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Question:

How is a functional structure different from a divisional structure?

Answer:

Difference between a functional structure and a divisional structure:

Basis of difference Functional Structure Divisional Structure
 Meaning An organisation structure in which departments are created on the basis of different functions performed in the organisation is called functional structure. An organisation structure in which various departments are created on the basis of products, territory or region is called a divisional structure.
 Formation It is formed on the basis of functions performed in the organisation. It is formed on the basis of product line territory or region.
 Specialisation It leads to functional specialisation. It leads to product specialisation.
 Managerial Development It does not help in managerial development as functional managers lack autonomy.

It helps in managerial development, as they have autonomy and knowledge of varied aspects of a product.
 Cost It is economical as there is no duplication. It is costlier, as there is duplication of resources.
 Responsibility It is difficult to fix responsibility in one department. It is easier to fix responsibility in each division.
 Suitability It is suitable for organisations which deal with a single product category. It is suitable for diversified or multi product firms.

 


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