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Planning and Organizing: Organisation, Functional and Divisional Structure
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
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
- 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.
- 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.