Divisional Structure is based on __________.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Product Lines
Option (1) Product Lines — Correct. Divisions are formed according to the products (product lines) made by the company. Each division is self-contained and works on one product line, so manpower is grouped on the basis of the different products made.
Option (2) Functional Lines — Incorrect. A functional structure groups jobs by functions such as production, marketing and finance. That is a different structure.
Option (3) Informal Basis — Incorrect. An informal organisation grows out of people’s social relations. A divisional structure is a formal structure.
Option (4) Occupational Specialization — Incorrect. Specialisation by occupation is the basis of a functional structure. It is not the basis of a divisional structure.
NCERT (2026-27 Edition): “Divisional Structure … In a divisional structure, the organisation structure comprises of separate business units or divisions.” “…Each unit has a divisional manager responsible for performance and who has authority over the unit. Generally, manpower is grouped on the basis of different products manufactured. Each division is multifunctional because within each division functions like production, marketing, finance, purchase, etc., are performed together to achieve a common goal. Each division is self-contained as it develops expertise in all functions related to a product line.” |