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.
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.
Pressing to change functional structure into a divisional structure are:
1. Excessive centralisation,
2. Delay to decision making,
3. Difficulties in co-ordination between function,
4. Managerial shortage and
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,
(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.
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.
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.