'AB Limited is a company dealing in plastic products. The work is mainly divided into functions including production, purchase, marketing, accounts and personnel.'

Identify the type of organisational structure followed by the organisation.

Functional structure

The correct answer is option 1- functional structure.

The type of organizational structure followed by AB Limited is Functional structure. This structure is characterized by dividing the organization into specific functions or departments, such as production, purchase, marketing, accounts, and personnel.

Grouping of jobs of similar nature under functional and organising these major functions as separate departments creates a 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.