Question

State any three points of difference between Divisional structure and Functional structure of an organisation.

Hint:

Functional structure groups work by function and divisional structure groups it by product. Compare them on any three bases such as formation, specialisation, responsibility, cost or coordination.

Answer 1

Step 1: Understand the two structures:
A functional structure groups jobs by the function they belong to, such as production, marketing and finance. A divisional structure groups jobs by product line, and each division has its own set of functions.
We now compare them on three bases.

Step 2: Difference 1: Formation:
Functional structure: it is formed on the basis of functions. All people doing one kind of work sit in one department.
Divisional structure: it is formed on the basis of product lines. Each product division is then supported by the functions it needs.

Step 3: Difference 2: Specialisation:
Functional structure: it gives functional specialisation. A marketing expert works only in marketing for all products.
Divisional structure: it gives product specialisation. A division head becomes expert in one product or market.

Step 4: Difference 3: Responsibility:
Functional structure: it is hard to fix responsibility for the final result on a single department. Many departments touch the same product.
Divisional structure: it is easy to fix responsibility for performance. The head of a division answers for the profit of that product.

Step 5: Other bases you may use:
Cost, coordination and managerial development are also accepted. Functional structure is economical, while divisional structure is costly because functions are repeated in each division.

Final Answer:
Functional structure is based on functions and gives functional specialisation, while divisional structure is based on product lines, gives product specialisation and makes responsibility easy to fix.