Tho departments become specialised ill their own way only. Everyone will report back to Radha. However, functions in each division may be different based on the suitability and need. An organization can be arranged acc… Divisional structure is different from functional structure altogether. Another way to prevent getting this page in the future is to use Privacy Pass. Span of management is a simple tool which helps in determining the number of subordinates which a superior can manage effectively and efficiently. Specialisation; Easy supervision; Easy co-ordination; It helps in increasing managerial efficiency; Effective training (b) Disadvantages. One of the advantages of a functional structure is the positive atmosphere it provides for skill development. There may be more power in hands of the head of divisions because they may get knowledge of every function in their divisional department and they may consider themselves to be of high authority and ignore the responsibilities and ultimately ignore the organizational interest. This will act as a good performance measurer and thus corrective measures can be taken for the divisional department which does not performs well. It does not give importance to psychological and social need of employees. The advantage of functional structure is that the different functional units of th… 1. The roles and responsibilities are specified. If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices. Suitability: (a) This type of organisational structure is suitable where the size of operation is very … Conflict of interests: conflict of interest will be there within different departments if they do not have clear distinction of responsibilities. Introduction & Meaning & Importance of Business Environment, 1. Unit Number 319, Vipul Trade Centre, Sohna Road, Gurgaon, Sector 49, Gurugram, Haryana 122018, India, Monday – Friday (9:00 a.m. – 6:00 p.m. PST) Saturday, Sunday (Closed), 7. Kiran will be responsible for dealing with the customers. Advantages of Formal Organisation. The employees are a bit satisfied with the functional structure because they can talk with the same language with their peers. A Functional Structure is a structure of an organization under which the similar kinds of activities or functions are grouped together to form a department. A good organizational structure will improve the communication line between the people in an organization and helps in better control of the work. Specialization. For any organization that has a growth prospective cannot leave organizational structure because without it the business will become stagnant and may sometime cease to exist. Divisional structure is thus suitable for product specialisation. CBSE class 12 Business Studies Organizing class 12 Notes Business Studies in PDF are available for free download in myCBSEguide mobile app. If you’ve had a job, you likely worked in a functional organizational structure.The functional structure is based on an organization being divided up into smaller groups with specific tasks or roles. Advantages of Functional Organization. There are five important advantages of the functional structure. There may be duplication of activities which may raise the cost of the industry. Learn the concepts of Class 12 Business Studies Organising with Videos and Stories. It leads to minimal duplication of effort, which results in economies of sacle and this lowers cost. Functional Organization Structure Main Advantages: Offers a high level of specialization. This structure is flexible because it initiates better and quicker decision making as there is no need to consult other departments for any decision to be taken. Introduction, Meaning, Importance, Features & Limitations of Planning, 3.2 Maslow’s need hierarchy theory of motivation. Advantages of Functional Structure. The functional organizational structure helps in achieving the benefits of specialization of work. Meaning: To divide the whole enterprise according to the major products (such as metal products, plastic products, etc.) The duplication of efforts will lead to wastage of efforts and wastage of time and money too. This benefit of smooth working comes from the proper line of authority and responsibility and clear distinctions made for the job roles of the employees. Functional structure; Divisional structure; Functional structure. Improves specialisation: when an organization is divided based on the functions then a department will perform single type of function and thus their efficiency and quality will increase because of the improved experience which they will get because of repetitive work. Of the following advantages, the first one is the most important; the functional structure can introduce a great deal of efficiency into the operations of a business. Inflexibility: as the people working in a department will be given training for that particular area and this will limit the learning of the heads of departments and other employees as they will not get trained in diverse areas. Secondly, by creating specific task, the efficiency of the labor needed to accomplish, the task increases. The functional structure is an organizational structure that divides its operations into separate departments or units according to the role of each department. Arjun will look after the after sales services. For example: a company may be manufacturing pens, pencils, notebooks and erasers. It ensures efficiency in operations. Speaking of a multinational organization, accounting activities from all the regional offices and the headquarters would be handled by one accounting department. They may want different things and want to achieve different objectives and thus can hinder each other’s growth. Each employee has a fixed job definition. The functional structure gives you the least power as a project manager, but offers plenty of other advantages: It works well for small teams and small projects because the function has full control over the team members and other resources required. Development of skills: the divisional department head will have knowledge of each function i.e. The main difference between functional and divisional structure is that in functional organization is described as an organizational structure wherein, the employees are classified on the basis of their area of specialization. These divisions have its separate functions therein. To make the annual function of the school successful the principal of the school divided all the … Due to the similarity in the tasks being performed, it promotes control and coordination within a department. When she specifies the roles, duties and responsibilities of each person, it becomes a organizational structure. There are different kinds of structure adopted by different kinds of business organizations based on the kind of work, area and products they offer. 3. Manish will look after the cash and online payments and other accounts work. Features of Secondary Market. If in future there is any new product which the company decides to add up in the product lines of the company then it will be easier as it will only have to add a separate department for the new product instead of hindering existing structure. (adsbygoogle = window.adsbygoogle || []).push({}); While this example is taken for a small scale business and there are lot many other activities which need to be performed in a business. When employees who have similar skills and experiences are grouped together, it makes production more efficient and of a higher quality. An organizational structure, so designed that it is bifurcated into semi-autonomous divisions on the basis of product, service, market etc, is known as divisional structure. Organising Important Questions for CBSE Class 12 Business Studies Formal and Informal Organisation. The key difference between functional and divisional structure is that functional structure is an organizational structure in which the organization is divided into smaller groups based on specialized functional areas such as production, marketing and sales whereas divisional structure is a type of organizational structure where operations are grouped based on divisions or separate product categories. Span of management is an important factor which needs to be considered while choosing a structure for the organization. Home » Business Studies Class 12 » Organizational Structure. Performing the instructions of the authorities within its competence is mandatory for all the units. the knowledge of how to handle sales, marketing, finance, human resource etc. It is structure which brings together the resources i.e. Coordination — The Essence of Management, 1. For example: consider a mobile manufacturing company, the company if takes up a functional structure as an organizational structure will have manufacturing department, marketing and sales department, finance department and personnel department. Organizational structure is a framework within which the tasks are separated and the managerial and operating tasks are performed by clearly mentioning the flow of authority and responsibility. Improved profits: the profits are bound to increase when there is improved workings in an organization because of departmentalisation and increased operational and managerial efficiency. As, in the divisional structure, the divisions are made based on the different kinds of products which the company is offering. Because a functional structure groups people performing similar tasks that require certain skills, more experienced or talented group members serve as examples and mentors to individuals with less experience. Proper performance measurement: each department based on the divisions will have clear distinction between the revenue earned, cost incurred and profit earned by them. For example the accounting activities of different operations are grouped in on accounting department. There may be conflict between the departments because some may perform better and others may not and this will lead to chaos. Functional structure has following advantages: Under functional structure, each major function of business is organised as a separate department. manufactured by it, is known as divisional organisation structure. Advantages and Disadvantages of the Functional Organization Structure. Advantages of functional structure are: It promotes control and coordination within a department. Now that we have seen the advantages and disadvantages of the divisional structure, it is … As, each and every person should have their personal goals aligned with the organizational goals so that it does not creates conflicts and chaos. Following are the important advantages of functional organizational structure: 1. Firstly, it provides order and accountability to an organization. The first advantage of functional organization is that it makes the management of specialists easier. Chapter 1 – Nature and Significance of Management. Performance & security by Cloudflare, Please complete the security check to access. The environment in which the business runs is ever changing and to react to this environment it is important to change accordingly. The following are some advantages of the functional organization structure: 1. The functional structure has both advantages and disadvantages. The Functional Organization Structure can be successfully applied in many areas. These will be considered divisions and these divisions will further have marketing department, production department, finance department etc. These activities are divided and can be further divided into sub categories. That is the reason, a good organizational structure is important. Divisional structure prevents organizations from getting the most out of economies of scale. This increases the performance of the team. She specifies that Rahul will be in close connection with the supplier and order the goods whenever necessary. Improves specialisation: when an organization is divided based on the functions then a department will perform single type of function and thus their efficiency and quality will increase because of the improved experience which they will get because of repetitive work. Staff working skills can be … Reduces duplication: when there are separate departments for different kinds of activities and there are sub sections under a particular department then it leads to economies of scale because the duplication of activities is reduces as there is no overlapping of similar kinds of activities. A functional structure emphasises on specific functions and ensures that different functions get due attention. Your IP: 165.227.28.180 • Completing the CAPTCHA proves you are a human and gives you temporary access to the web property. Advantages of Functional Organizational Structure The employees are made into groups according to their skills, and thus the overall effectiveness and efficiency of the tasks increase. Students who are in Class 12th or preparing for any exam which is based on Class 12 Business Studies can refer NCERT Book for their preparation. As the size and complexity of a business increases the organizational structure becomes more important. This streamlines communication and reduces confusion among employees. Team members report to only one supervisor. The functional organizational structure groups employees according to broad business activities, resulting in departments such as finance, marketing and production. 4. Also, the conflict can arise due to difference in allocation of funds for different departments. Since the hierarchy is simple, employees know the one manager they are to answer to, instead of multiple people. Thus, it improves specialisation in particular activity. Benefits & Disadvantages of a Functional Organizational Structure. It is a framework which helps in setting up clear distinction of heads and subordinated. ... actions get delayed in formal structure. Thus, it can be called multifunctional divisions. If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware. Employees are possible to become experts. In the functional structure, such as shown in the following Facebook organizational chart, functions are separated into different groups, resulting in some defects.Here are the major disadvantages you must consider: Create Your Own Org Charts! The head will thus be prepared for higher positions. Roles and tasks do not change very much so there is little time spent learning, and accountability is clear. It is the most logical, time proven form of organisation structure. All rights reserved. For example, a company could have a group working in information technology, another in marketing and another in finance.Each department has a manager or director who answers to an executive a level up in the hierarchy who may … Better control and coordination: as the departments are divided based on the functions and the similar kinds of tasks are performed thus it will give better control of the activities at a single place and thus help in coordinating the similar kinds of activities because people in a particular department will be aware of each other’s job roles and how to perform them. In this article, we discuss the advantages and disadvantages of the functional structure, plus learn about other organizational structures in business. Reduced unity of efforts towards organizational goal: different departments will have their own goals and they will focus on achieving them and this may become hindrance for the organizational goal. 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