In the above example, assume that 2 out of the 5 product categories are sold in two different countries. difference in simple language and explain it simply plzz Ask for details ; Follow Report by Bablesunaina 07.03.2018 Log in to add a comment Properly managed organizational structures can result in higher employee motivation and reduced costs. 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. As compared to divisional structure, which is appropriate for those organisations, that are large and dynamic. 3. In the functional structure, it is really difficult to fix responsibility, i.e. Divisional structure is a type of organizational structure where operations are grouped based on divisions or separate product categories. One person, alone, can start and run a small business, but when two or more people come together to accomplish a business goal, an organization is formed. Now one of the most common forms of formal organization is the functional organizational structure. Now that we have seen the advantages and disadvantages of the divisional structure, it is … Also called a "product structure", the divisional structure groups each organizational function into a division. Divisional structure. What is Functional Structure In this type of an organization structure, inefficiencies in one division do not affect the other divisions unlike in a functional structure since the divisions remain separate. 04 Apr. Dili has a professional qualification in Management and Financial Accounting. The functional structure is described as an organisational structure wherein; the employees are classified on the basis of their area of specialisation. Should the company want to diversify further, it is easy to 'bolt on' another division. Formation: Formation is based on functions; Specialization: Functional specialization. SDH Company operates with a divisional structure and produces 5 product categories. 2. Boundless, 31 May 2016. The difference between functional organization and divisional organizations mainly depends on the way they are structured. Divisional structure. In that case, the products have to be shipped to the respective countries and different marketing approaches may have to be used. They have production plants in a number of countries to produce and sell in respective countries. 2017. Strengths of … These are created on the basis of product-lines along with the functions. The key difference between functional and divisional structure is that functional structure is an organizational structure in which the organization is divided into smaller groups based on specialized functional areas such as production, marketing and sales whereas divisional structure is a type of organizational structure where operations are grouped based on divisions or separate product categories. Any business employing more than a few people needs to organize itself into a structure that defines how information travels within the company, and how workers in different roles and at different levels of responsibility relate to each other. Functional organisational structure refers to the structure in which different departments are created on the basis of major functions performed in the organisation. 1. All rights reserved. As a single division does not produce enough to take great benefits out of the economies of scale. Its objective is to carry out operations smoothly and efficiently. It is good for a company which is dealing in multi products (more than one product). The two most comm… Difference between functional and divisional Organizational Structure. An organization that has a management structure of sharing functions is called functional organization. This is the simplest & the most prevalent form of organizational structure. An organisational structure so designed that it is bifurcated into semi-autonomous divisions on the basis of product, service, market, etc., is known as the divisional structure. This is possible only when you have the best CBSE Class 12 Business Studies study material and a smart preparation plan. The majority of the decisions are taken by the top management, thus limited autonomy for managers under the functional structure. The principle of unity of command is not applied in his type of organizational structure. Product Structure; Product structure groups employees together based upon specific products produced by the company. In a divisional structure, the teams are organized in set of divisions, where each division corresponds to the end product or services provided by the organization. of the organisation is not doing well. Organizational structures increase efficiency by ensuring that all employees know to whom they report and from whom they take direction regarding their work activities.