Business Studies

Vimal Clothing Ltd. was manufacturing only fabrics. After having great success in fabric business the directors of Visual cloth Ltd. acquired three new manufacturing units and started selling multi-products in market. (Electronics, Mobile phone, Cements) They decided that an individual who has capability and competence to handle responsibility would head each unit. The vacant position will be filled by women candidate only.
(a) State the type of organisation structure Vimal doth Ltd. have followed as a producer of single product.
(b) Suggest which type of organisational structure Director must adopt now and explain its advantages.
(c) Identify the value which have been communicated in this paragraph.


SOLUTION
a) Functional organization 
Functional organization is a system in which functional department is 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.
The concept of the Functional organization was suggested by F.W. Taylor who recommended the appointment of specialists at important positions. For example, the functional head and Marketing Director directs the subordinates throughout the organization in his particular area. This means that subordinates receive orders from several specialists, managers working above them.

b) Divisional organization
The divisional organizational structure organizes the activities of a business around geographical, market, or product and service groups. Thus, a company organized on divisional lines could have operating groups for the United States or Europe, or for commercial customers, or for the green widget product line. Each such division contains a complete set of functions. Thus, the green widget division would handle its own accounting activities, sales and marketing, engineering, production, and so forth.
This approach is useful when decision-making should be clustered at the division level to react more quickly to local conditions. The divisional structure is especially useful when a company has many regions, markets, and/or products. However, it can cause higher total costs and can result in a number of small, quarreling fiefdoms within a company that do not necessarily work together for the good of the entire entity.
The key points in favor of the divisional structure involve placing decision making as close to the customer as possible. The advantages are:
() Accountability. This approach makes it much easier to assign responsibility for actions and results. In particular, a division is run by its own management group, which looks out for the best interests of the division.
() Competition. The divisional structure works well in markets where there is a great deal of competition, where local managers can quickly shift the direction of their businesses to respond to changes in local conditions.
() Culture. You can use this structure to create a culture at the divisional level that most closely meets the needs of the local market. For example, a retail division could have a culture specifically designed to increase the level of service to customers.
() Local decisions. The divisional structure allows decision-making to be shifted downward in the organization, which may improve the company's ability to respond to local market conditions.
() Multiple offerings. When a company has a large number of product offerings, or different markets that it services, and they are not similar, it makes more sense to adopt the divisional structure.
() Speed. This approach tends to yield faster responses to local market conditions.

(c) Value which have been communicated in this paragraph is women empowerment


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Subjective Medium Published on 18th 09, 2020
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