What is the Difference Between Functional and Divisional Structure?

The main difference between functional and divisional structure lies in how employees are organized within an organization. Here are the key differences between the two structures:

Functional Structure:

1. Employees are grouped based on their specialized functions or areas, such as finance, marketing, operations, human resources, or research and development.
2. This structure promotes expertise and efficiency within each function.
3. Coordination and communication within the functional structure can be challenging due to the segregation of workers by function.
4. Responsibility fixing is difficult in a functional structure, making it challenging to identify which department may not be performing well.

Divisional Structure:

1. Employees are grouped based on specific products, services, markets, or geographic locations.
2. This structure allows for faster decision-making, autonomy, customer focus, and flexibility.
3. Easier coordination and communication occur within a divisional structure as everyone in the division is focused on the market or product around which the division is formed.
4. It is easier to fix responsibility within a divisional structure, making it easier to identify which division may not be performing well.

In conclusion, functional structure focuses on organizing employees based on their specialized functions, while divisional structure groups employees based on specific products, services, markets, or geographic locations. The choice between these two structures depends on the organization's goals, size, industry, and strategic priorities.

Comparative Table: Functional vs Divisional Structure

Here is a table comparing the differences between functional and divisional structures:

Both functional and divisional structures are designed to help an organization achieve its goals and objectives. However, they differ significantly in terms of how they are structured and operate.