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Question

Rohan, a sole proprietor, was running food catering business in North Delhi. He got great success and profit margin in this business. Due to excess demand in the market he expanded his business with separate departments as purchase, production, finance and marketing.
Which type of organisational structure would you suggest him? Enumerate its two benefits.


Solution

Functional Organisation.
Functional organization has been divided to put the specialists in the top position throughout the enterprise. This is an organization in which we can define as a system in which functional department are created to deal with the problems of business at various levels. Functional authority remains confined to functional guidance to different departments. This helps in maintaining quality and uniformity of performance of different functions throughout the enterprise.
Benefits of functional organisation:
  • Specialization- Better division of labor takes place which results in specialization of function and it’s consequent benefit.
  • Effective Control- Management control is simplified as the mental functions are separated from manual functions. Checks and balances keep the authority within certain limits. Specialists may be asked to judge the performance of various sections.

Business Management

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