Question

A company has been registered under the Companies Act with an authorized Share Capital of Rs.400 crore. Its registered office is situated in Mumbai and manufacturing unit in a backward district of Karnataka. Its marketing department is situated in Hyderabad. The company is manufacturing consumer goods.

(i) With the help of a diagram suggest a suitable organisation structure for the company.

(ii) State any three limitations of this organisation structure.

Answer 1

Divisional Structure:

Limitations of Divisional Structure:

(a) Conflicts may arise among different divisions with reference to allocation of funds at the cost of other divisions.

(b) It may lead to the increase in cost due to the duplication of activities across products.

(c) Manager may misuse his power and ignore organisational interests.