matrix
c) Product
d) Virtual
Answer: b)Delegation of authority primarily involves:
a) Centralization of decision-making
b) Transfer of responsibility and authority
c) Elimination of accountability
d) Complete decentralization
Answer: b)Centralization refers to:
a) Dispersal of decision-making authority
b) Concentration of decision-making at the top level
c) Flat organizational structure
d) Informal organization
Answer: b)Which of the following is a graphical representation of an organization’s structure? [GU BCom: 2024]
a) Organogram
b) Origamy
c) Outsourcing
d) Decentralization
Answer: a)
Section 2: Questions for 2 Marks
1. Briefly state the relationship between planning and controlling in management. [GU BCom: 2023]
Answer: Planning and controlling are closely related functions of management. Planning involves deciding in advance what is to be done, how, and by whom, while controlling ensures that the actual performance conforms to the plans. Planning is the basis of controlling, because control cannot exist without a plan. At the same time, controlling provides feedback to improve future planning. Hence, both are complementary and inseparable functions of management.
2. What is delegation of authority? [GU BCom: 2022]
Answer: Delegation of authority refers to the process by which a manager assigns responsibility and grants authority to subordinates to perform specific tasks on his behalf. While responsibility is assigned downward, the manager still remains accountable for the final results. Delegation helps in reducing the workload of managers and promotes efficiency in the organization.
3. Write briefly two techniques commonly used in the decision-making process. [GU BCom: 2023]
Answer: Two techniques commonly used in decision-making are:
(i) Cost-Benefit Analysis: In this technique, the costs and benefits of different alternatives are compared, and the alternative with maximum benefit at minimum cost is selected.
(ii) Decision Tree: It is a diagrammatic representation of different possible alternatives and their probable outcomes. It helps managers to choose the best possible course of action.
4. What is a matrix organization? [GU BCom: 2022]
Answer: A matrix organization is a type of organizational structure where employees report to two managers at the same time – one is the functional manager (who handles specialized functions like finance, marketing, etc.) and the other is the project manager (who is responsible for a specific project). This structure combines the advantages of both functional and project organizations.
5. Write two features of strategic planning. [GU BCom: 2024]
Answer: Two features of strategic planning are:
(i) Long-term Orientation: Strategic planning focuses on long-term objectives and future growth of the organization.
(ii) Top-level Function: It is formulated by top management as it involves major decisions that affect the entire organization.
6. Mention the problem of dual accountability in a matrix organization. [GU BCom: 2023]
Answer: In a matrix organization, employees are answerable to two superiors – the functional manager and the project manager. This creates dual accountability, which often leads to confusion, conflict of interest, delay in decision-making, and lack of clarity about authority and responsibility.
7. What are two advantages of a virtual organization? [GU BCom: 2024]
Answer: Two advantages of a virtual organization are:
(i) Cost Efficiency: It reduces the cost of maintaining physical offices and infrastructure by relying on technology and virtual communication.
(ii) Flexibility: Virtual organizations can easily form teams across geographical boundaries, allowing access to global talent and resources.
8. Define centralization in organizational design.
Answer: Centralization in organizational design refers to the concentration of decision-making authority at the top levels of management. In a centralized structure, lower-level managers have limited authority, and all important decisions are made by top management.
9. What is meant by an informal organization?
Answer: An informal organization refers to the network of personal and social relationships that develop spontaneously among employees within the formal organizational structure. It is not officially planned but plays an important role in communication, cooperation, and employee satisfaction.
10. Explain two factors affecting organizational design.
Answer: Two factors affecting organizational design are:
(i) Size of the Organization: Large organizations require a more complex and formal structure, while small organizations can function with a simple and flexible structure.
(ii) Technology Used: The type of technology and processes used in the organization also determine the design. Advanced technology may require specialized departments and greater coordination.
Section 3:
a) Questions for 5 Marks
1. Explain the concept of strategic planning. [GU BCom: 2023]
Answer: Strategic planning refers to the process of defining an organization’s long-term goals and determining the best course of action to achieve them. It is a systematic process carried out by top management to ensure future growth, profitability, and survival of the business in a competitive environment.
Strategic planning involves analyzing both internal and external environments of the business. It sets the direction in which the organization wants to move and allocates resources accordingly. For example, a company may plan to expand into international markets or adopt digitalization as part of its strategic plan.
Features of strategic planning:
Long-term focus: It concentrates on objectives that may span 5 to 10 years or more.
Top management function: It is formulated at the highest level of management.
Future-oriented: It anticipates future opportunities and threats.
Comprehensive: It covers the entire organization, not just one department.
Thus, strategic planning acts as a roadmap for the organization, guiding it towards achieving its mission and vision.
2. Define ‘bounded rationality’ and its role in decision-making. [GU BCom: 2023]
Answer: The concept of bounded rationality was introduced by Herbert A. Simon. It means that managers, while making decisions, do not have unlimited information, time, and resources to make the perfect decision. Instead, their decision-making is restricted or bounded by these limitations.
In reality, managers cannot examine every possible alternative because of constraints such as lack of complete data, time pressure, or limited mental capacity. Therefore, they make decisions that are "satisfactory" rather than "optimal."
Role in decision-making:
Practical approach: Bounded rationality recognizes the limitations of human beings in decision-making.
Focus on feasible alternatives: Instead of wasting resources on analyzing infinite choices, managers select from a few practical alternatives.
Satisficing behavior: Managers look for a solution that is "good enough" under given circumstances, not necessarily the best.
Improves efficiency: It helps in making decisions quickly and realistically.
For example, while hiring employees, managers may not evaluate every applicant in the world but will shortlist from those who apply and meet the basic criteria.
3. What are the three core elements of delegation of authority? [GU BCom: 2023]
Answer: Delegation of authority is the process through which a manager assigns responsibility to subordinates and gives them the authority to carry out specific tasks. It consists of three essential elements:
Assignment of Responsibility: Responsibility means the duty assigned to a subordinate to perform a specific task. For example, a sales manager assigns a salesperson the responsibility to increase sales in a particular area.
Granting of Authority: Authority is the power given to the subordinate to make decisions and use organizational resources to fulfill the responsibility. Without authority, responsibility cannot be discharged effectively.
Creation of Accountability: Accountability means the subordinate is answerable to the superior for the performance of the task. Even though the authority is delegated, the manager remains ultimately responsible for the results.
Thus, responsibility, authority, and accountability are the three interrelated elements that make delegation of authority effective.
4. Explain the steps in decision-making. [GU BCom: 2023]
Answer:
Decision-making is the process of selecting the best alternative from among several available options to solve a problem or achieve an objective. The steps involved in decision-making are:
Identifying the Problem: The first step is to clearly define the problem or the decision that needs to be taken. For example, a company may face declining sales.
Analyzing the Problem: Collect relevant information regarding the problem, its causes, and its impact. This may include market research, cost data, or customer feedback.
Identifying Alternatives: Generate different possible solutions or courses of action. For declining sales, alternatives may include launching a new product, revising pricing, or increasing advertising.
Evaluating Alternatives: Each alternative is analyzed in terms of costs, benefits, risks, and feasibility.
Selecting the Best Alternative: The alternative that provides maximum benefit with minimum cost and risk is chosen.
Implementation of Decision: The chosen alternative is put into action by allocating resources and assigning responsibilities.
Reviewing the Decision: The results of the decision are evaluated to check whether objectives have been achieved. If not, corrective action is taken.
Thus, decision-making is a logical and systematic process that helps managers choose the most appropriate course of action.
5. Why is informal organization no less important than formal organization? [GU BCom: 2023]
Answer: An informal organization refers to the network of personal and social relationships that naturally develop among employees within a formal organization. Though it is not officially planned or structured, it plays a vital role in the success of formal organization.
Reasons why informal organization is important:
Improves Communication: Informal channels (grapevine) provide quick communication of information across levels, reducing delays.
Boosts Morale: It provides employees with a sense of belonging and emotional satisfaction.
Promotes Cooperation: Informal groups encourage teamwork and reduce conflicts among employees.
Helps in Problem-solving: Many issues are solved informally without reaching the higher authorities.
Influences Productivity: Informal norms and peer pressure motivate members to perform efficiently.
Therefore, although informal organization has no legal authority, it complements the formal structure and makes the overall functioning of the organization more effective.
6. Discuss the factors that affect organizational design. [GU BCom: 2024]
Answer: Organizational design refers to the process of structuring resources, authority, and responsibilities in an organization to achieve its objectives effectively. The following factors affect organizational design:
Size of the Organization:
Large organizations require a more complex structure with specialized departments, whereas small organizations can operate with simple and flexible structures.Technology Used:
The nature of technology and production methods influences design. For example, automated industries require a different structure compared to labor-intensive industries.Nature of Activities:
The type of business activities (manufacturing, trading, or services) determines the structure. A manufacturing unit may require more technical departments compared to a service firm.Environment:
Organizations operating in a dynamic and uncertain environment need flexible structures, while stable environments allow for rigid and formal designs.Strategy of the Organization:
If the strategy focuses on innovation and growth, a decentralized and flexible structure is preferred. If the strategy is cost control, a more centralized structure is suitable.People and Culture:
The skills, attitudes, and values of employees also influence design. Highly skilled employees may require less supervision and greater autonomy.
Conclusion: Organizational design must be chosen carefully by considering these factors so that the structure supports the goals and efficiency of the organization.
7. Explain the matrix organization structure. [GU BCom: 2023]
Answer: A matrix organization is a type of organizational structure that combines the features of both functional and project structures. In this system, employees report to two managers simultaneously – one functional manager (who looks after specialization like marketing, finance, production, etc.) and one project manager (who is responsible for a specific project or product).
Features of Matrix Organization:
Dual Authority: Employees have two bosses – the functional head and the project head.
Efficient Resource Utilization: Specialists from different departments work together on a project, avoiding duplication.
Flexibility: It allows shifting of experts from one project to another depending on need.
Emphasis on Teamwork: Encourages cross-functional collaboration.
Innovation-oriented: Promotes problem-solving and creativity as experts from diverse fields work together.
Example: A company launching a new product may bring together experts from marketing, finance, production, and R&D under one project manager, while they continue to report to their functional heads.
Thus, the matrix structure is suitable for dynamic and complex environments where innovation and flexibility are important.
8. State five points of distinction between virtual and traditional organizations in table. [GU BCom: 2015]
Answer:
Thus, virtual organizations represent modern business models, whereas traditional organizations follow conventional structures.
9. Write the characteristics of a good plan. [GU BCom: 2022]
Answer: A plan is a blueprint for future actions to achieve organizational goals. For a plan to be effective, it must have the following characteristics:
Clarity of Objectives: The plan should clearly define the objectives to be achieved.
Simplicity: A good plan must be simple and easy to understand by all employees.
Flexibility: It should allow adjustments to meet changing circumstances.
Practicality: The plan must be realistic and capable of being implemented with available resources.
Time-bound: A good plan specifies the time within which goals are to be achieved.
Economical: It should aim at achieving maximum results with minimum cost.
Futuristic: A plan should take into account future opportunities and threats.
Coordination-oriented: It must bring unity and coordination among different departments.
Thus, a good plan acts as a guide for action and ensures efficient use of resources.
10. Explain the importance of delegation of authority in an organization. [GU BCom: 2022]
Answer: Delegation of authority means assigning responsibility and granting authority by managers to their subordinates for carrying out specific tasks. It is important for the following reasons:
Reduces Manager’s Workload: By delegating tasks, managers can focus on higher-level functions like planning and decision-making.
Efficiency in Operations: Subordinates can make timely decisions, leading to quicker action and efficiency.
Employee Development: Delegation provides learning opportunities for subordinates, preparing them for future managerial roles.
Better Decision-making: Decisions are taken at the level where actual work is performed, leading to accuracy and practicality.
Motivation and Morale: When subordinates are trusted with authority, they feel valued, which improves motivation.
Growth of Organization: With effective delegation, managers can focus on expansion and strategic growth instead of routine tasks.
Therefore, delegation is essential for smooth functioning, leadership development, and organizational success.
11. What are the limitations of planning? [GU BCom: 2022]
Answer: Although planning is an important function of management, it has certain limitations:
Rigidity: Plans are often rigid and may not allow quick adaptation to sudden changes in the environment.
Uncertainty: Future is unpredictable, and sudden events (like economic recession or natural calamities) may make plans ineffective.
Costly Process: Planning requires time, money, and effort, which may not be affordable for small firms.
Time-consuming: Preparing detailed plans takes a long time, which may delay action.
Lack of Accuracy: Plans are based on forecasts and assumptions, which may not always be accurate.
Resistance to Change: Employees may resist following plans if they require changes in routine work.
False Sense of Security: Over-dependence on planning may make managers complacent and less innovative.
Conclusion: While planning provides direction and reduces uncertainty, managers must be aware of its limitations and keep plans flexible and realistic.
12. Compare and contrast centralization and decentralization in organizational design.
Answer:
In organizational design, the issue of centralization and decentralization relates to the distribution of decision-making authority.
Centralization means concentration of decision-making power at the top levels of management.
Decentralization means systematic delegation of authority to lower levels of management.
Comparison (Differences):
Conclusion: Both centralization and decentralization are not absolute but relative concepts. In practice, organizations adopt a balance depending on size, nature of activities, and environment.
13. Explain the features of a divisional organizational structure with examples.
Answer:
A divisional structure is an organizational design where activities are grouped based on products, services, markets, or geographical areas. Each division operates as a semi-autonomous unit with its own resources and objectives.
Features of Divisional Structure:
Product/Service Orientation: Each division is responsible for a specific product line or service.
Autonomy: Divisions function independently with their own resources, managers, and profit responsibility.
Specialization: Each division develops expertise in its product or market segment.
Accountability: Performance of each division can be measured separately.
Coordination Across Functions: Within each division, functions like production, marketing, and finance are integrated.
Costly Structure: Duplication of functions across divisions increases cost.
Example:
ITC Ltd. has divisions like FMCG, Hotels, Paperboards, and Agribusiness.
Reliance Industries has divisions like Petrochemicals, Refining, Telecom, and Retail.
Thus, divisional structure is suitable for large organizations producing diverse products or operating in different regions.
14. Discuss the role of organograms in understanding organizational hierarchy.
Answer: An organogram (or organizational chart) is a diagrammatic representation of the structure of an organization. It shows the hierarchy of authority, reporting relationships, and communication channels.
Role of Organograms:
Clarifies Authority and Responsibility: It defines who reports to whom and removes ambiguity.
Shows Organizational Levels: Provides a clear picture of top, middle, and lower levels of management.
Helps in Communication: Ensures proper flow of instructions and information through formal channels.
Identifies Relationships: Shows line authority, staff authority, and functional relationships among departments.
Improves Coordination: Helps in avoiding duplication of work and promotes cooperation.
Assists in Manpower Planning: Helps HR managers to identify positions, vacancies, and workload distribution.
Example: In a bank, an organogram would show the General Manager at the top, followed by branch managers, assistant managers, clerks, and so on.
Thus, organograms are useful tools for both managers and employees in understanding the organizational hierarchy and workflow.
15. What are the advantages and challenges of a virtual organization?
Answer:
A virtual organization is a network of geographically dispersed teams and individuals who work together through technology (emails, video conferencing, internet platforms) without being physically located in the same office.
Advantages:
Cost Efficiency: Saves cost of office space, infrastructure, and commuting.
Flexibility: Teams can be formed and dissolved quickly depending on projects.
Access to Global Talent: Organizations can hire skilled professionals from anywhere in the world.
Faster Response: Adapts quickly to changes in market demand.
Focus on Core Competencies: Non-core activities can be outsourced while focusing on key strengths.
Challenges:
Lack of Direct Supervision: Managers find it difficult to monitor performance.
Communication Barriers: Reliance on technology may cause miscommunication or delays.
Team Cohesion: Absence of physical presence may reduce bonding and trust among employees.
Security Issues: Sharing of data online increases risk of cyber threats.
Dependence on Technology: Any failure in internet or systems may disrupt operations.
Conclusion: Virtual organizations are modern and efficient but require strong technological infrastructure, trust, and effective communication systems to overcome their challenges.
b) Short Notes for 5 Marks
1. Strategic Planning [GU BCom: 2023]
Answer: Strategic planning is the process of defining the long-term direction and objectives of an organization and deciding on the allocation of resources to achieve them. It provides a roadmap for future growth and sustainability.
Steps in Strategic Planning:
Setting Objectives – Determining mission, vision, and goals.
Environmental Analysis – Studying internal strengths & weaknesses, and external opportunities & threats (SWOT).
Formulating Strategy – Designing policies and action plans to achieve goals.
Implementation – Putting strategies into action through resources, people, and systems.
Evaluation and Control – Monitoring performance and making adjustments when needed.
Importance: It ensures long-term survival, helps adapt to changing business environments, provides a sense of direction, and improves resource utilization.
2. Decision-Making Process [GU BCom: 2023]
Answer: Decision-making is the process of selecting the best course of action from available alternatives to achieve objectives.
Steps in Decision-Making:
Identifying the Problem – Recognizing the issue that needs resolution.
Gathering Information – Collecting relevant facts and data.
Developing Alternatives – Listing possible courses of action.
Evaluating Alternatives – Analyzing pros and cons of each option.
Choosing the Best Alternative – Selecting the most suitable solution.
Implementation – Putting the chosen solution into practice.
Review and Feedback – Checking the effectiveness of the decision.
Techniques used: Cost-benefit analysis, marginal analysis, operations research, and decision trees.
3. Delegation of Authority [GU BCom: 2022]
Answer: Delegation of authority means the process of transferring authority from a superior to a subordinate to carry out specific tasks.
Elements of Delegation:
Authority – Right to give orders and make decisions.
Responsibility – Duty to perform the assigned task.
Accountability – Obligation to report and justify results.
Importance:
Reduces workload of managers.
Develops subordinates’ skills.
Improves efficiency in decision-making.
Promotes organizational growth.
Challenges: Fear of losing control, lack of trust, and incompetence of subordinates.
4. Matrix Organization [GU BCom: 2023]
Answer: A matrix organization is a hybrid structure that combines functional and project-based structures. In this system, employees report to two managers: one functional manager (specialization) and one project manager (task-based).
Features:
Dual authority system.
Focus on both functions and projects.
Flexible use of resources.
Encourages teamwork and collaboration.
Example: In a construction company, engineers may report both to the Head of Engineering (functional) and to a Project Manager for a specific building project.
Problem: Dual accountability may create conflicts.
5. Virtual Organization [GU BCom: 2013, 2023]
Answer:
A virtual organization is a temporary network of companies or individuals connected through information technology to achieve a common objective.
Features:
No physical office, work is mostly online.
Temporary and flexible structure.
Heavy reliance on IT and communication tools.
Cost-effective and adaptable.
Advantages: Low cost, flexibility, access to global talent.
Challenges: Lack of personal contact, security risks, coordination difficulties.
Example: Freelancers working across countries on one project.
6. Formal vs. Informal Organization [GU BCom: 2023]
Answer:
Role of Informal Organization: Boosts morale, improves teamwork, and helps in quick problem-solving.
7. Centralization and Decentralization [GU BCom: 2024]
Answer:
Centralization means concentration of decision-making authority at the top level of management.
Decentralization means systematic delegation of authority to middle and lower levels of management.
Differences:
8. Organizational Design
Answer: Organizational design refers to the process of arranging resources, authority, and responsibilities to achieve goals effectively.
Factors affecting organizational design:
Nature of business (manufacturing, services).
Size of the organization.
Technology used.
Environmental conditions.
Skills and competence of employees.
Types of Designs: Functional, Divisional, Matrix, Project, Virtual, and Team-based.
9. Divisional Organization
Answer:
Divisional organization groups activities based on products, services, or geographical areas. Each division operates as a semi-autonomous unit.
Features:
Separate divisions for each product or region.
Each division has its own resources and managers.
Suitable for large and diversified companies.
Example: ITC Ltd. has divisions for FMCG, Hotels, Paperboards, and Agri-business.
Advantages: Accountability, specialization, and flexibility.
Limitations: Costly and duplication of resources.
10. Product Organization
Answer: Product organization is a type of divisional structure where divisions are created on the basis of products offered by the company.
Features:
Each product line has its own production, marketing, and finance departments.
Focus on product specialization.
Divisions act as independent profit centers.
Example: Tata Group having divisions for Tata Motors, Tata Steel, Tata Consultancy Services, etc.
Advantages: Promotes innovation, accountability, and product focus.
Limitations: Higher cost due to duplication of functions.
Section 4: Questions for 10 Marks
Q1. Explain the differences between centralization and decentralization in table.
Answer: In organizational design, centralization and decentralization are two opposite concepts related to the distribution of authority and decision-making power.
Centralization means concentration of decision-making power at the top level of management. Lower-level managers have little authority.
Decentralization means systematic delegation of decision-making authority to lower and middle levels of management.
Differences between Centralization and Decentralization
Conclusion: Both centralization and decentralization are relative terms. No organization is fully centralized or fully decentralized. A proper balance of both is necessary depending on size, nature, and complexity of business.
Q2. Describe the factors influencing the degree of delegation. [GU BCom: 2024]
Answer: Delegation of authority refers to assigning responsibility and granting authority to subordinates. The degree of delegation depends on various internal and external factors.
Factors Influencing Delegation:
Nature of the Organization: Large and complex organizations require more delegation compared to small organizations where decisions are easily made by the owner/manager.
Importance of the Decision: Strategic and critical decisions (like mergers, acquisitions) are usually centralized, while routine decisions are delegated.
Competence of Subordinates:
If employees are skilled, trustworthy, and experienced, managers feel confident in delegating more authority.Manager’s Style of Leadership: Autocratic managers hesitate to delegate, while democratic managers encourage delegation.
Cost of Decision-making Errors: If mistakes can lead to huge losses, delegation is limited. Where risks are small, delegation is wider.
Time Availability: In urgent situations, top managers may retain authority. In routine operations, authority is delegated to save time.
Technology and Communication System: Advanced communication tools make monitoring easier, which encourages higher delegation.
Trust and Control Mechanism:
If there is a reliable system of accountability and reporting, managers delegate more authority.
Conclusion: The degree of delegation depends on both organizational needs and human factors. Effective delegation balances responsibility, authority, and accountability, ensuring smooth functioning.
Q3. Discuss the various bases of departmentation. Also state the benefits of departmentation. [GU BCom: 2022]
Answer: Departmentation refers to the process of dividing an organization into different units or departments based on certain criteria to achieve efficiency. It is the foundation of organizational structure.
Bases of Departmentation:
Functional Departmentation: Activities are grouped according to functions such as production, marketing, finance, HR, etc.
Example: A bank may have departments like loans, deposits, and accounts.Product Departmentation: Departments are created based on products or services.
Example: ITC Ltd. has divisions for cigarettes, FMCG, hotels, paperboards.Geographical Departmentation: Divisions are based on regions or territories.
Example: A telecom company may have Northern, Southern, and Eastern zones.Customer-based Departmentation: Organized according to types of customers.
Example: Banks may have retail banking, corporate banking, and NRI services.Process Departmentation: Activities are grouped according to production processes.
Example: A textile unit may have spinning, weaving, dyeing, and finishing departments.Time-based Departmentation: Activities are grouped based on shifts (day/night).
Benefits of Departmentation:
Specialization: Each department develops expertise in its area.
Clarity of Responsibility: Defines responsibilities and accountability.
Coordination: Promotes better coordination within departments.
Performance Measurement: Makes it easy to evaluate departmental efficiency.
Growth and Expansion: Supports diversification of products and markets.
Conclusion: Departmentation provides a logical structure to the organization, ensuring efficiency, accountability, and growth.
Q4. Explain the four basic principles of decision-making. Also state the approaches in decision-making. [GU BCom: 2022]
Answer: Decision-making is the process of selecting the best course of action among alternatives.
Four Basic Principles of Decision-making:
Principle of Definition of Problem: The first principle is to clearly identify and define the problem before making a decision. A well-defined problem is half solved.
Principle of Adequate Information: A decision should be based on accurate and sufficient information. Wrong or incomplete data leads to poor decisions.
Principle of Alternatives: Before making a decision, managers should identify and evaluate all possible alternatives.
Principle of Commitment: Decisions must be realistic, implementable, and backed by commitment from both managers and employees.
Approaches in Decision-making:
Rational Approach: Decisions are made logically, step by step, after analyzing alternatives.
Intuitive Approach: Decisions are made based on intuition, experience, or gut feeling.
Scientific Approach: Decisions are made using data, statistics, models, and research.
Bounded Rationality Approach (Herbert Simon):
Managers do not have unlimited information or time; hence, they make decisions that are "satisfactory" rather than "perfect."
Conclusion: A good decision balances rational analysis with practical judgment. The principles and approaches ensure efficiency and effectiveness in management.
Q5. What are the various types of organizational structures? Discuss the suitability of matrix and virtual organizations in modern businesses.
Answer: Organizational Structure refers to the framework that defines roles, responsibilities, and authority relationships within an organization.
Types of Organizational Structures:
Line Organization: The oldest and simplest structure where authority flows directly from top to bottom.
Example: Military organizations.Functional Organization: Authority is divided based on specialized functions like finance, marketing, production.
Line and Staff Organization: Combines line authority with staff specialists who provide advice.
Divisional Structure: Activities are grouped based on products, services, or regions.
Matrix Organization: Employees report to two managers – functional and project manager. Encourages teamwork and innovation.
Virtual Organization: A network-based structure where employees work remotely through technology.
Suitability of Matrix Organization in Modern Business:
Useful in dynamic industries where projects require specialists from different fields.
Encourages innovation, problem-solving, and optimum resource utilization.
Common in IT companies, construction firms, and R&D projects.
Suitability of Virtual Organization in Modern Business:
Best for businesses that operate globally and rely heavily on technology.
Reduces costs of infrastructure and allows flexible work culture.
Useful in software firms, consulting companies, and online services.
Conclusion: Different structures suit different organizations, but in modern times matrix and virtual organizations are highly suitable because they provide flexibility, innovation, and efficiency in an increasingly competitive environment.
Q6. Explain the steps of strategic planning and its importance in achieving organizational goals.
Answer: Strategic planning is the process of defining long-term goals and determining the best strategies to achieve them. It provides direction and ensures that resources are used effectively to meet organizational objectives.
Steps in Strategic Planning:
Defining Mission and Vision: Clearly state the purpose of the organization and its long-term vision.
Environmental Analysis: Conduct SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to study internal and external environment.
Setting Objectives: Establish measurable and time-bound goals aligned with vision.
Formulating Strategies: Develop alternative strategies and select the most suitable one to achieve objectives.
Implementing the Strategy: Allocate resources, assign responsibilities, and execute the plan.
Monitoring and Evaluation: Regularly review progress and take corrective measures if needed.
Importance in Achieving Organizational Goals:
Provides direction to the entire organization.
Helps in resource allocation effectively.
Anticipates future challenges and opportunities.
Encourages coordination among departments.
Improves long-term sustainability and competitiveness.
Q7. Discuss the factors affecting organizational design. How do they influence the choice of organizational structure? [GU BCom: 2024]
Answer: Organizational design refers to the framework of roles, responsibilities, and authority relationships that determine how work is coordinated. The design of an organization is influenced by several factors.
Factors Affecting Organizational Design:
Size of the Organization: Large firms require complex structures (divisional, matrix), while small firms operate with simple line structures.
Nature of Activities: Service organizations may adopt functional structures, while manufacturing firms may prefer product or process-based designs.
Technology: Advanced technology requires specialized departments and flexible structures.
Environment: Stable environments allow centralized structures, while dynamic environments demand flexible structures like matrix or virtual.
Strategy of the Organization: A growth-oriented strategy requires decentralized structures, while cost-control strategies favor centralization.
People and Culture: Skilled employees require less supervision and thrive in decentralized systems. Traditional employees may prefer centralized systems.
Influence on Choice of Structure:
Line structure suits small, stable firms.
Functional structure suits firms focusing on specialization.
Divisional or product structures suit diversified firms.
Matrix and virtual structures suit modern, dynamic, technology-driven firms.
Conclusion: The choice of structure must fit organizational needs, environment, and goals, as a mismatch reduces efficiency.
Q8. What is delegation of authority? Explain its importance and the challenges faced in its implementation.
Answer: Delegation of authority is the process by which managers assign responsibility to subordinates and grant them the authority to perform tasks, while retaining ultimate accountability.
Importance of Delegation:
Reduces Managerial Workload: Frees top managers for strategic tasks.
Improves Efficiency: Decisions are taken quickly at lower levels.
Employee Development: Provides learning opportunities for future leadership.
Motivation and Morale: Builds trust and increases job satisfaction.
Organizational Growth: Facilitates handling of large-scale operations.
Challenges in Implementation:
Reluctance of Managers: Some managers hesitate to delegate due to fear of losing control.
Lack of Trust in Subordinates: Managers may doubt the competence of employees.
Inadequate Training: Subordinates may lack skills to handle responsibilities.
Fear of Accountability: Employees may resist delegation due to fear of failure.
Poor Communication: Misunderstanding of responsibilities and authority creates conflict.
Conclusion: Delegation is essential for efficiency and growth, but it requires trust, clarity, and proper training to overcome challenges.
Q9. Compare and contrast formal and informal organizations. Discuss their roles in enhancing organizational efficiency.
Answer: Formal Organization: The officially planned structure of authority, communication, and responsibility in an organization.
Informal Organization: The network of personal and social relationships that develop naturally among employees.
Comparison Table:
Roles in Enhancing Efficiency:
Formal organizations ensure order, discipline, and goal achievement.
Informal organizations promote teamwork, motivation, faster communication, and conflict resolution.
Conclusion: Both formal and informal organizations complement each other. While the formal structure provides efficiency and accountability, the informal network ensures motivation and cooperation.
Q10. Explain the decision-making process in detail. Discuss the techniques used to improve decision-making effectiveness.
Answer: Decision-making is the process of choosing the best alternative among several options.
Steps in Decision-making:
Identify the Problem: Recognize the issue requiring a decision.
Gather Information: Collect relevant data and facts.
Develop Alternatives: List possible courses of action.
Evaluate Alternatives: Assess pros and cons of each option.
Select the Best Alternative: Choose the most suitable solution.
Implement the Decision: Put the chosen solution into action.
Review and Feedback: Evaluate outcomes and make corrections.
Techniques to Improve Decision-making:
Cost-Benefit Analysis: Compare expected costs and benefits.
Decision Tree: Graphical tool showing alternatives and outcomes.
Marginal Analysis: Evaluate additional cost versus additional benefit.
Operations Research: Use of mathematical models and simulations.
Brainstorming and Group Decision-making: Encourages creativity and multiple viewpoints.
Conclusion: Effective decision-making requires a logical process supported by quantitative and qualitative techniques to minimize risk and maximize efficiency.
Q11. Discuss the features and applications of divisional, product, matrix, project, and virtual organizational structures with examples.
Answer:
1. Divisional Structure:
- Features: Departments are created on the basis of products, services, or geography. Each division functions as a semi-autonomous unit.
- Application: Large diversified firms like Reliance Industries (Petrochemicals, Telecom, Retail).
2. Product Structure:
- Features: Each product line is managed separately with its own resources.
- Application: ITC Ltd. has FMCG, Hotels, and Paperboard divisions.
3. Matrix Structure:
- Features: Combines functional and project structures; employees report to two managers (functional and project).
- Application: IT companies and construction projects requiring cross-functional expertise.
4. Project Structure:
- Features: Temporary structure created for a specific project. Once the project is completed, the team is dissolved.
- Application: Construction of a bridge, launching a new product.
5. Virtual Structure:
- Features: Network-based, relies on information technology, employees work remotely.
- Application: E-commerce firms, consulting companies, software firms.
Conclusion: Different structures are suited for different needs. In modern times, matrix, project, and virtual structures are highly popular because they offer flexibility, innovation, and global integration.
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Also Read:
- GU BCom 1st Sem FYUGP All Question Paper, Solved PDF's
- Access GU Business Organisation And Management Complete Notes
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