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CA Intermediate · Financial Management and Strategic Management · Strategy Implementation and Evaluation

Kaveri Foods Ltd. operates a stable, highly standardised packaged-flour business with a single product line and a centralised head office making almost all decisions. It now wants to ensure speed and routine efficiency. Which organisational structure best fits its situation?

A functional structure fits best. Grouping activities by function gives centralised control, specialisation and routine efficiency, which suits a single-product firm in a stable environment. Matrix, SBU and network structures are designed for diversified, complex or outsourcing-oriented organisations with more dynamic needs.

  1. AMatrix structure
  2. BFunctional structureCorrect
  3. CStrategic business unit structure
  4. DNetwork structure with outsourced core functions

Explanation

A functional structure groups activities by function such as production, marketing and finance. It suits small or single-product firms in stable environments needing centralised control and efficiency. Matrix and SBU structures suit diversified or complex firms, and a network structure suits outsourcing-heavy firms.

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