Functional vs. Divisional Structure Overview

Study Notes

Coordination issues arise with larger departments, delaying decision-making processes.
Functional structure often prioritizes departmental objectives over overall organizational goals.
Conflicts of interest may emerge between departments with misaligned interests.
Results in inflexibility as employees focus narrowly on their own tasks, hindering collaboration.
Limited training opportunities for functional heads, restricting their managerial development for top positions.

Organization divided based on major product lines, with each division managed by a divisional manager.
Each division performs all necessary functions (production, marketing, finance) to achieve common objectives.
Example divisions may include textile, cosmetics, and skincare within larger companies.
Encourages achievement of specific organizational objectives via structured management.

Facilitates the attainment of organizational goals through clearly defined responsibilities.
Impersonal approach allows focus on work without interference from personal feelings.
Enhances coordination among various departments through integrated efforts.

Clearly defined relationships make assigning responsibility straightforward.
Prevents overlapping duties by establishing clear definitions for tasks.
Maintains unity of command via a defined chain of authority.
Optimizes resource use, leading to effective goal achievement.
Provides stability with established policies, ensuring continuity amid personnel changes.

Systematic distribution of authority across all management levels and functions within the organization.
Aims to empower lower-level management to make decisions, promoting autonomy and adaptability.

Delegation is the delegation of authority by a superior to a subordinate, facilitating limited scope and creating a direct relationship.
Decentralization broadens the authority distribution model, encompassing multiple levels and departments, fostering a wider range of decision-making at different organizational tiers.

Empowers employees, spurring initiative and self-reliance through decision-making freedom.
Develops future managerial talent by providing lower-level managers with opportunities to gain experience in decision-making.
Accelerates decision-making by distributing the authority and thereby improving responsiveness.
Relieves top management from minor operational issues, allowing focus on strategic matters.