Difference between Functional and Divisional Structure

The organization is divided into two structural frameworks i.e. functional and divisional structure. The difference between functional structure and divisional structure tells about the formation of units or segments on the basis of functions and products. On the other hand, we can say that functional structure is designed on the basis of basic/specialized functions or jobs. Whereas Divisional structure is made on the basis of product specialization.

Meaning of Functional Structure:

This structure emphasis on specific functions. In this, activities are grouped according to the specialized work. For example, Jobs related to the production of goods categorized in the production department, jobs related to information technology grouped into IT department/computer department, etc.

let’s take another example of the production department which is further divided into sub-units according to the specialization-assembly department, quality control department, store department each department is under the control of one supervisor who manages the work all time.

Meaning of Divisional structure:

Divisional structure refers to forming a partition/splitting/subdivision. Where the business units producing more than one product with specialization. It is applicable to large-scale organizations. 

For example- One multiproduct manufacturing unit subdivided its activities related to production according to specialization. like; production of medicine, cosmetics, etc. then all the activities related to Medicine will be further subdivided into ayurvedic, allopathic, homeopathic, etc.)under the medicine department, Cosmetics will be further subdivided into different units according to the specialization in products: perfume making, kajal, nail paint, lotion, etc.

The Chart of difference between Functional and Divisional structure

Points of differences

Functional structureDivisional Structure
FormationThe structure is formed according to the specialized work/ function.The divisional structure is formed on the basis of product.
CostThis type of structure is economical.Divisional structure is not economical because different departments required different types of resources to produce the products.
Development of ManagersThere is less chance for the overall development of the managers because they are doing only a single specialized function.By performing multitasks they can get more chance of development.
SuitabilityThis type of structure is suitable for all types of organizations. Or in single product manufacturing units.Divisional structure is suitable only for multiproduct business units.
SpecializationThis structure brings Functional specialization.It mainly emphasis on Product specialization.
ExampleThe HR department, Production department, Marketing department of any organization.MC Donald’s one of the biggest leading fast-food chains in the world. The overall business is divided into independent separate subunits performing their tasks according to the operational needs.
Autonomy/RightIn a functional structure,Managers are having very less autonomy of taking decisions. They depend on the higher authority.Divisional managers are independent and can make the decision independently.

Conclusion:

Thus, Functional structure emphasis on specific functions. In this, activities are grouped according to the specialized work. For example, Jobs related to the production of goods categorized in the production department. This type of structure is applicable to all types of organizations. Whereas Divisional structure is made on the basis of product specialization and it is applicable to those organizations which are dealing in multiproduct manufacturing.

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