REVISION QUESTIONS

Revision Questions

What are the advantages and disadvantages of each type of Functional structure?

Benefits & Disadvantages of a Functional Organizational Structure

Organizations may choose from a number of common operating structures. One popular structure is the functional organization, where the company is divided into separate units based on role, such as accounting, marketing, research and development or distribution (Adler, 2007, pp. 22-25). The functional structure offers a number of potential advantages as well as disadvantages.

Specialization

An advantage of a functional organizational structure is that it offers a high level of specialization. Each unit operates as a type of self-contained mini-company, charged with carrying out its specific role (Spector, 2007, pp. 141). Employees typically start their careers in an entry-level position within the function and develop specialized knowledge as they move up within the hierarchy.

Efficiency and Productivity

A worker who is an expert in his functional area can perform tasks with a high level of speed and efficiency, which enhances productivity. Workers who know their jobs well can proceed with confidence and with a minimum amount of mistakes.

Lack of Teamwork

While specialized units within the functional structure often perform with a high level of efficiency, they may have difficulty working well with other units (Bateman, 2004, pp. 13). If a project calls for several units to work together, units may become territorial and unwilling to cooperate with each other. In essence, each unit may act in what it perceives to be its own best interests instead of those of the organization as a whole. Infighting may cause projects to fall behind schedule.

Difficult Management Control

Another potential disadvantage of the functional organization structure is that it can pose a challenge for top management to maintain control as the organization expands (Denison, 2001, pp. 21-78). As organizations get larger and top management needs to delegate more decision-making responsibilities to each functional area, the degree of autonomy may also increase, making coordination of activities more difficult.

What are the advantages and disadvantages of each type of Divisional structure?

Advantages & Disadvantages of Divisional Organizational Structure

A divisional organizational structure gives a larger business enterprise the ability to segregate large sections of the company's business into semi-autonomous groups. These groups are mostly self-managed and focused upon a narrow aspect of the company's products or services. As with any organization structure, divisions have both strengths and weaknesses.

Definition

A divisional organizational structure usually consists of several parallel teams focusing on a single product or service line. Examples of a product line are the various car brands under General Motors or Microsoft's software platforms (Denison, 2005, pp. 204-223). One example of a service line is Bank of America's retail, commercial, investing and asset management arms. Unlike departments, divisions are more autonomous, each with its own top executive--often a vice president--and typically manage their own hiring, budgeting and advertising.

Advantages

Divisions work well because they allow a team to focus upon a single product or service, with a leadership structure that supports its major strategic objectives. Having its own president or vice president makes it more likely ...