Important Questions Class 12 Business Studies Chapter 5 Organising 2026–27

Organising is the process of identifying and grouping work, assigning duties and establishing relationships to achieve objectives. In CBSE Class 12 Business Studies, Chapter 5 explains how organisations structure work, authority, responsibility and accountability.

Organising explains how plans are converted into action. It helps a business divide work, group activities, assign duties and establish reporting relationships so that people work together for a common purpose.

Use these Important Questions Class 12 Business Studies Chapter 5 to practise NCERT-based answers for the 2026–27 exams. Start with the meaning and process of organising, then revise organisation structure, functional structure, divisional structure, formal organisation, informal organisation, delegation and decentralisation.

Key Takeaways

• Organising: It coordinates human efforts, assembles resources and integrates both into a unified whole.
• Process: Organising includes identification and division of work, departmentalisation, assignment of duties and reporting relationships.
• Delegation: It has three elements: authority, responsibility and accountability.
• Decentralisation: It means delegation of authority throughout all levels of the organisation.

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Key Topics Covered in Organising Class 12 Chapter 5

CBSE Class 12 Business Studies Chapter 5 covers how work is divided, grouped and managed inside an organisation. These topics help students practise Organising Class 12 important questions with answers.

• Concept of Organising
• Process of Organising
• Importance of Organising
• Organisation Structure
• Functional Structure
• Divisional Structure
• Formal Organisation
• Informal Organisation
• Delegation
• Elements of Delegation: Authority, Responsibility and Accountability
• Importance of Delegation
• Centralisation and Decentralisation
• Importance of Decentralisation
• Difference between Delegation and Decentralisation
• Difference between Functional and Divisional Structure

Overall Exam Structure for CBSE Class 12 Business Studies

Section A: Objective Type Questions, 1 Mark Each

These Objective Type Questions test direct NCERT concepts from Organising. Practise them for quick recall of formal organisation, informal organisation, delegation and span of management.

Q1. The network of social relationships which arises spontaneously due to interaction at work is called:

1. Formal organisation
   b. Informal organisation
   c. Functional structure
   d. Divisional structure

Answer: b. Informal organisation

Informal organisation arises out of interaction among people at work. It has no written rules and no fixed lines of communication.

Q2. Span of management refers to:

1. Number of managers in an organisation
   b. Number of departments in an organisation
   c. Number of subordinates that can be effectively managed by a superior
   d. Number of products handled by a business

Answer: c. Number of subordinates that can be effectively managed by a superior

Span of management gives shape to the organisational structure. It also affects the levels of management.

Q3. Which organisational structure supports managerial and operational efficiency?

1. Informal organisation
   b. Formal organisation
   c. Functional structure
   d. Divisional structure

Answer: c. Functional structure

Functional structure groups similar jobs together. This increases specialisation and improves managerial and operational efficiency.

Q4. Which organisational structure promotes flexibility and initiative?

1. Functional structure
   b. Divisional structure
   c. Informal organisation
   d. Formal organisation

Answer: b. Divisional structure

Divisional structure promotes flexibility because each division functions as an autonomous unit. It also supports faster decision making.

Q5. Which organisation is deliberately created by management?

1. Formal organisation
   b. Informal organisation
   c. Social group
   d. Friendship group

Answer: a. Formal organisation

Formal organisation is designed by management to accomplish a particular task. It clearly defines authority and responsibility.

Q6. The elements of delegation are:

1. Planning, organising and staffing
   b. Authority, responsibility and accountability
   c. Direction, motivation and control
   d. Coordination, control and reporting

Answer: b. Authority, responsibility and accountability

Delegation includes authority, responsibility and accountability. Authority can be delegated, but accountability cannot be delegated.

Q7. Decentralisation means:

1. Retaining all authority at top level
   b. Delegation of authority throughout all levels of the organisation
   c. Ending the need for delegation
   d. Removing responsibility from subordinates

Answer: b. Delegation of authority throughout all levels of the organisation

Decentralisation pushes decision-making authority down the chain of command. It places authority near the points of action.

Q8. Which organisational structure is based on product lines?

1. Functional structure
   b. Divisional structure
   c. Formal organisation
   d. Informal organisation

Answer: b. Divisional structure

Divisional structure groups manpower on the basis of different products. Each division works as a self-contained unit.

Q9. Which organisational structure is based on functions?

1. Functional structure
   b. Divisional structure
   c. Decentralised structure
   d. Informal structure

Answer: a. Functional structure

Functional structure groups jobs of similar nature under major functions. For example, production, marketing, finance and personnel may form separate departments.

Q10. Which type of organisation has no fixed lines of communication?

1. Formal organisation
   b. Functional structure
   c. Informal organisation
   d. Divisional structure

Answer: c. Informal organisation

Informal organisation has no fixed lines of communication. Information can flow in any direction.

Section B: Short Answer Type-I Questions, 3 Marks Each

These Short Answer Type-I Questions cover Class 12 Business Studies Chapter 5 Important Questions that need direct 50 to 75 word answers. Focus on NCERT definitions, steps and elements.

Q11. What are the steps in the process of organising?

The steps in the process of organising are identification and division of work, departmentalisation, assignment of duties and establishing authority and reporting relationships.

First, work is identified and divided into manageable activities. Then similar activities are grouped together. Duties are assigned to suitable employees, and clear reporting relationships are established.

Q12. State any three points of importance of organising.

Organising is important because it gives benefits of specialisation, clarity in working relationships and optimum utilisation of resources.

It divides work systematically among employees. It also clarifies who has to report to whom. Proper assignment of jobs avoids overlapping of work and reduces wastage of resources.

Q13. Discuss the elements of delegation.

The elements of delegation are authority, responsibility and accountability.

Authority means the right to command and take action. Responsibility means the obligation to perform an assigned duty. Accountability means answerability for the final outcome of the assigned task.

Q14. How does informal organisation support formal organisation?

Informal organisation supports formal organisation through faster communication, quick feedback and fulfilment of social needs.

It helps employees share information without following prescribed lines of communication. It also helps management test employee reactions towards plans and policies through the informal network.

Q15. State any two circumstances under which functional structure is appropriate.

Functional structure is suitable when the organisation is large and has diversified activities. It is also suitable when operations require a high degree of specialisation.

In this structure, similar jobs are grouped together. This helps employees improve performance by doing similar tasks within a department.

Q16. What is the meaning of authority as an element of delegation?

Authority means the right of an individual to command subordinates and take action within the scope of his position.

Authority arises from the established scalar chain. It flows from top to bottom, so a superior has authority over the subordinate.

Q17. Why is delegation important for effective management?

Delegation is important because it helps managers reduce routine workload and focus on important matters.

When routine tasks are assigned to subordinates, managers get more time for high-priority activities. It also gives subordinates opportunities to use their skills and gain experience.

Section C: Short Answer Type-II Questions, 4 Marks Each

These Short Answer Type-II Questions include chapter 5 class 12 business studies important questions based on comparison and application. Write direct answers with explanation and case clues.

Q18. Explain the difference between authority, responsibility and accountability.

Authority, responsibility and accountability are the three elements of delegation.

Authority is delegated by a superior to a subordinate. Responsibility is assumed by the subordinate, while accountability is imposed for performance.

Q19. Can a large-sized organisation be totally centralised or decentralised? Give your opinion.

A large-sized organisation cannot be totally centralised or totally decentralised. Both complete centralisation and complete decentralisation are unrealistic.

In centralisation, decision-making authority is retained by higher management levels. In decentralisation, authority is delegated to lower levels. Every organisation needs a balance between both to function properly.

Q20. Decentralisation is extending delegation to the lowest level. Comment.

Decentralisation means systematic delegation of authority throughout all levels of the organisation. It is wider than delegation.

Delegation usually takes place between a superior and his immediate subordinate. Decentralisation extends authority to the lowest level where decisions can be taken. It increases the role of subordinates in the organisation.

Q21. The principal of a school divided annual function activities into task groups such as decoration, rehearsals, stage management and refreshments. Identify and explain the function of management performed.

The function performed is organising.

The principal divided the total work into smaller task groups. Each group handled a specific activity such as decoration, rehearsals or refreshments. A senior teacher supervised each group, which shows assignment of duties and establishment of reporting relationships.

Q22. A company has its registered office in Delhi, manufacturing unit at Gurgaon and marketing and sales department at Faridabad. It manufactures consumer products. Which organisational structure should it adopt and why?

The company should adopt functional structure.

Functional structure groups activities on the basis of functions such as manufacturing, marketing and sales. It is suitable because the company has different functional departments. This structure promotes specialisation and improves managerial and operational efficiency.

Q23. Panda Trucks Ltd. allowed communication to flow in all directions. Identify the organisation type and state its advantages.

The organisation type is informal organisation.

Informal organisation allows communication to flow in any direction. It leads to faster spread of information and quick feedback. It also fulfils the social needs of employees and gives them a sense of belongingness.

Q24. Neha manufactures shoes and wants to diversify into leather bags and western formal wear. Which structure is recommended and why?

Divisional structure is recommended.

Divisional structure is suitable when an enterprise has more than one product category. Each division can focus on its own product line. This helps in product specialisation, accountability, flexibility and expansion.

Section D: Long Answer Type Questions, 6 Marks Each

These Long Answer Type Questions cover business studies class 12 chapter 5 important questions that need structured answers. Use NCERT points and write in a clear sequence.

Q25. Why is delegation considered essential for effective organising?

Delegation is essential because no manager can perform every task on his own. It refers to the downward transfer of authority from a superior to a subordinate.

Delegation is important for the following reasons:

Effective management: Delegation reduces the manager’s routine workload. It gives managers more time to concentrate on important matters.

Employee development: Subordinates get opportunities to use their talent. They gain experience and prepare for higher responsibilities.

Motivation of employees: Delegation shows trust in subordinates. It builds self-esteem and improves confidence.

Facilitation of growth: Delegation prepares trained employees for new projects and expansion.

Basis of management hierarchy: Delegation establishes superior-subordinate relationships. It clarifies who has to report to whom.

Better coordination: Authority, responsibility and accountability define powers and duties. This reduces duplication and improves coordination.

Q26. What is a divisional structure? Discuss its advantages and limitations.

Divisional structure is an organisation structure in which separate business units or divisions are created on the basis of product lines. Each division has a divisional manager responsible for its performance.

Advantages of divisional structure:

Product specialisation: Each division focuses on one product line. This helps divisional heads develop varied skills.

Accountability: Revenues and costs can be identified division-wise. This helps in fixing responsibility for performance.

Flexibility and initiative: Each division functions as an autonomous unit. This leads to faster decision making.

Expansion and growth: New divisions can be added without disturbing existing operations.

Limitations of divisional structure:

Conflict: Different divisions may compete for funds and resources.

Increase in cost: Duplication of activities across divisions increases expenditure.

Ignoring organisational interests: Divisional managers may focus on their own division and ignore overall organisational goals.

Q27. Decentralisation is an optional policy. Explain why an organisation would choose to be decentralised.

Decentralisation is an optional policy because it is adopted at the discretion of top management. An organisation chooses decentralisation when it wants to give greater decision-making authority to lower levels.

Reasons for choosing decentralisation:

Develops initiative among subordinates: Lower-level managers get freedom to take decisions. This builds confidence and self-reliance.

Develops managerial talent: Subordinates gain experience by handling assignments independently. This prepares them for higher positions.

Quick decision making: Decisions are taken near the points of action. This reduces delay and improves response.

Relief to top management: Top managers get more time for important policy decisions.

Facilitates growth: Departments and divisions get more autonomy. This supports expansion and higher productivity.

Better control: Performance can be evaluated at each level. Departments can be held accountable for their results.

Q28. How is functional structure different from divisional structure?

Functional structure and divisional structure differ in their basis of formation, specialisation, responsibility, cost and coordination.

Functional structure suits large organisations with specialised functions. Divisional structure suits organisations with several product categories.

Q29. Aman Chadha of Bulls Eye appointed Ishan and Vrinda because the volume of work made it impractical for him to handle everything himself. Identify the concept and explain its importance.

The concept is delegation.

Aman Chadha assigned work to Ishan and Vrinda so that he could focus on objectives. Delegation means transfer of authority from a superior to a subordinate. It helps managers get work done through others.

Importance of delegation:

Effective management: It reduces routine workload and gives managers time for important work.

Employee development: Subordinates get chances to use their skills and gain experience.

Motivation: Responsibility builds confidence and improves performance.

Growth: Delegation prepares employees for future leadership roles.

Hierarchy: It creates superior-subordinate relationships.

Coordination: It clarifies authority, responsibility and accountability.

Q30. A company manufacturing toys has a functional structure and wants to diversify into electronic toys. Which organisation structure should be adopted? Give reasons.

The company should adopt divisional structure.

Divisional structure is suitable when an organisation offers more than one category of products. Since the company wants to diversify into electronic toys, separate product divisions can help it manage different product lines better.

Reasons:

Product specialisation: Each division can focus on its own product category.

Accountability: Revenue and cost can be tracked for each division.

Flexibility: Each division can take faster product-related decisions.

Expansion: New divisions can be added without disturbing existing operations.

Better coordination: All functions related to one product are integrated within one division.

This structure helps the company manage growth and product diversification more effectively.

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