ABC Corporation is a multinational company that manufactures and sells consumer electronics. To ensure smooth operations, it follows a well-defined organizing process, which includes identifying tasks, grouping similar activities, assigning responsibilities, and establishing reporting relationships.
The company follows a structure where employees are grouped based on their expertise. Departments like Marketing, Finance, Production, and Human Resources operate independently, ensuring specialization and efficiency. However, in its international operations, ABC Corporation adopts a structure where each division operates as a separate entity based on regions such as North America, Europe, and Asia. This helps the company cater to regional market needs effectively.
Within the company, two types of organization exist. One organization is structured with clearly defined roles, responsibilities, and hierarchy. On the other hand, the other organization consists of unofficial relationships among employees, such as friendships and personal networks, which enhance teamwork and communication beyond the official chain of command.
To ensure smooth delegation of tasks, authority and responsibility are transferred to subordinates. It empowers employees, reduces the workload of senior managers, and enhances decision-making efficiency.
Through a combination of well-structured organizational processes and flexible informal interactions, ABC Corporation maintains operational efficiency while fostering a collaborative work environment.
What is a key benefit of a functional structure?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Ensures Specialisation
Option (1) Promotes Product Specialisation — Incorrect. This is a merit of the divisional structure, where each division handles one product and its managers become experts in that product.
Option (2) Flexibility — Incorrect. Flexibility is a merit of divisional structure or informal organisation. A functional structure is rather rigid, because each department looks only at its own function.
Option (3) Ensures Specialisation — Correct. In ABC’s domestic set-up, employees are grouped by their expertise into Marketing, Finance, Production and Human Resources. A functional structure groups jobs of a similar nature into departments. Each person keeps doing the same kind of work, so he becomes an expert in it. This occupational specialisation is its key benefit, and the passage says so too: “ensuring specialization and efficiency”.
Option (4) More Cost — Incorrect. Higher cost is not a benefit. Functional structure in fact saves cost, because there is no duplication of work. Duplication and higher cost are drawbacks of the divisional structure.
NCERT (2026-27 Edition): “Functional structure … Advantages: The functional structure has many advantages to offer. Important among them are as follows: |