Distinguish between functional structure and divisional structure of organisation.

Question

Accepted Answer

| Basis | Functional Structure | Divisional Structure |
|---|---|---|
| Basis of grouping | By the function performed (production, finance, marketing, HR) | By product line (or territory), each a separate division |
| Suitability | A large organisation with a single product/product line | A large organisation with multiple, distinct product lines |
| Specialisation | High — each functional head is a specialist in one function | Each division has its own set of functional departments, so specialisation is somewhat diluted across divisions |
| Accountability for results | Difficult to pin overall product profitability on any one function | Easy — each division is a self-contained profit centre, so its performance can be directly assessed |
| Coordination | Easier within a function, but coordination ACROSS functions for one product can be harder | Easier within a division (all functions serving one product report together), but resources/functions may be duplicated across divisions | …

Q.Distinguish between functional structure and divisional structure of organisation.

Concept understanding — Organising

Basis	Functional Structure	Divisional Structure
Basis of grouping	By the function performed (production, finance, marketing, HR)	By product line (or territory), each a separate division
Suitability	A large organisation with a single product/product line	A large organisation with multiple, distinct product lines
Specialisation	High — each functional head is a specialist in one function	Each division has its own set of functional departments, so specialisation is somewhat diluted across divisions
Accountability for results	Difficult to pin overall product profitability on any one function	Easy — each division is a self-contained profit centre, so its performance can be directly assessed
Coordination	Easier within a function, but coordination ACROSS functions for one product can be harder	Easier within a division (all functions serving one product report together), but resources/functions may be duplicated across divisions

Q.Distinguish between functional structure and divisional structure of organisation.

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