What are the advantages and disadvantages of a functional structure? Compare them with those of a divisional structure.

Question

What will be an ideal response?

Answer 1

Functional structures are very efficient, with little redundancy across units, and provide little opportunity for self-cannibalization. However, these structures tend to be inflexible and insensitive to subtle differences across products, regions, or clients. Alternatively, because of their work-flow focus, semi-autonomous nature, and proximity to a homogeneous consumer base, divisional structures tend to be more flexible and innovative. They can detect and exploit opportunities in their respective consumer bases faster than the more centralized functionally structured organizations. In addition, the perceived autonomy that goes along with divisional structure means that most employees prefer it and feel they are more fairly treated than when they are subject to centralized decision-making structures. However, on the downside, divisional structures are not very efficient because of the redundancy associated with each group carrying its own functional specialists. In addition, divisional structures can 'self-cannibalize' if the gains achieved in one unit come at the expense of another unit.