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Functional and Divisional Organizational Structures

The Functional organizational structure

This is an organization plan that takes into account the individual specializations. Delegation of activity focuses on the skills and qualifications of workers e.g., marketing specialists, ICT specialists. (Jones, 2010)

The Divisional organizational structure

Factor Functional Structure Divisional Organizational
Origin The division of roles is based on the possession of specialized skills and qualifications. The division of roles is based on the outcome e.g., customer or product.
Responsibility It is problematic to amend the responsibility for the outcome. The responsibility of the outcome can be amended without difficulties.
Unity of Command The code of unity of command is not fundamental It adopts the code of unity of command.
Overlapping /Duplication It helps to reduce duplication or overlapping of work Duplication or overlapping of work is relatively inevitable
Coordination Coordination of different activities and procedures is relatively a challenge Coordination of activities is achievable without many difficulties

In this structure, the division of activities focuses on the particular demands of the products, customers, services, and markets. The personnel is grouped with the aim of achieving a common result and not on their professionalism. (Jones, 2010)

Differences between Functional Structure and Divisional Organizational Structure

Advantages and disadvantages of Functional Organizational Structure


  1. It promotes effective coordination within an organization. This is because the manager of a particular function oversees every aspect.
  2. It facilitates specialization in the division of labor. Every individual can perform their roles professionally.
  3. It exercises functional flexibility. This allows any amendments that might be necessary for activities. This ensures efficiency and achievement of the perceived outcome. (Daft, 2010)
  4. It provides the right avenues for effective supervision


  1. It is relatively expensive as it involves professionals and specialists (expensive labor)
  2. Lack of Unity of Command as all the instructions and directions come directly from the manager.
  3. It faces duplication and overlapping of work.
  4. It also brings about confusion among the personnel.
  5. Conflicts of agreement among top players drag the decision-making process. This may result in lagging behind operations. (Jones, 2010)

Advantages and disadvantages of Divisional Organizational Structure


  1. Coordination and cooperation of different individual professional ensures a broader development of skills
  2. It ensures accountability in operations. This is because the structure’s design is according to the product requirement or the customer’s expectations. People work to achieve these expectations.
  3. It encourages interdepartmental coordination. (Daft, 2010)


  1. This leads to duplication of resources as different departments may require similar systems of operation.
  2. Inhibits personal career development of technical specialists, while promoting that of top managers.
  3. It brings about difficulties in product integration. (Jones, 2010)

Use of Functional Organizational Structure

Functional Organization structure is less product-oriented as compared to Divisional Organization Structure. It tends to focus more on the technical aspect as compared to the product aspect. As a result, companies that adopt this system usually employ fewer people. Therefore, this organizational structure is suitable for smaller companies that need not a lot of labor. It also works well with organizations that produce a few products e.g., single-line product companies. It is also effective with organizations that have a stable external environment.

The transition from Functional structure to Organizational structure

The organizational structure of a company is not static but dynamic, depending on the prevailing conditions. A company may need to progress from a functional structure system to a divisional organization to increase the control of the managers over its activities. This may be necessary when the company’s activities have increased. This involves the change of a company from the production of one product to several products or expansion of a small business to a larger one. (Jones, 2010)

The transition from divisional organization to Matrix organization

Reasons for adopting a matrix structure

Matrix Organizational structure involves the application of two different organizational structures in an organization e.g., project organization and functional organization. Hence it is termed as a “hybrid process.” It is classified according to projects e.g., project C with a foreseeing manager. This system of the organization may be necessary when there is a desire for high efficiency in a process. It eventually leads to the attainment of high profits at low costs. It may also be applied to an organization with an unstable external environment; constant negative changes. The structure can identify and respond quickly to such problems. (Jones, 2010)

A company may adopt the matrix system when

  1. Two different organizational systems seem to work together.
  2. A severe difficulty demanding exceptional attention arises. This might involve the introduction of another effective system to aid in the process.
  3. A severe difficulty requiring integration of a high degree of information

In conclusion, strategic management provides a variety of organizational structures. The adoption of a particular structure depends on the quality of personnel desired, the scale of production, and the prevailing conditions of the organization. The choice aims at attaining the highest levels of efficiency. Therefore, it all depends on the organization’s preference.


Daft, R. L. ( 2010). Organizational Theory and Design. Cheriton House, United Kingdom: Cengage Learning EMEA.

Jones, G. (2010). Organizational Theory, design and Change. Upper Saddle River, New Jersey: Prentice Hall.

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StudyKraken. "Functional and Divisional Organizational Structures." September 25, 2021.


StudyKraken. 2021. "Functional and Divisional Organizational Structures." September 25, 2021.


StudyKraken. (2021) 'Functional and Divisional Organizational Structures'. 25 September.

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