Toycars Pvt Ltd is a company manufacturing toys, enjoying a good market reputation. It has functional organisation with separate departments for production, finance, marketing and human resource. Lately, to use its brand name and to cash on new business opportunities, it is thinking to diversify into manufacturing of electronic toys.
(i) What change must be brought about in the organisation structure?
(ii) Explain any 4 benefits of adopting such a change.

Explanation

The company must change its organisation structure from functional to divisional.
(ii) Some benefits of adopting divisional structure are:
(a) Product specialisation: The company will attain specialisation in all its products.
(b) Accountability The company can make divisional heads accountable for profits, revenues and costs of their respective divisions.
(c) Flexibility Since, each division functions as autonomous unit, it leads to faster decisions.
(d) Facilitate growth By adopting divisional structure, the company can add new divisions for growth, without affecting the other divisions/departments.