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CMA Foundation · Fundamentals of Business Economics and Management · Organisation Structure, Responsibility, Accountability and Delegation of Authority

A large Indian conglomerate groups its activities into semi-autonomous units such as Tea, Hotels and Steel, each responsible for its own profit. This is an example of:

This is a divisional structure, where an organisation is grouped into semi-autonomous units by product or business, each accountable for its own profit. It suits large diversified firms because each division can respond to its own market.

  1. ADivisional structureCorrect
  2. BLine structure
  3. CFunctional foreman system
  4. DInformal organisation

Explanation

Grouping activities by product or business unit, each acting as a profit centre with its own managers, is a divisional structure. A line structure has no such product-based grouping, and informal organisation arises from social relations, not design.

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