__________ structure is suitable for those business enterprises where a large variety of products are manufactured using different productive resources and when an organization grows and needs to add more employees, create more departments and introduce new levels of management.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Divisional
Option (1) Divisional — Correct. A divisional structure groups the work by product. Each product has its own division, with its own production, sales and finance. It suits a firm making a large variety of products, and a firm that is growing and adding people, departments and levels.
Option (2) Matrix — Incorrect. The two types of formal structure studied are functional and divisional. The matrix structure is not one of them.
Option (3) Line and staff — Incorrect. This is not one of the two types either.
Option (4) Functional — Incorrect. A functional structure groups work by function, such as production and marketing. It suits a large firm with one main product line, not a firm with many different products.
NCERT (2026-27 Edition): “Suitability: Divisional structure is suitable for those business enterprises where a large variety of products are manufactured using different productive resources. When an organisation grows and needs to add more employees, create more departments and introduce new levels of management, it will decide to adopt a divisional structure. …” |