Question

Infocom has diversified itself into several product lines: Telecommunications, Engineering, financial services. Each subsidiary is self-sufficient with their-own administrative functions, propagating the belief that people can assume the responsibility for the effective implementation of their decisions and should be given autonomy. This has reduced the need for direct supervision by superiors, has promoted flexibility, initiative and faster decision making. The orders of customers are never delayed, as a result of good policy decisions of top management.
(a). Identify and explain any two points of importance of the concept being
discussed above.
(b). Name and briefly explain a suitable framework for the company within which
the managerial and operating task are to be performed.

Answer 1

(a) It is divisional structure organisation. Two importance are quick decision making and easy assessment of divisional results.

(b) It is an organisational structure which is suitable for the company in which operating and managerial tasks are to be performed.

Explanation:

(a) It is divisional structure organisation: It refers to dividing the whole enterprise according to the major products to be manufactured (like Telecommunications, Engineering, financial services , etc.).  

Two importance are as follows:

1. Quick decision making : Divisional manager can take any decision regarding his division independently which makes decisions quick and effective .

2. Divisional results can be assessed : Divisional results ( profit\ loss ) can be assessed easily . On this  basis any unprofitable division can be closed .

(b) It is an organisational structure which is suitable for the company in which operating and managerial tasks are to be performed.

Organisational structure refers to a specific pattern of relationship which is created during the organizing process. The structure provides a basis or framework for manager and others employees for performing their functions.

There is need for this organisation:

1. This type of organisation is required when the size and complexity is increased.

2. It is required as it helps in effective administration , better use of resources , growth and expansion.