Differences between Functional and Divisional Structure - QS Study
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Differences between Functional and Divisional Structure

Functional Structure

  • Formation: Formation is based on functions
  • Specialization: Functional specialization.
  • Responsibility: Difficult to fix on a department.
  • Managerial Development: Difficult, as each functional manager has to report to the top management.
  • Cost: Functions are not duplicated hence economical
  • Coordination: Difficult for a multiproduct company.

Divisional Structure

  • Formation: Formation is based on product lines and is supported by functions.
  • Specialization: Product specialization.
  • Responsibility: Easy to fix responsibility for performance.
  • Managerial Development: Easier, autonomy as well as the chance to perform multiple functions helps in managerial development.
  • Cost: Duplication of resources in various departments, hence costly.
  • Coordination: Easy, because all functions related to a particular product are integrated in one department.