Practicing Success
Practicing Success
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Which of the following is NOT a demerit of divisional structure? |
It is an expensive structure to maintain, since there may be a duplication of activities across products. All functions related to a particular product are integrated in one department. Conflict may arise among different divisional heads due to different interests. Authority provided to the managers to supervise all activities related to a particular division may lead to undesirable consequences. |
All functions related to a particular product are integrated in one department. |
The correct answer is option 2- All functions related to a particular product are integrated in one department. Option 2 is not a demerit but a result of the structure. Each division is self-contained as it develops expertise in all functions related to a product line. 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 |
