Question

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

(i) Responsibility

(ii) Cost

(iii) Coordination

Hint:

Functional structure makes it hard to fix responsibility and coordinate many products, but it saves cost. Divisional structure fixes responsibility and coordinates easily, but it is costly due to duplication.

Answer 1

Step 1: Know the two structures:
Functional structure groups work by function. Divisional structure groups work by product. We compare them on responsibility, cost and coordination.

Step 2: (i) Responsibility:
Functional structure: it is difficult to fix responsibility on a department, because many departments contribute to one result.
Divisional structure: it is easy to fix responsibility for performance, because each division head answers for his product.

Step 3: (ii) Cost:
Functional structure: it is economical, as the functions are not duplicated.
Divisional structure: it is costly, as resources are duplicated in the various divisions.

Step 4: (iii) Coordination:
Functional structure: coordination is difficult for a company with many products.
Divisional structure: coordination is easy, because all the functions related to one product are brought together in a single division.

Final Answer:
Functional structure makes responsibility hard to fix, is economical and is hard to coordinate for many products. Divisional structure fixes responsibility easily, is costly and is easy to coordinate.