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Business Studies · 2025 · 6 marks
CBSE 2025 · Region 4 · Set 1 · Q34
(a) ‘Organisation's decision to opt for Functional Structure or Divisional Structure will vary with the nature and type of activities performed by…
‘Organisation's decision to opt for Functional Structure or
Divisional Structure will vary with the nature and type of
activities performed by it.'
Differentiate between ‘Functional Structure’ and ‘Divisional
Structure’ on the basis of the following:
(i)
Formation
(ii)
Specialisation
(iii)
Responsibility
(iv)
Cost
(v)
Managerial development
(vi)
Coordination
‘Decentralisation is a philosophy that implies selective
dispersal of authority because it propagates the belief that
people are competent, capable and resourceful.'
In the light of this statement, explain any four points that
highlight the importance of Decentralisation.
Marking-scheme solution
Difference between ‘Functional Structure’ and ‘Divisional
Structure’:
| Basis | Functional Structure | Divisional Structure |
| (i) Formation | Formation is based on functions. | Formation is based on product lines and is supported by functions. |
| (ii) Specialisation | It leads to functional specialisation. | It leads to product specialisation. |
| (iii) Responsibility | In this, it is difficult to fix responsibility on a department. | In this, it is easy to fix responsibility for performance. |
| (iv) Cost | In this structure, the functions are not duplicated and hence it is economical. | In this structure, there is duplication of resources in various departments, hence it is costly. |
| (v) Managerial Development | It is difficult to achieve managerial development as each functional manager has to report to the top management. | It is easier to achieve managerial development as autonomy and chance to perform multiple functions are available. |
| (vi) Coordination | Coordination is difficult for a multiproduct company | Coordination is easy because all functions related to a particular product are integrated in one department. |
Importance of Decentralisation
1) Develops initiative among subordinates.
2) Develops managerial talent for the future.
3) Quick decision making.
4) Relief to top management.
5) Facilitates growth.
6) Better control.
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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.