Question

Differentiate between the functional organization and divisional organization

Answer 1

Functional Structure: In a functional structure, positions are grouped based on the type of work they do and the skills required to complete that work. Organizations employing this kind of structure divide themselves into functional areas like marketing, engineering, and accounting.

Each functional area is usually led by an administrator with expertise in that field. The strengths of the functional structure include fostering, supervising and efficiently utilizing specialized resources.

Divisional Structure: In a divisional structure, an organization divides itself not into functional areas but into divisions. These divisions, which can be created around product lines, markets or geographic regions, usually are given more independence and sometimes even act like separate companies. This structure is usually employed by businesses whose growth into new products, markets or regions makes the functional structure too complex and cumbersome. By creating these pseudo-sovereign divisions, decisions can be made more quickly and employees can specialize in the unique aspects of the division in which they work, providing for more efficient use of resources.