Function vs divisonal

Question 1

differences between functional and divisional org structures

Answer 1

functional
-org as a whole is an investment centre
- all centres below chief executive level are cost or revenue centres

divisionalized
-org is divided into separate investment or profit centres and a functional structure applies below this
-divisions tend to be investment or profit centres, but within each division their are multiple cost and revenue centres
-lead to decentralization

Question 2

advantage of divisionalization

Answer 2

improve quality decisons
speedier decisions
increase in manager motivation
allow top management to devote more time to strategic issue

Question 3

disadvantage of divisionalization

Answer 3

suboptimal for goal congruence
more costly to operate divisionalized
loss of control by top management