23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

Business Management Ideas

Organisational
Structure:
Functional
Structure and
Divisional
Structure
Article shared by :

Organizational Structure: Functional

Structure and Divisional Structure ! Also
learn about its advantages and
disadvantages!

The organizational structure can

be classified under following two
types:

1. Functional Structure

ADVERTISEMENTS:

http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 1/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

Buyerzone Multi function 2 … Ganesh Vegetable Dicer …

See price Rs. 408.00

(details + delivery)

2. Divisional Structure

Functional Structure:
This is the simplest & the most
prevalent form of organizational
structure. Functional organisational
structure refers to the structure in which
different departments are created on the
basis of major functions performed in
the organisation.

Each department has a coordinating

head and can be further divided into
separate sections. For example, a
manufacturing concern will have
Marketing Department, Production
Department, Personnel Department and
Accounts Department etc. Marketing
Department may be further divided into
http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 2/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

sections like Sales Section, Market

Research Section etc.

Functional Structure:
Advantages of Functional
Structure:
Advantages of functional structure
are as follows:

1. Specialisation:

Under functional organisation, an

employee is required to perform the
same job within a department regularly.
Thus, this improves the performance of
the employees and leads to
specialisation in the organisation.

2. Coordination:

ADVERTISEMENTS:

http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 3/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

Gemba Walk Free Guide

Successful Guide - Gemba Walks
An essential guide to the process and protocol of
successful gemba walks!

traccsolution.com OPEN

Since the workers perform similar jobs,

it becomes very easy to control and
coordinates their activities.

3. Increasing Managerial
Efficiency:

Functional structure helps in increasing

managerial and operational efficiency
and thus leads to increase in profits.

4. Economical:

ADVERTISEMENTS:

Videocon d2h HD Digital … Ganesh Vegetable Dicer …

Rs. 1,540.00 Rs. 408.00

(details + delivery) (details + delivery)

http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 4/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

It helps in avoiding duplication of work

leading thereby to economies of scale
and minimum cost.

5. Effective Training:

Providing training to employees is very

easy since focus is only on a limited
range of skills.

Disadvantages of Functional
Structure:
Disadvantages of functional
structure are as under:

1. Hindrance in Organisational
Objectives:

Under functional structure, more

emphasis is given on achieving of
departmental objectives rather than the
overall organisational objectives. Such a
practice leads to functional empires and
places hindrance in the interaction
between two or more departments.
Hence, organisational objectives may
not get achieved.

2. Ineffective Coordination:

Establishing coordination in
functionally differentiated departments
becomes very difficult.

http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 5/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

3. Conflicts:

Sometimes, interests of two or more

departments may not be compatible. In
such a situation, it leads to conflicts
among different departments.

4. Inflexibility:

It leads to inflexibility in the

organisation since people with same
skills and knowledge develop a narrow
outlook and face difficulty in
understanding and appreciating other
jobs.

Suitability:
(a) This type of organisational structure
is suitable where the size of operation is
very large and has various activities.

(b) The operations of the firm need high

degree of specialisation.

Divisional Structure:
Dividing the whole organisation
according to the major products to be
manufactured by them is known as
Divisional Organizational Structure. For
example Samsung, Reliance etc. This
type of structure is devised by the
business firms when they are dealing in
different categories of products. It helps
http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 6/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

in coping with the emerging

complexities due to diversification of
products.

In a divisional structure, the various

departments or divisions are created on
the basis of different products
manufactured in the enterprise. In each
department or division, different
functions like production, purchase,
finance, sales etc. are performed in
order to achieve organisational goals.

Each division has a divisional manager

who is responsible for the working of his
division and has full authority over it. In
each department, functional structure
automatically develops.

But functions of each division are

different, depending upon the nature of
the product to be produced. Also, the
divisional head of each division is
responsible for the profit or loss of his
division so that each division acts as a
profit centre.

http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 7/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

Advantages of Divisional
Structure:
Following are the important
advantages of divisional structure:

1. Development of Skills:

Handling all aspects relating to a

product line enhances various skills in a
divisional head and thus makes him
worthy of promotion to next higher
level.

2. Accountability:

Performance measurement of each

division is easily possible since the
divisional heads are accountable for
profits. This further helps in fixing
responsibilities and taking appropriate
remedial action in case of poor
performance.

3. Quick Decision Making:

Each division acts as an autonomous

unit; hence divisional structure
promotes flexibility and quick decision
making.

4. Easy Expansion:

http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 8/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

Under divisional structure, new

divisions can be easily added without
interrupting the working of other
divisions. Thus, it facilitates growth and
expansion of the enterprise.

Disadvantages of Divisional
Structure:
Disadvantages of divisional
structure are as under:

1. Duplication of Activities:

Similar types of activities performed in

all divisions leads to duplication of work
and increased expenditure.

2. Conflict:

There may be conflicts among different

divisions over allocation of funds.
Further, the divisions may also try to
maximize their profits at the cost of
other divisions.

3. Organisational Interest
Ignored:

Since the managers have authority to

supervise all the activities within their
respective divisions, they may gain
tremendous power; focus on their goals

http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 9/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

alone and ignore all else including even

organisational interests.

Suitability:
(a) This type of organisational structure
is suitable for those organisations which
are concerned with the manufacturing
of large variety of goods.

(b) An organisation can also opt for such

a structure when it wants to grow, wants
to employ more employees, or wants to
create more departments.

Related Articles:

Designing the Project Organisation Structure:

2 Forms
Difference between Functional and Divisional
Departmentation

You May Like Sponsored Links by Taboola

Ready To Plan, Operate, And Grow Your Business?

Liveplan

Looking for a home at Gurgaon from a reliable

developer, Hero Homes is coming soon
Hero Homes

India's Ultimate Cheap Flight Prices!

Save70

Degree programmes for working professionals from

BITS Pilani
BITS Pilani WILP

http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 10/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

Low Income Worker Fights To Save Baby Daughter

From Cancer
Impact Guru

10 Beautiful Places In India You Are Not Allowed

To Visit
TopsJournal.xyz

Get the Trendy Sunglasses Starting Just Rs.299/-.

Shop Now !
Naytr.com

Check your CIBIL Score FREE - In just 2 minutes!

wishfin.com

Before uploading and

sharing your
knowledge on this site,
please read the
following pages:

1. Content Guidelines
2. Prohibited Content
3. Image Guidelines 4.
Plagiarism Prevention
5. Content Filtration 6.
Terms of Service 7.
Disclaimer 8. Privacy
Policy 9. Copyright 10.
Report a Violation 11.
Account Disable 12.
Uploader Agreement.

http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 11/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

Title

Description

Your Name

Your Email ID

Drop files
here or

Select
files

UPLOAD AND SHARE

You Sponsored Links

May Like
Ready To Plan,
Operate, And
Grow Your…
Liveplan

Looking for a home

at Gurgaon from a
reliable develope…
Hero Homes

India's Ultimate
Cheap Flight…
Save70

Degree

http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 12/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

programmes for
BITS Pilani WILP
GUIDELINE
Low Income
S
Worker Fights To
Save Baby…
 Guru
Impact
Home

by Taboola
 Privacy
Policy

 Upload &
Share

 Contact
Us

SUGGESTIO
N

 Report
Spelling and
Grammatical
Errors

 Suggest
Us

ADVERTIS
EMENTS

http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 13/14
23/06/2018 Organisational Structure: Functional Structure and Divisional Structure

VIDEOCON D2H HD
DIGITAL SET TOP BOX …
Rs. 1,571.00
(details + delivery)

VIDEOCON D2H HD
DIGITAL SET TOP BOX …
Rs. 1,540.00
(details + delivery)

BUYERZONE MULTI
FUNCTION 2 IN 1 …
See price

http://www.businessmanagementideas.com/organisation/organisational-structure-functional-structure-and-divisional-structure/2334 14/14