What statement is not false in respect of Divisional structure?

It is most suitable for product specialisation

The correct answer is option (3)- It is most suitable for product specialisation.

It is most suitable for product specialisation is not false for divisional structure.

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.

Divisional structure is suitable for those business enterprises where a large variety of products are manufactured using different productive resources. When an organisation grows and needs to add more employees, create more departments and introduce new levels of management, it will decide to adopt a divisional structure.

** Functional structure is most suitable when the size of the organisation is large, has a diversified activities and operations require a high degree of specialisation.