Six Mark Question:
A Steel Manufacturing Company has the following main jobs:
(i) Manufacturing
(ii) Finance
(iii) Marketing
(iv) Personnel and
(v) Research and development.
Which type of organisational structure is to be chosen for this type of a company and why? State any five advantages of this organisational structure.


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.

Merits of Functional Organization
  • Specialization- Better division of labour 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.
  • Efficiency- Greater efficiency is achieved because of every function performing a limited number of functions.
  • Economy- Specialization compiled with standardization facilitates maximum production and economical costs.
Expansion- Expert knowledge of functional manager facilitates better control and supervision.

Business Management

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