'It may lead to increase in costs since there may be a duplication of activities across products. Providing each division with separate set of similar functions increases expenditure.'
Whose disadvantage is highlighted in the above statement?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Divisional organisation.
Divisional structure is highlighted in the given lines.
In a divisional structure, the organisation structure comprises of separate business units or divisions. Divisional Structure is followed in case of Multi Product Company. In a divisional structure, the organisation structure comprises of separate business units or divisions. The divisional structure has certain disadvantages. Some of them are as follows:
(a) Conflict may arise among different divisions with reference to allocation of funds and further a particular division may seek to maximise its profits at the cost of other divisions.
(b) It may lead to increase in costs since there may be a duplication of activities across products. Providing each division with separate set of similar functions increases expenditure.
(c) It provides managers with the authority to supervise all activities related to a particular division. In course of time, such a manager may gain power and in a bid to assert his independence may ignore organisational interests.