Read the following Case Study and answer the question.

Aryan is a CEO of RS Infotech Ltd., which is a company working in the technology sector for the last 55 years. The company is doing very well in this sector and now has a growth plan of entering into cosmetics market.

Keeping in view the changing tastes and preferences of customers, it is planning to enter organic products market.

The company targets to achieve 20% of market share in the first 2 years of its entry.

For financial issues, Aryan consulted his chief finance officer, Raj and found that it requires 50 crores of additional capital for setting up a separate cosmetics division.

The Company plans to arrange this money by issuing equity shares in the market but it lacks sufficient cash to bear the floatation cost and hence planned to approach the financial market for the same.

Identify the type of organisation structure required by RS Infotech.

Divisional Organisation Structure

The correct answer is option 4- Divisional Organisation Structure.

RS Infotech is planning to set up a separate cosmetics division to enter a new market (cosmetics), it will require an organizational structure that allows for specialized focus on different products or services. The Divisional Organisation Structure is best suited for this situation, where the company is segmented into divisions based on products, services, or geographical locations. Each division operates as a semi-autonomous unit, allowing the company to focus on the unique needs of the new cosmetics division while still being part of the larger organization.

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.