Question

Differentiate between functional structure and divisional structure on the basis of:

1. Formation
2. Specialisation
3. Responsibility
4. Managerial development
5. Cost
6. Coordination

Answer 1

Basis	Functional Structure	Divisional Structure
(I) Formation	Formation is based on functions.	Formation is based on product lines and is supported by functions. Specialisation.
(II) Specialisation	Functional specialisation.	Product specialisation.
(III) Responsibility	Difficult to fix on a department.	Easy to fix responsibility for performance.
(IV) 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.
(V) Cost	Functions are not duplicated, hence economical.	Duplication of resources in various departments, hence costly.
(VI) Coordination	Difficult for a multiproduct company.	Easy, because all functions related to a particular product are integrated in one department.