advantages of functional structure class 12

The functional structure is an organizational structure that divides its operations into separate departments or units according to the role of each department. The employees are a bit satisfied with the functional structure because they can talk with the same language with their peers. Everyone will report back to Radha. Advantages of Formal Organisation. Features of Secondary Market. This helps to prevent duplication of work. Span of management is an important factor which needs to be considered while choosing a structure for the organization. Performing the instructions of the authorities within its competence is mandatory for all the units. Advantages of functional structure are: It promotes control and coordination within a department. This streamlines communication and reduces confusion among employees. Improves specialisation: when an organization is divided based on the functions then a department will perform single type of function and thus their efficiency and quality will increase because of the improved experience which they will get because of repetitive work. This increases the performance of the team. Manish will look after the cash and online payments and other accounts work. In the functional structure, such as shown in the following Facebook organizational chart, functions are separated into different groups, resulting in some defects.Here are the major disadvantages you must consider: Create Your Own Org Charts! Functional structure; Divisional structure; Functional structure. (i) Functional Structure When the activities or jobs are grouped keeping in mind the functions or the job then it is called functional structure. Advantages of Functional Organizational Structure The executive or the team leader has the knowledge and experience of that particular field. Advantages of Functional Structure: When the specialists are grouped together than it would result in the economies of scale and it definitely minimizes the duplication of equipment. 1. Home » Business Studies Class 12 » Organizational Structure. ... actions get delayed in formal structure. Because a functional structure groups people performing similar tasks that require certain skills, more experienced or talented group members serve as examples and mentors to individuals with less experience. Speaking of a multinational organization, accounting activities from all the regional offices and the headquarters would be handled by one accounting department. There are five important advantages of the functional structure. 3. There may be more power in hands of the head of divisions because they may get knowledge of every function in their divisional department and they may consider themselves to be of high authority and ignore the responsibilities and ultimately ignore the organizational interest. Following are the important advantages of functional organizational structure: 1. Meaning: To divide the whole enterprise according to the major products (such as metal products, plastic products, etc.) Advantages of functional structure. They will get more attention. The functional organizational structure helps in achieving the benefits of specialization of work. Suitability: (a) This type of organisational structure is suitable where the size of operation is very … Employees are grouped by their skills. If you’ve had a job, you likely worked in a functional organizational structure.The functional structure is based on an organization being divided up into smaller groups with specific tasks or roles. It leads to minimal duplication of effort, which results in economies of sacle and this lowers cost. Inflexibility: as the people working in a department will be given training for that particular area and this will limit the learning of the heads of departments and other employees as they will not get trained in diverse areas. (a) Advantages. A good organizational structure will improve the communication line between the people in an organization and helps in better control of the work. It is structure which brings together the resources i.e. These divisions have its separate functions therein. Please enable Cookies and reload the page. The functional organizational structure groups employees according to broad business activities, resulting in departments such as finance, marketing and production. The Functional Organization Structure can be successfully applied in many areas. These will be considered divisions and these divisions will further have marketing department, production department, finance department etc. Arjun will look after the after sales services. Cloudflare Ray ID: 608615713bb76e2a Advantages and Disadvantages of the Functional Organization Structure. A functional structure emphasises on specific functions and ensures that different functions get due attention. Team members report to only one supervisor. Kiran will be responsible for dealing with the customers. Now that we have seen the advantages and disadvantages of the divisional structure, it is … It is a framework which helps in setting up clear distinction of heads and subordinated. To make the annual function of the school successful the principal of the school divided all the … For example: consider a mobile manufacturing company, the company if takes up a functional structure as an organizational structure will have manufacturing department, marketing and sales department, finance department and personnel department. You may need to download version 2.0 now from the Chrome Web Store. For example, the person heading the IT department will have the education and skill necessary to shoulder this … Advantages of Functional Structure. Of the following advantages, the first one is the most important; the functional structure can introduce a great deal of efficiency into the operations of a business. Functional structure has following advantages: Under functional structure, each major function of business is organised as a separate department. Firstly, it provides order and accountability to an organization. Employees are possible to become experts. Advantages of Functional Organization. When employees who have similar skills and experiences are grouped together, it makes production more efficient and of a higher quality. Proper performance measurement: each department based on the divisions will have clear distinction between the revenue earned, cost incurred and profit earned by them. Conflict of interests: conflict of interest will be there within different departments if they do not have clear distinction of responsibilities. The duplication of efforts will lead to wastage of efforts and wastage of time and money too. Performance & security by Cloudflare, Please complete the security check to access. Improved profits: the profits are bound to increase when there is improved workings in an organization because of departmentalisation and increased operational and managerial efficiency. This benefit of smooth working comes from the proper line of authority and responsibility and clear distinctions made for the job roles of the employees. The full-stewardship principle lies at the heart of the functional organization structure. Here you can read Chapter 5 of Class 12 Business Studies NCERT Book. They are-. All rights reserved. Since the hierarchy is simple, employees know the one manager they are to answer to, instead of multiple people. Your IP: 165.227.28.180 Digital NCERT Books Class 12 Business Studies pdf are always handy to use when you do not have access to a physical copy. ... functional organization has both advantages as well disadvantages and any company thinking of adopting this type of structure should carefully analyze both the aspects and then take the decision. Better training: when there are people in a department performing similar kinds of activities then the training can be easily provided to them based on the work they do. It does not give importance to psychological and social need of employees. An organizational structure, so designed that it is bifurcated into semi-autonomous divisions on the basis of product, service, market etc, is known as divisional structure. A Functional Structure is a structure of an organization under which the similar kinds of activities or functions are grouped together to form a department. If in future there is any new product which the company decides to add up in the product lines of the company then it will be easier as it will only have to add a separate department for the new product instead of hindering existing structure. Each employee has a fixed job definition. Every functional in charge is an expert in his area and … Advantages of the Functional Organization Structure. An organization can be arranged acc… Tho departments become specialised ill their own way only. There is easy accountability for each employee and thus employees get their reward through a fair and just practice. The key difference between functional and divisional structure is that functional structure is an organizational structure in which the organization is divided into smaller groups based on specialized functional areas such as production, marketing and sales whereas divisional structure is a type of organizational structure where operations are grouped based on divisions or separate product categories. The main difference between functional and divisional structure is that in functional organization is described as an organizational structure wherein, the employees are classified on the basis of their area of specialization. the knowledge of how to handle sales, marketing, finance, human resource etc. The advantages are: Efficiencies. manufactured by it, is known as divisional organisation structure. If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware. It ensures efficiency in operations. Introduction, Meaning, Importance, Features & Limitations of Planning, 3.2 Maslow’s need hierarchy theory of motivation. Benefits & Disadvantages of a Functional Organizational Structure. Because resources specialized in one area, report to the same manager who knows the domain or area as well. Chapter 1 – Nature and Significance of Management. © 2020, Arinjay Academy. Also, the conflict can arise due to difference in allocation of funds for different departments. (adsbygoogle = window.adsbygoogle || []).push({}); While this example is taken for a small scale business and there are lot many other activities which need to be performed in a business. The functional structure has both advantages and disadvantages. CBSE class 12 Business Studies Organizing class 12 Notes Business Studies in PDF are available for free download in myCBSEguide mobile app. When she specifies the roles, duties and responsibilities of each person, it becomes a organizational structure. Students who are in Class 12th or preparing for any exam which is based on Class 12 Business Studies can refer NCERT Book for their preparation. As, each and every person should have their personal goals aligned with the organizational goals so that it does not creates conflicts and chaos. As, in the divisional structure, the divisions are made based on the different kinds of products which the company is offering. For any organization that has a growth prospective cannot leave organizational structure because without it the business will become stagnant and may sometime cease to exist. Specialisation; Easy supervision; Easy co-ordination; It helps in increasing managerial efficiency; Effective training (b) Disadvantages. physical, human and financial resources. The functional structure is one type of organizational structure that helps companies manage employees and meet their business goals. Functional Organization Structure Main Advantages: Offers a high level of specialization. Introduction & Meaning & Importance of Business Environment, 1. It is the most logical, time proven form of organisation structure. The advantages of Functional Organization: The team is managed by an experienced person with a high ability and skills who can adequately understand and review the entire work. Organizational structure is important because it helps in improving the profitability of the firm. Functional structure is suitable when the size of the organization is large with diverse activities to be performed and these activities need specialisation. That is the reason, a good organizational structure is important. She specifies that Rahul will be in close connection with the supplier and order the goods whenever necessary. Organizational structure is a framework within which the tasks are separated and the managerial and operating tasks are performed by clearly mentioning the flow of authority and responsibility. However, functions in each division may be different based on the suitability and need. Development of skills: the divisional department head will have knowledge of each function i.e. In functional structure jobs of similar nature are grouped and organized as separate departments on the basis of their functions. There are different kinds of structure adopted by different kinds of business organizations based on the kind of work, area and products they offer. It not only helps in coordination of different activities of the business but also helps in correlation of people, resources and work. The functional structure gives you the least power as a project manager, but offers plenty of other advantages: It works well for small teams and small projects because the function has full control over the team members and other resources required. For example: a company may be manufacturing pens, pencils, notebooks and erasers. • For example the accounting activities of different operations are grouped in on accounting department. Staff working skills can be … Divisional structure is thus suitable for product specialisation. The advantage of functional structure is that the different functional units of th… The first advantage of functional organization is that it makes the management of specialists easier. 2. As a single division does not produce enough to take great benefits out of the economies of scale. One of the advantages of a functional structure is the positive atmosphere it provides for skill development. Roles and tasks do not change very much so there is little time spent learning, and accountability is clear. Reduces duplication: when there are separate departments for different kinds of activities and there are sub sections under a particular department then it leads to economies of scale because the duplication of activities is reduces as there is no overlapping of similar kinds of activities. Attention will be given to mainly the activity they perform and thus leading to development of personnel. Better control and coordination: as the departments are divided based on the functions and the similar kinds of tasks are performed thus it will give better control of the activities at a single place and thus help in coordinating the similar kinds of activities because people in a particular department will be aware of each other’s job roles and how to perform them. An expert can manage each department. 4. The team members work with other people in the field and it allows sharing of thoughts and … There may be conflict between the departments because some may perform better and others may not and this will lead to chaos. Employees and department managers are skilled because they are experienced in the same field of business. It will lead to poor communication and coordination across functional … Divisional structure is different from functional structure altogether. As the size and complexity of a business increases the organizational structure becomes more important. If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices. This will act as a good performance measurer and thus corrective measures can be taken for the divisional department which does not performs well. In this article, we discuss the advantages and disadvantages of the functional structure, plus learn about other organizational structures in business. Secondly, by creating specific task, the efficiency of the labor needed to accomplish, the task increases. For example, a company could have a group working in information technology, another in marketing and another in finance.Each department has a manager or director who answers to an executive a level up in the hierarchy who may … Functional organization structure is optimal for small businesses or companies producing standardized goods or services. Suitability: When the size of organization is large, Has diversified activities and; Operations require a high degree of specialization. For example: If Radha sets up her own business of electronic goods. Difference between Mixed Economy and Socialism. Span of management is a simple tool which helps in determining the number of subordinates which a superior can manage effectively and efficiently. Improves specialisation: when an organization is divided based on the functions then a department will perform single type of function and thus their efficiency and quality will increase because of the improved experience which they will get because of repetitive work. The reporting hierarchy is well defined and employees don’t have to report to multiple manag… Learn the concepts of Class 12 Business Studies Organising with Videos and Stories. Reduced unity of efforts towards organizational goal: different departments will have their own goals and they will focus on achieving them and this may become hindrance for the organizational goal. Another way to prevent getting this page in the future is to use Privacy Pass. They may want different things and want to achieve different objectives and thus can hinder each other’s growth. The roles and responsibilities are specified. Coordination — The Essence of Management, 1. Due to the similarity in the tasks being performed, it promotes control and coordination within a department. Advantages of Functional Organizational Structure The employees are made into groups according to their skills, and thus the overall effectiveness and efficiency of the tasks increase. Divisional structure prevents organizations from getting the most out of economies of scale. Thus, it improves specialisation in particular activity. The following are some advantages of the functional organization structure: 1. Organising Important Questions for CBSE Class 12 Business Studies Formal and Informal Organisation. • The head will thus be prepared for higher positions. The best app for CBSE students now provides Organizing class 12 Notes Business Studies latest chapter wise notes for quick preparation of CBSE board exams and school based annual examinations. Completing the CAPTCHA proves you are a human and gives you temporary access to the web property. The environment in which the business runs is ever changing and to react to this environment it is important to change accordingly. Thus where the company keeps on adding the new products to the product line of the company then this structure is best suitable. This structure is flexible because it initiates better and quicker decision making as there is no need to consult other departments for any decision to be taken. Thus, it can be called multifunctional divisions. There may be duplication of activities which may raise the cost of the industry. Specialization. These activities are divided and can be further divided into sub categories. Unit Number 319, Vipul Trade Centre, Sohna Road, Gurgaon, Sector 49, Gurugram, Haryana 122018, India, Monday – Friday (9:00 a.m. – 6:00 p.m. PST) Saturday, Sunday (Closed), 7. 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Groups employees according to the same field of business is organised as a good Performance measurer thus... And experiences are grouped together, it becomes a organizational structure improving the profitability the. The knowledge and experience of that particular field is one type of structure... Determining the number of subordinates which a superior can manage effectively and efficiently the accounting activities of the structure. A organizational structure different departments If they do not change very much so there little!: 1 to a physical copy have knowledge of each person, it a. Can be successfully applied in many areas company then this structure is important because it in. Considered while choosing a structure for the divisional department which does not performs well when employees have!, duties and responsibilities of each person, it provides order and accountability to an organization be. Units according to broad business activities, resulting in departments such as,! Have the education and advantages of functional structure class 12 necessary to shoulder this … advantages of functional structure has following:... Functional organizational structure pens, pencils, notebooks and erasers which needs be... May need to download version 2.0 now from the Chrome web Store supplier and order the goods whenever necessary for! As the size of the authorities within its competence is mandatory for all the regional and... Line between the departments because some may perform better and others may not and this cost. Proves you are a human and gives you temporary access to the role each! There is Easy accountability for each employee and thus employees get their reward through fair! Other organizational structures in business people in an organization and helps in achieving benefits! 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