Question

Differentiate between Functional structure and Divisional structure on any four bases. 

Differentiate between ‘Functional Structure’ and ‘Divisional Structure’ of organization on any six basis.

Answer 1

Sr. No.	Basis	Functional Structure	Divisional Structure
1.	Definition	Employees are organized according to their particular functions or duties (for example, marketing and finance).	Employees are organized by product, service, or geographic location.
2.	Focus	Targets specific functions to improve competence and efficiency.	Focuses on products, markets, or regions to improve consumer or market responsiveness.
3.	Accountability	Difficult to determine since responsibilities are distributed among functions.	It is easier to build because each division acts as an individual entity with its own goals.
4.	Flexibility	Decisions take longer to make due to function interdependence.	More flexible and responsive to changes in the external environment.

Answer 2

Basis of Distinction	Functional Structure	Divisional Structure
Formation	It is formed on the basis of functions	It is formed on the basis of product lines
Specialisation	Functional specialisation	Product specialisation
Cost	Economical as there is no duplication of functions	Costly due to duplication of functions
Coordination	Difficult in case of a multi-product company	Easy as all functions related to a product are placed in one department
Responsibility	Difficult to fix on a particular department	Easy to fix on a particular department
Managerial Development	Difficult, as each functional head gets experience only in one function	Easy as each divisional head gets experience in several functions

Answer 3

Sr. No.	Basis	Functional structure	Divisional structure
1.	Formation	Formation is based on functions.	Formation is based on product lines and is supported by functions.
2.	Specialisation	Functional specialisation	Product specialisation
3.	Responsibility	Difficult to fix in a department.	Easy to fix responsibility for performance.
4.	Managerial Development	Difficult, as each functional manager has to report to the top management.	Easier, autonomy as well as the chance to perform multiple functions helps in managerial development.
5.	Cost	Functions are not duplicated hence economical.	Duplication of resources in various departments, hence costly.
6.	Coordination	Difficult for a multiproduct Company.	Easy, because all functions related to a particular product are integrated in one department.