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Business Studies · 2025 · 4 marks
CBSE 2025 · Region 6 · Set 1 · Q30
‘Nurata Ltd.’ is a leading manufacturer of clothing in India, known for good quality casual wear as well as formal wear for children. The company is…
‘Nurata Ltd.’ is a leading manufacturer of clothing in India,
known for good quality casual wear as well as formal wear for
children. The company is earning good profits and now wants to
expand its business by entering into the business of electronics and
home appliances too. The management decided to create separate
business units, where each unit head would be responsible for a
specific product category and for its performance. All key functions,
such as marketing, finance, production, etc. would be handled within
each unit.
(a)
Identify the organizational structure adopted by
‘Nurata Ltd.’ on expansion of its business.
(b)
State any two advantages and one disadvantage of
the organizational structure identified in (a) above.
Marking-scheme solution
(a)
Divisional Structure
(b)
Advantages of Divisional Structure:
(i)
Product specialisation helps in the development of varied skills in
a divisional head and prepares him for higher positions.
(ii)
It helps in fixation of responsibility in case of poor performance
of the division because the divisional heads are accountable for
profits.
(iii)
It promotes flexibility and initiative because each division
functions as an autonomous unit which leads to faster decision
making.
(iv)
It facilitates expansion and growth as new divisions can be
added without interrupting the existing operations by merely adding
another divisional head and staff for the new product line.
Disadvantage of Divisional Structure:
(i)
Conflict may arise among different divisions with reference to
allocation of funds and a particular division may seek to maximise
its profits at the cost of other divisions.
(ii)
It may lead to increase in costs since there may be duplication of
activities across products.
(iii)
A divisional manager may gain power for activities of his
division and in a bid to assert his independence may ignore
organisational interests.
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CBSE Class 12 Business Studies past-paper question from the 2025 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.