Boundless, 31 May 2016. Divisional structure: Any organization that divides its employees and other resources into different groups based on regional and product differences, such that each group is responsible and answerable for its own actions, has a divisional structure. An organization that has a management structure of sharing functions is called functional organization. First and foremost we must remember that an organisation structure is a Functional Structure is one in which the reporting relationships of the organization are bifurcated according to their functional area. (Foreign 2014) Terms of Use and Privacy Policy: Legal. Boundless, 08 Aug. 2016. It is good for a company which is dealing in multi products (more than one product). Divisional structure is a type of organizational structure where operations are grouped based on divisions or separate product categories. Divisional structure is appropriate for companies that have multiple product categories and is present in a number of locations. Such functional areas are also referred to as ‘silos’. For such organizations, they have limited choice but to adopt a divisional structure. Functional Structure. The difference between functional organization and divisional organizations mainly depends on the way they are structured. Functional Structure: In this type of structure, the similar set of activities are grouped together into a function and the major functions are termed as departments. Side by Side Comparison – Functional vs Divisional Structure As a single division does not produce enough to take great benefits out of the economies of scale. As you can see, in a functional organization products/businesses cut across (siloed) functions like a matrix. ADVERTISEMENTS: 2. Functional Structure: . Functional structure. Overview and Key Difference Managers do not have autonomy of decisions. 1. The principle of unity of command is not applied in his type of organizational structure. The organization structure should be carefully chosen and this will depend on the nature of the business and the preference of the top management. “Advantages & Disadvantages of Divisional Organizational Structure.” Chron.com. 1. class 12 business studies ch- organising types of organisational structure frunctional structure advantages and disadvantages of functional structure The functional structure is best suited to those organisation which is small and simple. However, functional structures are difficult to adopt for larger scale companies that operate in a wide geographical area, especially if the organization has overseas operations. Filed Under: General Management Tagged With: Compare Functional and Divisional Structure, Divisional Structure, Divisional Structure Definition, Divisional Structure Features, Functional and Divisional Structure Differences, Functional Structure, Functional Structure Definition, Functional Structure Features, Functional vs Divisional Structure, M-form structure, Multidivisional form Structure, U-form structure, Unitary form structure. The two most comm… Key Differences Between Functional and Divisional Structure The difference between functional and divisional structure can be drawn clearly on the following grounds: The functional structure is described as an organisational structure wherein; the employees are classified on the basis of their area of specialisation. Difference between functional and divisional Organizational Structure. In the above example, assume that 2 out of the 5 product categories are sold in two different countries. If an organisation wants to grow and diversify, the functional structure cannot cope, so instead the divisional structure should be adopted. Functional structure is formed on the basis of functions, whereas divisional structure is formed on the basis of various product lines, which is further supported by functions. Expensive as it involves repeatation of resources. Merits of functional organization structure: 1. This leads to operational efficiencies within that group. In divisional structure, significant autonomy is granted for divisional managers. 04 Apr. Your email address will not be published. The products have to be shipped to the structure in which different departments are on... To … Types of organizational structure one in which the company is offering HR, and so it economical! Comm… Differences between functional and divisional organizations tax implications and additional regulations also... 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