How is a functional structure different from a divisional structure?
Difference between a functional structure and a divisional structure:
| Basis of difference | Functional Structure | Divisional Structure |
|---|---|---|
| Meaning | An organisation structure in which departments are created on the basis of different functions performed in the organisation is called functional structure. | An organisation structure in which various departments are created on the basis of products, territory or region is called a divisional structure. |
| Formation | It is formed on the basis of functions performed in the organisation. | It is formed on the basis of product line territory or region. |
| Specialisation | It leads to functional specialisation. | It leads to product specialisation. |
| Managerial Development | It does not help in managerial development as functional managers lack autonomy. |
It helps in managerial development, as they have autonomy and knowledge of varied aspects of a product. |
| Cost | It is economical as there is no duplication. | It is costlier, as there is duplication of resources. |
| Responsibility | It is difficult to fix responsibility in one department. | It is easier to fix responsibility in each division. |
| Suitability | It is suitable for organisations which deal with a single product category. | It is suitable for diversified or multi product firms. |
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