Read the following passage and answer question.
Mr. Avinash has joined as a vice President of a manufacturing unit manufacturing garments. As a vice president, he was given the responsibility of increasing the production and efficiency of workers. He observed that managers relied on their personal judgement while attending to the problems they confronted. So he recommended work study which will result in saving time, effort and increasing efficiency. He also noticed that management was not honouring their commitment. He surveyed the market too. His study of the survey showed that demand can be increased through diversification.
He decided to diversify into footwear and handbags. He created divisions for garments, footwear and handbags and made the divisional managers responsible for performance. Each division is self contained with respect to various functions like production, purchases, finance, marketing etc. Now he decided to fill the various positions created with the right person. For this, he analysed the number and type of workers needed. He got his organisation registered at naukri.com.
'Each division is self contained with respect to various functions like production, purchase, marketing and finance'.
Identify the type of organisational structure highlighted in the above statement.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Divisional structure
Option (1) Administrative structure — Incorrect. This is not a type of organisation structure. There are only two types: functional and divisional.
Option (2) Divisional structure — Correct. Each division is self-contained, with its own production, purchase, marketing and finance functions. The organisation is divided into units, one for each product (garments, footwear and handbags). Each unit works like a small business.
Option (3) Functional structure — Incorrect. Here the jobs are grouped by function, such as production or marketing, into common departments. In the passage, every division has all the functions, so it is not functional.
Option (4) Managerial structure — Incorrect. This is not a type of organisation structure.
Note: The case study is taken from the chapter ‘Principles of Management’, but this question is based on the chapter ‘Organising’. However, since it is a case-study based question, all the questions on this case study are tagged to the chapter the case study is taken from. 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.” |