Question

Differentiate between Functional structure and Divisional structure on any four bases.

Accepted Answer

Differences between Functional structure and Divisional structure: Basis Functional structure Divisional structure Formation Its formation is based on functions. Its formation is based on product lines and is supported by functions. Specialisation It leads to functional specialization. It leads to product specialization. Responsibility It is difficult to fix on a Department. It is easy to fix responsibility for performance. Managerial Development It is difficult, as each functional manager has to report to the top management. It is easier, autonomy as well as the chance to perform multiple functions helps in managerial development. Cost Functions are not duplicated hence economical. It leads to duplication of resources in various departments, hence costly. Coordination It is difficult for a multi-product It is easy, because all functions related to a company. particular product are integrated in one department.

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Basis	Functional structure	Divisional structure
Formation	Its formation is based on functions.	Its formation is based on product lines and is supported by functions.
Specialisation	It leads to functional specialization.	It leads to product specialization.
Responsibility	It is difficult to fix on a Department.	It is easy to fix responsibility for performance.
Managerial Development	It is difficult, as each functional manager has to report to the top management.	It is easier, autonomy as well as the chance to perform multiple functions helps in managerial development.
Cost	Functions are not duplicated hence economical.	It leads to duplication of resources in various departments, hence costly.
Coordination	It is difficult for a multi-product	It is easy, because all functions related to a
	company.	particular product are integrated in one department.