References: Strengths of … Difference between divisional structure and functional structure class 12th business studies. On the other hand, divisional structure, the specialisation depends on product lines. Advantages and Disadvantages of Formal Organization. Distinguish between: Functional and Divisional Structure on the basis of the following points: (i) Co-ordination (ii) Managerial Development and (iii) Cost . Ans: Difference between functional and divisional structure. “Advantages & Disadvantages of Divisional Organizational Structure.” Chron.com. Divisional Structure: In the divisional structure, the organisation divides into autonomous divisions which themselves display a functional structure. Advantages & disadvantages of divisional structures Advantages . The functional structure is described as an organisational structure wherein; the employees are classified on the basis of their area of specialisation. As against this, divisional structure there exists autonomy of decisions. Functional Structure: . She has also completed her Master’s degree in Business administration. Divisional structure is a type of organizational structure where operations are grouped based on divisions or separate product categories. 2. The most significant advantage of this type of a structure is that the company will be able to benefit from specialized functional expertise and enjoy notable cost savings by using shared services. Differentiate between Functional structure and Divisional structure. Thus, it … Divisional structures are very costly to operate since cost benefits available to functional structures through shared services are not enjoyed. Functional Structure. 2017. 2. Functional organizations are more cost effective than divisional organizations. Dili has a professional qualification in Management and Financial Accounting. How is a functional structure different from a divisional structure? Easy to fix responsibility for performance. CONTENTS This is possible only when you have the best CBSE Class 12 Business Studies study material and a smart preparation plan. An organizational structure wherein the organizational functions are classified into divisions as per product or service lines , market, is called Divisional Structure. The management in a divisional structure is more independent in its decision-making process. An organization can be arranged according to a variety of structures, which enable the organization to operate and perform. Each division has its own set of functional units like research, manufacturing, marketing etc … Difference Between Provident Fund and Pension Fund, Difference Between Zip Code and Postal Code, Difference Between Fire Insurance and Marine Insurance, Difference Between Micro and Macro Economics, Difference Between Developed Countries and Developing Countries, Difference Between Management and Administration, Difference Between Qualitative and Quantitative Research, Difference Between Discipline and Punishment, Difference Between Hard Skills and Soft Skills, Difference Between Internal Check and Internal Audit, Difference Between Measurement and Evaluation, Difference Between Percentage and Percentile, Difference Between Journalism and Mass Communication, Difference Between Internationalization and Globalization. It is economical as duplication of work is minimised. For such organizations, they have limited choice but to adopt a divisional structure. An example of this would be a company that produces three distinct products, "product a", "product b", and "product c". What is Divisional Structure Functional organisational structure refers to the structure in which different departments are created on the basis of major functions performed in the organisation. The two most comm… Application Type Questions. Ans: Difference between centralisation and decentralisation. 04 Apr. Ans: Difference between functional and divisional structure. Now one of the most common forms of formal organization is the functional organizational structure. It is good for a company which is dealing in multi products (more than one product). Terms of Use and Privacy Policy: Legal. A structure is considered as the value type whereas, a class is a reference type. 3. CBSE Class 12 Business Studies Case Studies – Organising ... it is advisable for a firm to adopt functional structure. Your email address will not be published. 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 Divisional structure is appropriate for companies that have multiple product categories and is present in a number of locations. Unlike functional management, the divisional management is more skilled along product business and lesser in core technical competencies. The senior management prefers the functional structure because they believe that principles of change management can easily; Therefore, it can be concluded that divisional structure has its benefits but organizations and employees prefer the functional structure because it is quite beneficial from them in both the short and the long run. “MSG Management Study Guide.” Line Organization. CBSE Class 12 Business Studies Case Studies – Organising ... it is advisable for a firm to adopt functional structure. In functional structure jobs of similar nature are grouped and organized as separate departments on the basis of their functions. As a single division does not produce enough to take great benefits out of the economies of scale. Functional structure; Divisional structure; Functional structure. 1. Difference between functional and divisional Organizational Structure. Functional Structure is one in which the reporting relationships of the organization are bifurcated according to their functional area. Difference between functional and divisional Organizational Structure. Here, separate functions such as Production, HR, and finance can be seen under each division to support each product line. B. Divisional Structure is the organisation structure which is formed on the basis of product specialisation. N.p., n.d. Managerial development is not easy in functional structure due to the absence of autonomy of decisions, as the decisions are guided by top management. This is the simplest & the most prevalent form of organizational structure. Divisional structure is a type of organizational structure where operations are grouped based on divisions or separate product categories. Functional Structure is one in which the reporting relationships of the organization are bifurcated according to their functional area. It is good for a company which is dealing in multi products (more than one product). The functions are divided into units like marketing, production, research and development, human resource etc. As compared to divisional structure, which is appropriate for those organisations, that are large and dynamic. SDH Company operates with a divisional structure and produces 5 product categories. 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. Overview and Key Difference Hence managerial development is easier. 1. In contrast, by default, all the members of the class are private. High specialization can be seen in functional organizations since the use of shared functions. Functional Structure. The management in a functional structure is not totally autonomous in its decision making process. Meaning and Features of Formal Organization. Advantages and Disadvantages of Informal Organization. Basis of Difference. Basis: In functional departmentation, departments are created on the basis of functional areas (production, marketing etc.) 1.”Functional Structure – Boundless Open Textbook.” Boundless. 2. First and foremost we must remember that an organisation structure is a Now that we have seen the advantages and disadvantages of the divisional structure, it is … (Foreign 2014) Difficult to fix responsibility on a particular department. 3. If the tasks are segregated according to separate divisions or product categories, such organizations are divisional organizations. Functional organisational structure refers to the structure in which different departments are created on the basis of major functions performed in the organisation. Divisional structure is different from functional structure altogether. As you can see, in a functional organization products/businesses cut across (siloed) functions like a matrix. However it could also lead to a lack of communication between the functional groups within an organization, making the organization slow and inflexible. Advantages and Disadvantages of Formal Organization. Define organisation as a structure. Differentiate between 'Functional' and 'Divisional' structure of organizing on the basis of the following: (i) Meaning (ii) Formation (iii) Specialization (iv) Responsibility (v) Managerial development (vi) … Its objective is to carry out operations smoothly and efficiently. In a functional organization structure, the entire organization is divided into smaller groups or departments based on specialized functions. Properly managed organizational structures can result in higher employee motivation and reduced costs. They have production plants in a number of countries to produce and sell in respective countries. 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. The sub-ordinate may be confused by the multiple command system. Product Divisional Structure. Unlike, the divisional organisational structure wherein there is the repetition of resources, and so it is costly. Managerial Development: Difficult, as each functional manager has to … 2017. 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. Difference between Functional Structure and Divisional Structure Basis Nature Structure Authority Functional Structure Focuses on functional departments like production, finance, marketing, etc. In that case, the products have to be shipped to the respective countries and different marketing approaches may have to be used. B. Divisional Structure is the organisation structure which is formed on the basis of product specialisation. Tax implications and additional regulations are also applicable to companies that operate in multiple countries. Divisional Structure The divisional structure is broken down into three areas: product, market, and geographic. 04 Apr. Functional Structure: . Divisional structure. Functional Structure vs Divisional Structure, Difference Between Communication and Business Communication, Difference Between Transformational and Situational Leadership, Side by Side Comparison – Functional vs Divisional Structure, Compare Functional and Divisional Structure, Functional and Divisional Structure Differences, Difference Between Coronavirus and Cold Symptoms, Difference Between Coronavirus and Influenza, Difference Between Coronavirus and Covid 19, Difference Between Summary and Conclusion, Difference Between Lorikeets and Rosellas, Difference Between Sleep Apnea and Snoring, Difference Between Free and Attached Ribosomes, Difference Between 5 HTP Tryptophan and L-Tryptophan, Difference Between N Glycosylation and O Glycosylation, Difference Between Epoxy and Fiberglass Resin. 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. 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