Question

Distinguish between ‘Functional structure’ and ‘Divisional structure’ of an organisation on the basis of the following :

(i) Formation

(ii) Specialisation

(iii) Managerial development

Hint:

Functional structure is built on functions and gives functional specialisation, with managerial development being difficult. Divisional structure is built on product lines, gives product specialisation and makes managerial development easier.

Answer 1

Step 1: Know the two structures:
A functional structure puts people doing the same kind of work into one department. A divisional structure puts people working on the same product into one division. We compare them on formation, specialisation and managerial development.

Step 2: (i) Formation:
Functional structure: it is formed on the basis of functions such as production, sales and finance.
Divisional structure: it is formed on the basis of product lines, and the functions support each product division.

Step 3: (ii) Specialisation:
Functional structure: it offers functional specialisation. Employees become expert in one function.
Divisional structure: it offers product specialisation. Employees become expert in one product or market.

Step 4: (iii) Managerial development:
Functional structure: managerial development is difficult. Each functional manager reports to the top management and handles only one function.
Divisional structure: managerial development is easier. A division head enjoys autonomy and handles several functions, which helps him learn.

Final Answer:
Functional structure is function based with functional specialisation and slow managerial growth. Divisional structure is product based with product specialisation and better managerial growth.