question_answer 25)

Neha runs a factory wherein she manufactures shoes. The business has been doing well and she intends to expand by diversifying into leather bags as well as Western formal wear, thereby making her company a complete provider of corporate wear. This will enable her to market her business unit as the one stop for working women. Which type of structure would you recommend for her expanded organisation and why?

Answer:

Neha should decide for divisional structure because (i) She will diversify her unit now into varied product lines. (ii) Such a structure would enable her to know the profit margins from each product line and accordingly, she can plan and select the specific product for future diversification. (iii) It will facilitate further expansion without disturbing the existing units.