Divisional Organizational Structure vs. Functional Organizational Structure

Attribute	Divisional Organizational Structure	Functional Organizational Structure
Structure	Organized by divisions or business units	Organized by functions or departments
Focus	Focus on products, services, or markets	Focus on specialized tasks or skills
Communication	Communication within divisions may be easier	Communication within functions may be easier
Coordination	Coordination between divisions may be challenging	Coordination between functions may be easier
Decision-making	Decisions may be made at divisional level	Decisions may be made at functional level

Introduction

Organizational structure plays a crucial role in determining how a company operates and how decisions are made. Two common types of organizational structures are divisional and functional structures. Each structure has its own set of attributes that can impact the efficiency and effectiveness of an organization. In this article, we will compare the attributes of divisional and functional organizational structures to help you understand the differences between the two.

Divisional Organizational Structure

A divisional organizational structure is characterized by grouping employees based on the products, services, or geographic locations they are responsible for. Each division operates as a separate entity within the larger organization, with its own set of functions such as marketing, finance, and operations. This structure allows for greater autonomy and accountability within each division, as decision-making is decentralized and focused on specific goals.

• Grouping by products, services, or geographic locations
• Greater autonomy and accountability within divisions
• Decentralized decision-making
• Focus on specific goals

Functional Organizational Structure

In contrast, a functional organizational structure groups employees based on their specialized skills or functions, such as marketing, finance, and operations. Each department is responsible for a specific set of tasks that contribute to the overall goals of the organization. This structure promotes efficiency and expertise in each functional area, as employees can focus on their specific roles and responsibilities.

• Grouping by specialized skills or functions
• Promotes efficiency and expertise
• Employees focus on specific roles and responsibilities

Comparison of Attributes

When comparing divisional and functional organizational structures, several key attributes stand out. One major difference is the way employees are grouped within the organization. In a divisional structure, employees are grouped based on products, services, or geographic locations, while in a functional structure, employees are grouped based on their specialized skills or functions.

Another important attribute to consider is the level of autonomy and accountability within each structure. Divisional structures typically offer greater autonomy to each division, allowing them to make decisions independently and focus on specific goals. In contrast, functional structures may have a more centralized decision-making process, with departments working together to achieve common objectives.

Furthermore, the focus of each structure differs in terms of goals and objectives. Divisional structures are often more focused on specific goals related to their products, services, or geographic locations. On the other hand, functional structures may be more focused on achieving overall organizational goals through the expertise and efficiency of each department.

Conclusion

In conclusion, divisional and functional organizational structures have distinct attributes that can impact the way an organization operates. Divisional structures offer greater autonomy and accountability within each division, with a focus on specific goals. Functional structures, on the other hand, promote efficiency and expertise in specialized areas, with a focus on achieving overall organizational goals. Understanding the differences between these two structures can help organizations determine which structure is best suited to their needs and goals.