Suman pipes ltd. has followed an organisational structure which has not only
increased the managerial efficiency but also increased the control and coordination
with in a given department. Identify the types of formal organisational structure
followed by the company. Also, state two merits and demerits of the structure.
Answers
1. Meaning of Organisational Structure An organisational structure shows the authority and responsibility relationship between various positions in the organisation and also clarifies who will report to whom.
2. Types of Organisational Structure
(i) Functional structure It is an organisational structure which is formed by grouping of jobs of similar nature under various functional departments.
Advantages of functional structure are:
It promotes control and coordination within a department.
It is the most logical, time proven form of organisation structure.
It leads to minimal duplication of effort, which results in economies of sacle and this lowers cost.
It ensures that different functions get due attention.
Disadvantages of functional structure are:
(a) It becomes difficult to hold a particular department responsible for any problem.
It may lead to inflexibility as people with same skills and knowledge may develop a narrow perspective.
A functional structure places less emphasis on overall enterprise objectives than the objectives pursued by a functional head.
(ii) Divisional structure Under the divisional structure an organisation is divided into different divisions or units on the basis of products or geographical area.
Advantages of divisional structure are:
Decisions are taken much faster in divisional structure.
It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.
It leads to specialisation of physical facilities and human talent.
Disadvantages of divisional structure are:
There is a duplication of physical facilities and functions.
It suffers from the under utillisation of plan capacity.
Conflict may arise between different divisions on allocation of funds and other resources.
Previous Years Examination