IPA IP 2025 Question 15

In-house company organization — each business domain becomes an almost independent company inside the firm, for faster decisions and independent profitability.

Each in-house company is given its own management resources, such as capital and staff, and wide authority over investment and personnel. It answers for its own results as if it were a separate company, often for its own balance sheet as well as its profit and loss. Decisions are taken close to the business, so they come faster, and each business’s performance is plain to see. It goes a step beyond a divisional organization, whose divisions are responsible for profit but have less autonomy.

Answer (a)

Why not others:

• •(b) — a functional organization groups the work by specialist function (development, production, sales, accounting); no unit runs a business on its own account
• •(c) — a project organization gathers members from various departments for a fixed period to achieve a specific goal and is dissolved when it is reached
• •(d) — a matrix organization combines two axes, such as functions and products or regions, so each member reports to two managers

Key rule: Organize by function (functional), by business with profit responsibility (divisional; with independent profitability and wide authority, in-house company), by goal for a period (project), or by two axes at once (matrix).

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