Podcast Beta
Questions and Answers
What is one benefit of planning in an organization?
Planning reduces uncertainty in an organization.
True
What does planning encourage in an organization?
Innovation and creativity
Effective planning makes action more __________.
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Match the following planning benefits with their descriptions:
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Which of the following is NOT an advantage of line organization?
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Line organization is often referred to as military organization due to its origins.
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Name one advantage of line organization that promotes discipline among employees.
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In line organization, each executive has full authority and responsibility for their job, providing __________ to make changes quickly.
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Match the following advantages of line organization with their descriptions:
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Study Notes
Planning: Importance and Advantages
- Planning is crucial for an organization to decide on actions and their timing, eliminating aimless activity and making actions more meaningful.
- It provides a unifying framework, setting priorities, aligning efforts, and defining roles across departments to achieve organizational goals.
- Planning is economical, promoting efficient resource utilization by eliminating unproductive work, optimizing facility usage, and reducing waste.
- It reduces the risk of uncertainty by anticipating future challenges, preparing for risks, and making necessary provisions for unexpected events.
- Planning facilitates decision making by providing a framework for evaluating alternatives and selecting the best option, especially for decisions impacting the future.
- Planning encourages innovation and creativity by prompting organizations to identify opportunities and threats in the environment.
Line Organization
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Characteristics:
- Simple and straightforward, with direct authority relationships.
- Promotes quick decision making and communication.
- Offers a chance for developing all-around executives.
- Ensures unified control over departmental activities.
- Establishes fixed responsibilities and accountability.
- Encourages discipline due to clear lines of command.
- Is cost-effective with low overhead costs.
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Disadvantages:
- Top executives can be overburdened with administrative tasks.
- May lead to a lack of specialized expertise in specific areas.
- Can limit the scope for organizational expansion.
Functional Organization
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Characteristics:
- Divides work based on specialized functions, promoting efficiency.
- Facilitates effective supervision through expert knowledge.
- Offers a broader scope for organizational expansion.
- Improves overall efficiency through separation of mental and manual tasks.
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Disadvantages:
- May result in poor discipline due to multiple lines of command.
- Can lead to divided responsibility and buck passing.
- May negatively impact employee morale due to multiple supervisors.
- Hampers the development of all-round executives.
- Can create coordination challenges due to conflicting priorities between specialists.
- May cause delays in decision making due to the need for multiple consultations.
- Can be expensive to maintain due to the need for numerous specialists.
Line and Staff Organization
- Combines the advantages of line organization (clear authority) and functional organization (specialized expertise).
- Seeks to achieve a balance between central control and functional specialization.
- Aims to improve efficiency by utilizing the strengths of both organizational structures.
Limited Liability Partnership (LLP)
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Key Features:
- Requires at least two partners, with no limit on the maximum number.
- Partners can be individuals, other LLPs, or companies.
- Each partner contributes to the LLP in various forms (cash, property).
- Requires a written LLP Agreement outlining the partnerships and the LLP.
- At least two designated partners, one of whom must be a resident Indian.
- Designated Partners have DPINs (Designated Partner Identification Numbers).
- Requires digital signatures for online registration.
- Provides limited liability for partners, limited to their investment.
- Allows for active participation of all partners in the business.
- Is a separate legal entity, distinct from its members.
- Is created through registration under the Limited Liability Partnership Act, 2008.
- Has perpetual succession, meaning its existence is not affected by partner changes.
- Is a body corporate with its own legal personality.
- Uses a common seal for official signatures.
One Person Company (OPC)
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Definition:
- A company with only one person as a member.
- Introduced in India by the Companies Act, 2013.
- Offers the flexibility of a company structure with limited liability protection.
- Similar concepts already existed in other countries, including China, Singapore, UK, Australia, and the USA.
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