Difference between Types of Organization Structure
Functional Structure
A functional structure organizes employees based on specialized roles and tasks. Departments such as marketing, finance, and production each focus on their specific functions, promoting expertise and efficiency.
Divisional Structure
A divisional structure groups employees based on products, services, or geographical locations. Each division operates as a semi-autonomous unit with its own resources, management, and objectives.
Difference between Functional Structure and Divisional Structure
Basis | Functional Structure | Divisional Structure |
| Formation | Formation is based on functions. | Formation is based on product lines and is supported by functions. |
Specialization | There is functional specialization. | There is product specialization. |
Responsibility | In this case it is difficult to fix responsibility on a department. | It is easy to fix responsibility for performance. |
Managerial Development | Difficult, as each functional manager has to report to the top management. | Easier, autonomy as well as the chance to perform multiple functions helps in managerial development. |
Cost | Functions are not duplicated hence economical. | Duplication of resources in various departments, hence costly. |
Coordination | Difficult for a multi-product company. | Easy, because all functions related to a particular product are integrated in one department. |
Difference between Types of Organization
Formal Organization
A formal organization is a structured setup with defined roles, responsibilities, and hierarchies. It follows official rules, procedures, and policies to achieve organizational goals efficiently.
Informal Organisation
An informal organisation consists of social networks and relationships that naturally form among employees. It operates alongside the formal structure, influencing communication, morale, and collaboration informally.
Difference between Formal Organisation and Informal Organisation
Basis | Formal organization | Informal organization |
Meaning | Structure of authority relationships is created by the management. | Network of social relationships arising out of interaction among employees. |
Origin | It arises as a result of company rules and policies. | Arises as a result of social interaction. |
Authority | It arises by virtue of position in management. | Arises out of personal qualities. |
Behavior | It is directed by rules laid down by the management. | There is no set behavior pattern. |
Flow of Communication | Communication takes place through the scalar chain. | Flow of communication is not through a planned route. It can take place in any direction. |
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