This article throws light upon the two main types of organisation structure of a company. The types are: 1. Functional Structure 2. Divisionalised Structure.
Type # 1. Functional Structure:
All work of the same kind is put into one managerial unit. Every company starts with a basic functional organisation. When business is small, products range is narrow, market is limited, we have functional organistion.
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It encourages specialisation facilities coordination, and provides economic flexibility. It is most economical. It promotes outstanding personal leadership. Functional organisation is unsuitable for every large and diversified corporations.
Type # 2. Divisionalised Structure:
All the different kinds of work necessary to accomplish a specific result on a product, territory, customer asisare put into one manageable organisational unit called a division.
Warning signs:
Pressing to change functional structure into a divisional structure are:
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1. Excessive centralisation,
2. Delay to decision making,
3. Difficulties in co-ordination between function,
4. Managerial shortage and
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5. Difficulty in establishing controls; growth and diversification needs divisional organisation structure.
Divisionalisation is a radical procedure. It is a major surgery. Before it is brought into existence, we must have proper planning and preparation.
Safeguards for Divisionalisation:
(1) Provision for decentralisation,
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(2) Provision for the best co-ordination,
(3) Provision for effective control,
(4) Management development programme,
(5) Phased programme in three stages — first divisionalisation in production, then in marketing and finally in finance.
Note:
1. In each group we have many divisions.
2. Each division is a separate Profit Centre.
3. In each division we have basic functional departments such as manufacturing, sales and personnel.
Note:
1. Divisionalisation is essential to divide very large functional organisation-into smaller, flexible administrative units.
2. Divisionalisation (by Product/Area) enables big companies to recapture advantages of small, functional organisations, while minimising the disadvantages of increasing size diversity and dispersion.
