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Question

Gracie runs a large factory, manufacturing steel appliances. The whole organisation is divided into major functions like production, marketing, finance and purchase, which may be grouped into different departments. All the activities related to purchases are grouped under purchase department like purchase of raw materials, records of purchase of inputs and tools, etc. Similarly, activities related to marketing include sales department and advertising department are grouped in the factory. 

(i) What types of structure is followed by Gracie?

(ii) State any two advantages of this structure.

(iii) What are the prerequisites or features or requirements for this type of organisational structure to work?


Solution

(i) Functional structure is followed by Gracie. 

(ii) Advantages of functional structure are :

(a) Clearer path within the function: Employees of similar skills can work together cohesively with each other by training and guiding each other on a concentrated area.

(b) Efficient use of resources: When similar skills are clubbed together, resources can be used efficiently such that equipment and personnel are not repeated across departments.

(iii) Prerequisites or features of functional structure :

(a) There should be a centralised authority that makes decisions for the organisation.

(b) There should be standardised procedures for standardised product/service.

(c) Jobs should be organised, specialised and grouped under homogenous sub-groups or business units.

(d) The business should focus on producing products and services at low costs.

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