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Which type of organizational structure is the most suitable for an organization which is large, has diversified activities and manufacturing one product?

Solution

Correct Option: 1

Functional structure suits organizations that are large, have diversified activities, and operate a single product line, because grouping is done by function (production, marketing, finance) to gain specialization. Divisional structure is suited for multi-product companies. Since the firm here manufactures only one product, functional structure is most appropriate.

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