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.
