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.
How does ABC Corporation organize its international operations?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → By using a divisional structure
Option (1) By merging all departments — Incorrect. Nothing is merged. ABC separates its international business into divisions.
Option (2) By using a divisional structure — Correct. Abroad, each division of ABC operates as a separate entity based on a region: North America, Europe and Asia. In a divisional structure, the organisation is split into units by product or by market area, and each unit has its own manager and its own functions. Organising by region lets each division respond to the needs of its own market.
Option (3) By eliminating regional offices — Incorrect. The regions are the very basis of its divisions.
Option (4) By centralizing all decisions — Incorrect. Divisions that run as separate entities take many decisions themselves, which is decentralisation rather than centralisation.
NCERT (2026-27 Edition): “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.” |