Which of the following statements related to functional and divisional structure are correct?
A. It is easy to fix responsibility for performance in functional structure of organisation.
B. Formation of functional structure of organisation is based on functions.
C. Divisional structure of organisation is Economical.
D. It is easy to fix responsibility for performance in divisional structure of organisation.
E. Functional structure of organisation is economical
Choose the correct answer from the options given below :
Answer & explanation
Correct answer: option 3
The correct answer is option (3)- B, D and E only.
A. It is easy to fix responsibility for performance in functional structure of organisation. This is not true as in divisional structure it is easy to fix responsibility not in functional structure.
B. Formation of functional structure of organisation is based on functions. This is true.
C. Divisional structure of organisation is Economical. This is not true as divisional structure is costly because of Duplication of resources in various departments.
D. It is easy to fix responsibility for performance in divisional structure of organisation. This is true.
E. Functional structure of organisation is economical. This is true.
Comparative view: Functional and Divisional Structure
| Basis | Functional Structure | Divisional Structure |
| Formation | Formation is based on functions | Formation is based on product lines and is supported by functions |
| Specialisation | Functional specialisation | Product specialisation |
| Responsibility | Difficult to fix on a department | Easy to fix responsiblity for performance |
| Managerial Development | Difficult, as each functional manager has to report to the top management | Easier, autonomy as well as the chance to perform multiple functions helps in managerial development |
| Cost | Functions are not duplicated hence economical | Duplication of resources in various departments, hence costly |
| Coordination | Difficult for a multi product company | Easy, because all functions related to a particular product are integrated in one department |