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Organisation structure is the outcome of the organising process and plays a crucial role in determining a firm's efficiency and growth. An effective structure enhances coordination, improves communication, and contributes to increased profitability. As businesses expand, the need for a well-defined structure becomes essential to manage complexity and ensure smooth operations. Peter Drucker emphasised the significance of an appropriate organisation structure, stating that the wrong structure can impair business performance. The organisation structure serves as a framework that defines relationships among individuals, work, and resources, facilitating the achievement of organisational goals. It can broadly be classified into functional structure and divisional structure. The functional structure groups jobs based on similar functions, promoting specialisation and operational efficiency. However, it may also lead to coordination challenges and interdepartmental conflicts. On the other hand, the divisional structure is suitable for large, diversified organisations, allowing independent divisions to function as profit centers. While it enables product specialisation and accountability, it may result in increased costs due to duplication of resources. Choosing the right organisation structure is critical, as it directly impacts decision-making, efficiency, and the overall success of an enterprise.
What is a key advantage of a functional structure?
It allows independent divisions to function as profit centers
It reduces coordination challenges
It promotes specialisation and operational efficiency
It eliminates duplication of resources
Explanation: A functional structure groups jobs based on similar functions (e.g., marketing, finance, operations). This allows employees to specialise in their respective areas, leading to increased efficiency and expertise. However, it may also create coordination challenges between departments.
By: Roshni Gautam ProfileResourcesReport error
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