Difference between functional divisional and matrix structures

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The structure under which jobs of similar nature are grouped under one department is known as Functional Structure. All the departments report to one coordinating head or executive. For example, all work related to production will come under the production department. Such type of structure is suitable for organizations that have diversified activities. It aims at promoting specialization as each partner has to perform work according to their skills, specialization, and knowledge.

The structure under which jobs related to one product are grouped under one department is known as Divisional Structure. Such a type of structure is suitable for organizations that have more than one category of products to offer. The organization is divided into separate units or divisions, and each division is managed by a divisional manager. For example, if an organization has four divisions, then each department will have a separate department for production, marketing, finance, etc.

Difference between Functional Structure and Divisional Structure:

On the other hand, divisional organisation structure refers to the structure wherein the organisational functions are grouped together, into divisions, depending on product, service, market or geographies. Take a glance at this article to know the difference between functional and divisional structure.

1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion

Comparison Chart

Definition of Functional Structure

The functional structure is one such structure, in which the activities of similar nature are grouped together, i.e. the activities belonging a particular function are taken together as a separate department. These independent departments have their own functions to perform and objectives to pursue. For instance, there are autonomous departments for marketing, production, purchase, human resource, research and development, etc. in an organisation.

In a functional organisational structure, each department is supervised by a functional head called as the department manager. The manager would be an expert in the respective field, and he will be held responsible for the performance of his department. Moreover, the functional heads of all the departments report directly to the top management of the organisation.

Definition of Divisional Structure

Divisional Structure is defined as an organisational structure that clubs together various functions on the basis of product lines and regional divisions. Further, each division of the organisation has its own essential resources and functions like production, marketing, purchase, human resource, etc. In this type of organisational structure, the divisions are headed by the general manager who controls the regular business activities. The general manager is accountable to the top management of the organisation for the performance of their division.

Divisional Structure is applied to those organisation which are large and have more than one product line to continue. Suppose an organisation produces and sells four products, A, B, C, D. All these products are organised into separate departments and operated as individual units which are supported by functions.

Key Differences Between Functional and Divisional Structure

The difference between functional and divisional structure can be drawn clearly on the following grounds:

1. The functional structure is described as an organisational structure wherein; the employees are classified on the basis of their area of specialisation. An organisational structure so designed that it is bifurcated into semi-autonomous divisions on the basis of product, service, market, etc., is known as the divisional structure.
2. In the functional structure, the specialisation is based on functions. On the other hand, divisional structure, the specialisation depends on product lines.
3. In the functional structure, it is really difficult to fix responsibility, i.e. Suppose a product does not perform well in the market, then it is difficult to identify, that which department (production, sales, finance, etc.) of the organisation is not doing well. As opposed to, the divisional structure where it is easy to fix responsibility, as every product of the organisation has separate departments.
4. Managerial development is not easy in functional structure due to the absence of autonomy of decisions, as the decisions are guided by top management. As against this, divisional structure there exists autonomy of decisions. Hence managerial development is easier.
5. The cost involved in functional organisation structure is comparatively less as the functions are not repeated. Unlike, the divisional organisational structure wherein there is the repetition of resources, and so it is costly.
6. The functional structure is best suited to those organisation which is small and simple. As compared to divisional structure, which is appropriate for those organisations, that are large and dynamic.

Conclusion

As every coin has two sides, similarly both the organisational structure has their own merits and demerits. Therefore, it is a bit difficult to say, that which one is better than the other in a particular condition, but on the basis of their suitability, it can be concluded that which one is good for a particular organisation.