Thus where the company keeps on adding the new products to the product line of the company then this structure is best suitable. Employees are possible to become experts. It not only helps in coordination of different activities of the business but also helps in correlation of people, resources and work. 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. A functional structure emphasises on specific functions and ensures that different functions get due attention. Specialisation; Easy supervision; Easy co-ordination; It helps in increasing managerial efficiency; Effective training (b) Disadvantages. It will lead to poor communication and coordination across functional … Functional organization structure is optimal for small businesses or companies producing standardized goods or services. Another way to prevent getting this page in the future is to use Privacy Pass. Advantages of the Functional Organization Structure. Everyone will report back to Radha. For example the accounting activities of different operations are grouped in on accounting department. She specifies that Rahul will be in close connection with the supplier and order the goods whenever necessary. 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. Now that we have seen the advantages and disadvantages of the divisional structure, it is … Cloudflare Ray ID: 608615713bb76e2a However, functions in each division may be different based on the suitability and need. For example: a company may be manufacturing pens, pencils, notebooks and erasers. Staff working skills can be … 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. There is easy accountability for each employee and thus employees get their reward through a fair and just practice. ... actions get delayed in formal structure. manufactured by it, is known as divisional organisation structure. One of the advantages of a functional structure is the positive atmosphere it provides for skill development. Span of management is an important factor which needs to be considered while choosing a structure for the organization. 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. Functional structure has following advantages: Under functional structure, each major function of business is organised as a separate department. It does not give importance to psychological and social need of employees. When she specifies the roles, duties and responsibilities of each person, it becomes a organizational structure. (a) Advantages. Specialization. Benefits & Disadvantages of a Functional Organizational Structure. 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. The duplication of efforts will lead to wastage of efforts and wastage of time and money too. There may be conflict between the departments because some may perform better and others may not and this will lead to chaos. The roles and responsibilities are specified. The head will thus be prepared for higher positions. An organization can be arranged acc… Advantages of Functional Organizational Structure The executive or the team leader has the knowledge and experience of that particular field. 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! Digital NCERT Books Class 12 Business Studies pdf are always handy to use when you do not have access to a physical copy. Better training: when there are people in a department performing similar kinds of activities then the training can be easily provided to them based on the work they do. 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. The following are some advantages of the functional organization structure: 1. the knowledge of how to handle sales, marketing, finance, human resource etc. In this article, we discuss the advantages and disadvantages of the functional structure, plus learn about other organizational structures in business. Advantages of Functional Structure. © 2020, Arinjay Academy. These activities are divided and can be further divided into sub categories. 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. There may be duplication of activities which may raise the cost of the industry. physical, human and financial resources. As the size and complexity of a business increases the organizational structure becomes more important. As, in the divisional structure, the divisions are made based on the different kinds of products which the company is offering. 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. Thus, it can be called multifunctional divisions. 3. The full-stewardship principle lies at the heart of the functional organization structure. The functional structure has both advantages and disadvantages. 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 … Roles and tasks do not change very much so there is little time spent learning, and accountability is clear. 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. The functional organizational structure helps in achieving the benefits of specialization of work. You may need to download version 2.0 now from the Chrome Web Store. 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. Meaning: To divide the whole enterprise according to the major products (such as metal products, plastic products, etc.) Manish will look after the cash and online payments and other accounts work. 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. This helps to prevent duplication of work. The advantages of Functional Organization: The team is managed by an experienced person with a high ability and skills who can adequately understand and review the entire work. 4. As a single division does not produce enough to take great benefits out of the economies of scale. Secondly, by creating specific task, the efficiency of the labor needed to accomplish, the task increases. The employees are a bit satisfied with the functional structure because they can talk with the same language with their peers. 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. Due to the similarity in the tasks being performed, it promotes control and coordination within a department. Functional structure is suitable when the size of the organization is large with diverse activities to be performed and these activities need specialisation. Employees are grouped by their skills. 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. These will be considered divisions and these divisions will further have marketing department, production department, finance department etc. Learn the concepts of Class 12 Business Studies Organising with Videos and Stories. Since the hierarchy is simple, employees know the one manager they are to answer to, instead of multiple people. Speaking of a multinational organization, accounting activities from all the regional offices and the headquarters would be handled by one accounting department. The best app for CBSE students now provides Organizing class 12 Notes Business Studies latest chapter wise notes for quick preparation of CBSE board exams and school based annual examinations. Functional structure; Divisional structure; Functional structure. When employees who have similar skills and experiences are grouped together, it makes production more efficient and of a higher quality. Introduction, Meaning, Importance, Features & Limitations of Planning, 3.2 Maslow’s need hierarchy theory of motivation. Your IP: 165.227.28.180 Advantages of functional structure. Advantages of Formal Organisation. 2. 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. Chapter 1 – Nature and Significance of Management. There are different kinds of structure adopted by different kinds of business organizations based on the kind of work, area and products they offer. Following are the important advantages of functional organizational structure: 1. 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. • The environment in which the business runs is ever changing and to react to this environment it is important to change accordingly. 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. Suitability: When the size of organization is large, Has diversified activities and; Operations require a high degree of specialization. • Here you can read Chapter 5 of Class 12 Business Studies NCERT Book. For example, the person heading the IT department will have the education and skill necessary to shoulder this … 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. It is structure which brings together the resources i.e. Advantages of Functional Organization. Also, the conflict can arise due to difference in allocation of funds for different departments. 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