What are the advantages and disadvantages functional and divisional (product, customer and geographic) organizational structures?
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Both functional and divisional structures have advantages and disadvantages.
Divisional: In a globalized economy, a divisional structure can respond to cultural diversity. The divisions of a company located in or doing business in China, India, and Brazil, for example, can hire people fluent in local languages and knowledgeable about local business practices, something that is not the case with functional structures. However, this may create parochial rather than company loyalties and unwillingness to be open to ideas outside the particular cultural milieu.
Functional: A functional structure avoids duplication of expertise and can result in synergies from multiple perspectives being brought to bear on individual problems. The limitation is that this can result in product or technology driven corporate cultures insensitive to local consumer needs and cultures.
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