Q.'Kia Tyres' is a company manufacturing tyres for cars, two-wheelers, trucks and buses. It has a well-defined organisational structure designed by the management to facilitate smooth functioning of the organisation. It specifies the relationships among various job positions and the nature of their inter-relationship. It is easier to fix responsibility, since mutual relationships are clearly defined. There is no ambiguity in the role that each member has to play, as duties are specified. This also helps in avoiding duplication of work. As a result, 'Kia Tyres' is able to effectively accomplish its goals. However, during lunch breaks and after office hours, employees from different departments of 'Kia Tyres' meet regularly. This helps to fulfil the social needs of employees and allows them to interact with like-minded people. This enhances their job satisfaction by giving them a sense of belongingness in the organisation.
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Start your 14-day free trial to unlock the full solution →The case describes two coexisting organisational structures: the formal organisation (designed by management for clarity and efficiency) and the informal organisation (spontaneous social interactions that fulfil employees’ emotional needs).
Let’s begin with the scene. Every company, no matter how small, needs a skeleton — a clear framework that tells people who reports to whom, what each person is supposed to do, and how different roles connect. That skeleton is the formal organisation. In the case of Kia Tyres, management has deliberately created a well-defined structure specifying relationships among job positions. This is the official, written blueprint of the company. It is deliberately planned, stable, and focused on achieving the organisation’s goals efficiently.
But no organisation runs on paper alone. People are not machines. During lunch breaks and after office hours, employees from different departments at Kia Tyres meet regularly. They talk, share interests, form friendships, and build bonds that are not part of any official chart. This is the informal organisation — the network of personal relationships that emerges naturally among people who work together. It is not created by management; it grows spontaneously out of human interaction.
The NCERT textbook (Class XII, Business Studies, Chapter 5 – Organising) clearly distinguishes these two types. Formal organisation is the “officially defined” structure, while informal organisation refers to “social relationships” that arise from the formal structure but are not officially prescribed.
Now, the question asks for two advantages of each type that are not mentioned in the given case. Let’s take them one by one.
Formal Organisation – The case already mentions that it clarifies roles, fixes responsibility, avoids duplication, and helps accomplish goals. Two additional advantages from the NCERT textbook are:
- Stability and predictability. Because every task and authority relationship is clearly defined, the organisation can operate smoothly even when employees change. New people can be trained quickly because the structure is documented. There is no confusion about who does what, which gives the organisation a stable foundation.
- Ease of control and coordination. With a clear hierarchy, managers can easily monitor performance, give instructions, and ensure that different departments work in harmony. The chain of command makes it simple to pass orders downward and receive feedback upward.
A key point from the NCERT: Formal organisation is essential for systematic work, but it can become rigid and slow if followed too strictly. That is why informal organisation is valuable — it adds flexibility and human warmth. …
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