1. FUNCTIONAL AND DIVISIONAL
STRUCURE OF AN ORGANISATION

2. WHAT IS AN ORGANIZATIONAL
STRUCTURE ??
Before we discuss the differences in organizational
structure, we need to understand the meaning and
purpose of organizational structure. Organizational
structure formally determines the hierarchy within
an organization. In other words, It refers to how the
people in an organization are grouped and to whom
they report. Some companies refer to this as the
organizational chart. Types of organizational
structure include:
Functional structure, Divisional structure,
and Matrix structure. Divisional structure is
further broken down into three sub-types: product
structure, market structure, and geographic
structure.

3. FUNCTIONAL STRUCTURE
The functional structure groups employees together based
upon the functions of specific jobs within the organization.
Employees within the functional divisions of an organization
tend to perform a specialized set of tasks, for instance if the
engineering department would be staffed only with software
engineers. This leads to operational efficiencies within that
group. For eg :A division of an internet service provider
(ISP).The Functional chart of that organization is as follows:
 Vice President
 - Sales Department (sales function)
 - Customer Service Department (customer service function)
 - Engineering Department (engineering function)
 - Accounting Department (accounting function)
 - Administration Department (administration function)

5. CONTROL PROBLEMS IN FUNCTIONAL
STRUCTURE
 As a company grows and becomes more complex
control problems can arise
 Communication Problems
 Measurement Problems
 Location Problems
 Customer Problems
 Strategic Problems
 Managers can solve control problems by
redesigning the functional structure to increase
integration between functions

6. DIVISIONAL STRUCTURE
Divisional organizational structure is a term used to
describe a practice that is characterized by grouping
each organizational function into a division. This
helps in the smooth running of day to day activities in
an organization.
The divisional structure of an organization is further
broken down into three areas:
 Product Structure
 Market Structure
 Geographic Structure

7. PRODUCT STRUCTURE
Product structure groups employees together
based upon specific products produced by the
company. An example of this would be a company
that produces three distinct products, "product a",
"product b", and "product c". This company would
have a separate division for each product.

8. MARKET STRUCTURE
Market structure groups employees together based
upon specific markets in which the company sells.
Eg: Internet service provider (ISP),They also use a
market structure. They sell internet access to
individual consumers as well as business
customers. So the sales and customer service
departments were organized using market
structure. Consumer sales and consumer customer
service worked together, and corporate sales and
corporate customer service worked together.

9. GEOGRAPHICAL STRUCTURE
Geographic structure groups employees together
based upon specific geographic location. This is
often used by large companies that operate in
many areas throughout the home country as well
as overseas.

10. CONCLUSION
Finding the organizational structure that works
best for a particular company is very important.
Using the wrong structure can result in poor
communication, poor product development, poor
customer service, and a myriad of other business
problems. Any of these things can be detrimental
to a company and could result in lost revenue or
even complete failure of the company.