Read the following passage and answer the following questions.

Progress Ltd. which deals in stationery has been registered with a share capital of ₹1,000 crores in New Delhi. The company has a manufacturing unit in Madhya Pradesh and a marketing department in Nashik. The company divided its activities into different departments. The company assigned duties and powers without creating formal authority-responsibility relationship. The entire business started working on gossip and based on personal relations.

In the given passage, which step of the organising process is highlighted as being neglected or improperly implemented, leading to inefficient functioning of the organisation?

Establishing authority and reporting relationships

The correct answer is option 4- Establishing authority and reporting relationships

The passage explicitly states that the company "assigned duties and powers without creating formal authority-responsibility relationship". 

Consequence of Neglect: Because the company failed to establish a clear hierarchy—defining who reports to whom and who has the authority to give orders—the formal structure broke down. 

Resulting Inefficiency: Instead of a professional chain of command, the business began functioning on "gossip and based on personal relations," which is characteristic of an informal organization replacing a poorly defined formal one.

Other Options:

• Option 1 (Identification and division of work): This step involves breaking down the total work into manageable tasks. The passage implies work was divided into activities, so this is not the primary issue highlighted.

• Option 2 (Departmentalisation): The company successfully implemented this by creating a "manufacturing unit in Madhya Pradesh and a marketing department in Nashik".

• Option 3 (Assignment of duties): The text mentions that "The company assigned duties and powers". Therefore, the act of assigning work occurred; the failure was in linking those duties through a formal reporting structure.