Class 12 Business Studies - Chapter Organising NCERT Solutions | Discuss the different types of organizat
Discuss the different types of organizational structures.
Organizational structures define how tasks are divided, coordinated, and controlled within a company. The two main types of structures used in businesses are functional and divisional.
- Functional Structure: This is one of the most common organizational structures where the company is divided into functional departments such as marketing, finance, human resources, and production. Each department performs specialized tasks. The key benefits include:
- Specialization: Employees focus on their specific functional areas, leading to expertise and high efficiency.
- Clear Career Paths: Employees have a clear trajectory for career advancement within their function.
- Operational Efficiency: Since employees in each function perform similar tasks, resources are used efficiently.
However, one drawback of the functional structure is that it may lead to poor coordination between departments, as employees may prioritize their department’s goals over the organization’s overall objectives.
- Divisional Structure: In this structure, the organization is divided into divisions based on products, services, or geographic areas. Each division operates almost like a separate entity, with its functional departments. The key benefits are:
- Focus on Products/Markets: Each division focuses on specific products or geographic regions, making it more responsive to market demands.
- Accountability: Divisional heads are responsible for the profitability and success of their respective divisions, which fosters accountability.
However, this structure can lead to resource duplication as each division has its own departments, increasing operational costs.
- Matrix Structure: A more complex structure where employees report to both functional managers and project managers. It allows for flexibility and better resource allocation, especially in project-based industries.
In conclusion, while both functional and divisional structures have their merits, the choice of structure depends on the organization’s size, nature, and objectives. A functional structure suits organizations focusing on efficiency, while a divisional structure is more appropriate for businesses with diverse products or regions.
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A company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, new liberalised environment has seen entry of many MNC’s in the sector. With the result the market share of X limited has declined. The company had followed a very centralised business model with Directors and divisional heads making even minor decisions. Before 1991 this business model had served the company very well as consumers had no choice. But now the company is under pressure to reform. What organisation structure changes should the company bring about in order to retain its market share? How will the changes suggested by you help the firm? Keep in mind that the sector in which the company is FMCG.
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A company manufacturing sewing machines set up in 1945 by the British promoters follows formal organisation culture in totality. It is facing lot of problems in delays in decision making. As the result it is not able to adapt to changing business environment. The work force is also not motivated since they cannot vent their grievances except through formal channels, which involve red tape. Employee turnover is high. Its market share is also declining due to changed circumstances and business environment. You are to advise the company with regard to change it should bring about in its organisation structure to overcome the problems faced by it. Give reasons in terms of benefits it will derive from the changes suggested by you.
- Q:-
Neha runs a factory wherein she manufactures shoes. The business has been doing well and she intends to expand by diversifying into leather bags as well as western formal wear thereby making her company a complete provider of corporate wear. This will enable her to market her business unit as the one stop for working women. Which type of structure would you recommend for her expanded organisation and why?
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Decentralisation is an optional policy. Explain why an organisation would choose to be decentralised.
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Decentralisation is extending delegation to the lowest level. Comment.
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A company, which manufactures a popular brand of toys, has been enjoying good market reputation. It has a functional organisational structure with separate departments for Production, Marketing, Finance, Human Resources and Research and Development. Lately to use its brand name and also to cash on to new business opportunities it is thinking to diversify into manufacture of new range of electronic toys for which a new market is emerging. Which organisation structure should be adopted in this situation? Give concrete reasons with regard to benefits the company will derive from the steps it should take.
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Can a large sized organisation be totally centralised of decentralised? Give your opinion.
- Q:-
Draw a diagram depicting a functional structure.
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