Functional and divisional strucure of an organisation

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Functional and divisional strucure of an organisation

  1. 1. FUNCTIONAL AND DIVISIONAL STRUCURE OF AN ORGANISATION
  2. 2. WHAT IS AN ORGANIZATIONAL STRUCTURE ?? Before we discuss the differences in organizational structure, we need to understand the meaning and purpose of organizational structure. Organizational structure formally determines the hierarchy within an organization. In other words, It refers to how the people in an organization are grouped and to whom they report. Some companies refer to this as the organizational chart. Types of organizational structure include: Functional structure, Divisional structure, and Matrix structure. Divisional structure is further broken down into three sub-types: product structure, market structure, and geographic structure.
  3. 3. FUNCTIONAL STRUCTURE The functional structure groups employees together based upon the functions of specific jobs within the organization. Employees within the functional divisions of an organization tend to perform a specialized set of tasks, for instance if the engineering department would be staffed only with software engineers. This leads to operational efficiencies within that group. For eg :A division of an internet service provider (ISP).The Functional chart of that organization is as follows:  Vice President  - Sales Department (sales function)  - Customer Service Department (customer service function)  - Engineering Department (engineering function)  - Accounting Department (accounting function)  - Administration Department (administration function)
  4. 4. CONTROL PROBLEMS IN FUNCTIONAL STRUCTURE  As a company grows and becomes more complex control problems can arise  Communication Problems  Measurement Problems  Location Problems  Customer Problems  Strategic Problems  Managers can solve control problems by redesigning the functional structure to increase integration between functions
  5. 5. DIVISIONAL STRUCTURE Divisional organizational structure is a term used to describe a practice that is characterized by grouping each organizational function into a division. This helps in the smooth running of day to day activities in an organization. The divisional structure of an organization is further broken down into three areas:  Product Structure  Market Structure  Geographic Structure
  6. 6. PRODUCT STRUCTURE Product structure groups employees together based upon specific products produced by the company. An example of this would be a company that produces three distinct products, "product a", "product b", and "product c". This company would have a separate division for each product.
  7. 7. MARKET STRUCTURE Market structure groups employees together based upon specific markets in which the company sells. Eg: Internet service provider (ISP),They also use a market structure. They sell internet access to individual consumers as well as business customers. So the sales and customer service departments were organized using market structure. Consumer sales and consumer customer service worked together, and corporate sales and corporate customer service worked together.
  8. 8. GEOGRAPHICAL STRUCTURE Geographic structure groups employees together based upon specific geographic location. This is often used by large companies that operate in many areas throughout the home country as well as overseas.
  9. 9. CONCLUSION Finding the organizational structure that works best for a particular company is very important. Using the wrong structure can result in poor communication, poor product development, poor customer service, and a myriad of other business problems. Any of these things can be detrimental to a company and could result in lost revenue or even complete failure of the company.

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