Bharat Energy Ltd.
Bharat Energy Ltd. drills for oil at many sites across India. For many years, its work was run from the head office by the heads of separate activities such as drilling, finance and purchase. This old system had two difficulties. First, even a small repair at a drilling site had to be cleared by the head office, and site work often stood still for months. Second, the purchase head kept spare-part stocks low to show savings in his own budget, even when drilling stopped for want of parts.
A consultant advised forming a team around each oil field, with clearly defined duties. Each field manager was put in charge of all the service staff at his field and was even given the power to buy materials. Each team now has its own drilling, service and purchase staff and answers for the results of its field. A few common services are still run from the head office.
Under its old system, on which basis was the work of Bharat Energy Ltd. grouped?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Functions
Option (1) Product lines — Incorrect. Grouping by product lines gives a divisional structure. The old system had no unit for each product or field.
Option (2) Functions — Correct. Under the old system each head looked after one activity: drilling, finance or purchase. Grouping jobs of a similar nature into such major functions creates a functional structure.
Option (3) Territories — Incorrect. Territory, such as north or south, is one basis for forming departments. The old system was not divided region by region; it had one head for each activity.
Option (4) Skills and competencies of employees — Incorrect. Skills and competencies decide which member gets which job inside a department. They are not a basis for grouping the work.
NCERT (2026-27 Edition): NCERT (2026-27 Edition): “Functional structure Grouping of jobs of similar nature under functional and organising these major functions as separate…”
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