Question

Distinguish between functional and divisional organisational structure on the following basis:

(a) Formation, 

(b) Managerial development, 

(c) Responsibility, 

(d) Suitability

Answer 1

S.No.	Basis	Functional structure	Divisional Structure
1.	Formation	It is based upon functions.	It is based upon product lines and is supported by functions.
2.	Managerial Development	Difficult, as each function manager has to report to the chief manager.	Easier autonomy as well as the chance to perform multiple functions which help in managerial development
3.	Responsibility	Difficult to fix on any one department.	Easy to fix responsibility for performance
4.	Suitability	Suitable for medium sized firms having a single product or small number of related products.	Suitable for large firms having multiple products with distinct characteristics.