Consider the following statements about the divisional structure:(A)…

The correct answer is Option (4) → (A), (C) and (E) only

(A) In a divisional structure, product specialisation helps in the development of varied skills in a divisional head. — Correct. A divisional head handles all functions of one product. This gives him varied skills and prepares him for higher positions.

(B) In a divisional structure, conflict may arise among different divisions with reference to the allocation of employees. — Incorrect. Divisions clash over the allocation of funds, and a division may try to raise its profits at the cost of others. The statement changes ‘funds’ to ‘employees’.

(C) A divisional structure promotes flexibility and initiative, because each division functions as an autonomous unit. — Correct. Each division works as an autonomous unit under its own head. So it can act on its own and decide faster.

(D) In a divisional structure, a divisional manager may gain power and, to assert his independence, may ignore departmental interests. — Incorrect. A powerful divisional manager may ignore organisational interests, the interests of the whole company, to assert his independence. The statement changes ‘organisational’ to ‘departmental’.

(E) A divisional structure may lead to an increase in costs, since there may be a duplication of activities across products. — Correct. Each division has its own set of similar functions. This duplication of activities across products increases expenditure.