Planning and Organizing: Organisation, Functional and Divisional Structure (For CBSE, ICSE, IAS, NET, NRA 2022)

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Organisation Structure

  • Organisation structure which constitutes a network of job positions and the authority relationships among the various positions.
  • The various factors that are usually taken into consideration for designing a good organisation structure are
    • Job specifications
    • Departmentation
    • Authority-responsibility
    • Relationships
  • The whole structure takes the shape of a pyramid
  • The hierarchical relationships and the patterns of communication and coordination.
  • Two most commonly used forms of organisation structure are
  • Functional structure
  • Divisional structure
The Forms of Organisation Structure in Image

Functional Structure

  • An organisation structure formed by grouping together all activities into functional departments and putting each department under one coordinating head is called functional structure.
  • Industrial enterprise the functions like
    • Manufacturing
    • Marketing
    • Finance
    • Personnel
  • In case of a large retail store purchasing, sales and warehousing may be the major units.
  • It may be noted that the major units use is further divided into sub-units.
  • For example, the manufacturing department may be sub-divided into
    • Stores
    • Repairs
    • Maintenance
    • Production
  • Chart Shows the Functional Structure
    This form organisation structure helps in developing functional specialization in each unit duly headed by an expert in that functional area.
  • This facilitates the coordination within the department since all are fully familiar with the various activities involved.
  • This type of structure is considered suitable for small and medium size organisations.
  • Large organisations, the units become too unwieldy and difficult to manage.

Divisional Structure

  • In large organisations dealing in multiple products and serving a number of distinctive markets, the divisional structure is considered more suitable.
  • Structure the organisation is divided into units entrusted with all activities related to different products on different territories (markets) .
  • Each divisional head is required to look after all functions related to the product or market territory.
Image Shows the Divisional Structure
  • Divisional structure, most activities associated with a product or product group can be well coordinated and its profitability easily ascertained.
  • Provides opportunity to divisional managers to take prompt decisions and resolve all sorts of problems without much difficulty.
  • This structure is expensive and gives rise to duplication of efforts.

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