State any two advantages of the organisational structure suggested in (i) above.
State any two advantages of the organisational structure suggested in (i) above.
Two advantages of the divisional structure suggested in (i) are as follows.
- Fixation of responsibility and accountability: Since each division (footwear, clothing, bags, accessories) operates as a separate profit centre under one divisional head, responsibility for that division's performance can be clearly fixed, making it easy to evaluate results and hold managers accountable.
- Product/divisional specialisation and expertise: Managers of each division can concentrate exclusively on their specific product line, developing specialised knowledge, quicker decision-making, and greater flexibility in responding to changes in demand for that particular product category.
Marking Scheme
- 11 mark each for any two correct, distinct advantages of divisional structure (e.g., product specialisation, fixation of responsibility, flexibility, ease of expansion, management development) — 2 marks total.
Hint
Recall the standard NCERT list of divisional structure advantages: specialisation, fixed responsibility, flexibility, easier expansion, and management development — pick any two.
Quick Oral Answer
Two advantages are: fixation of responsibility since each division is a separate profit centre, and product specialisation as each division focuses only on its own product line.
Analysis & Explanation
This question follows directly from Q23 and requires stating advantages specific to divisional structure.
Standard NCERT advantages of divisional structure
- Product specialisation — each division focuses on one product line, building deep expertise.
- Fixation of responsibility — since each division is a self-contained profit centre, accountability for its results is easy to establish.
- Flexibility and initiative — divisional managers can take faster decisions suited to their product/market without waiting for central approval.
- Facilitates expansion and growth — new divisions can be added for new products/markets without disturbing existing ones.
- Basis for management development — divisional managers gain broad general-management experience running a near-independent unit.
Applying to the case
- For Soal Footwear Ltd., each product line (footwear, clothing, bags, accessories) can be managed by its own division, enabling focused expertise and clear accountability for that line's performance while the company continues expanding its diversified portfolio.
Exam tip: Choose any two distinct advantages and, where possible, briefly connect them to the diversification context of the case for a well-rounded answer.
Common Mistakes
- 1Stating advantages of functional structure instead of divisional structure.
- 2Giving only one advantage or repeating the same point in different words instead of two genuinely distinct advantages.
Interesting Facts
Divisional structure makes it easier for a company to shut down or divest a poorly performing product line without disrupting the rest of the business, since each division functions as a largely self-contained unit.
Large multi-product companies like Godrej and ITC use divisional structures, running separate divisions for categories like consumer products, agri-business, and appliances.
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Frequently Asked Questions
What are the main advantages of divisional structure?
Product specialisation, fixation of responsibility, flexibility and quicker decision-making, ease of expansion and growth, and development of all-round managers.
Why is fixation of responsibility easier in a divisional structure?
Because each division functions as a semi-autonomous profit centre with its own resources and manager, the performance and results of that division can be directly traced back to its divisional head.