Question

reference organization chart 3.2:

the structure would bring strengths such as:

• product responsibility is clear and simple.
• economies of scale
• suitability for an unstable environment.
• determining total cost of any given product is a straightforward hierarchical matter.

Explanation:

🆕 New Concept Discovered: Organizational Structure Types
Grouping by specialized business functions

Step 1: Identify the organizational structure type

The organization chart shows departments grouped by specialized business activities: Accounting, Production, Marketing, and Distribution. This is a classic functional organizational structure, where employees are grouped based on their specific skills, knowledge, and tasks.

Step 2: Analyze the strengths of a functional structure

A functional structure groups similar specialties together. This leads to several key advantages:

• Economies of scale: By grouping specialists (e.g., all production workers or all marketing experts) within the same department, the organization minimizes duplication of equipment and personnel, leading to cost efficiencies and shared expertise.
• In-depth skill development: Employees work closely with others in their field, enhancing their specialized skills.

Let's evaluate the given options against this structure:

• product responsibility is clear and simple: Incorrect. This is a strength of a divisional (product) structure, not a functional one. In a functional structure, responsibility for a single product is split across different departments (Production, Marketing, etc.).
• economies of scale: Correct. Grouping similar functional activities together allows the organization to achieve economies of scale within each department.
• suitability for an unstable environment: Incorrect. Functional structures are rigid and slow to adapt, making them best suited for stable environments.
• determining total cost of any given product is a straightforward hierarchical matter: Incorrect. Because costs are spread across functional departments (e.g., shared production lines and marketing campaigns), tracking the exact cost of a specific product is complex in a functional structure.

Answer:

economies of scale