ABC Corporation is a multinational company that manufactures and sells consumer electronics. To ensure smooth operations, it follows a well-defined organizing process, which includes identifying tasks, grouping similar activities, assigning responsibilities, and establishing reporting relationships.
The company follows a structure where employees are grouped based on their expertise. Departments like Marketing, Finance, Production, and Human Resources operate independently, ensuring specialization and efficiency. However, in its international operations, ABC Corporation adopts a structure where each division operates as a separate entity based on regions such as North America, Europe, and Asia. This helps the company cater to regional market needs effectively.
Within the company, two types of organization exist. One organization is structured with clearly defined roles, responsibilities, and hierarchy. On the other hand, the other organization consists of unofficial relationships among employees, such as friendships and personal networks, which enhance teamwork and communication beyond the official chain of command.
To ensure smooth delegation of tasks, authority and responsibility are transferred to subordinates. It empowers employees, reduces the workload of senior managers, and enhances decision-making efficiency.
Through a combination of well-structured organizational processes and flexible informal interactions, ABC Corporation maintains operational efficiency while fostering a collaborative work environment.
Which organizational structure does ABC Corporation follow for its domestic operations?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Functional
Option (1) Functional — Correct. At home, ABC groups employees by expertise into departments such as Marketing, Finance, Production and Human Resources. A functional structure groups jobs of a similar nature, that is, the same function, into departments under their own heads. That is how ABC is organised at home.
Option (2) Divisional — Incorrect. ABC uses the divisional structure only for its international operations, where the divisions are based on regions.
Option (3) Matrix — Incorrect. The passage mentions no matrix structure, in which an employee reports to both a functional head and a project head.
Option (4) Individual — Incorrect. There is no “individual” structure. The formal structures studied are functional and divisional.
NCERT (2026-27 Edition): “Functional structure … All departments report to a coordinating head. For example, in a manufacturing concern division of work into key functions will include production, purchase, marketing, accounts and personnel. These departments may be further divided into sections. Thus, a functional structure is an organisational design that groups similar or related jobs together.” “Divisional Structure … In a divisional structure, the organisation structure comprises of separate business units or divisions.” |