Organizational Theory Design and Change - Essay Example

18 January, What are the principal differences between a functional structure and a multidivisional structure? Why does a company change from a functional to a multidivisional structure? A functional structure is very simple and is commonly employed in businesses. Functional structure has significantly developed functional departments having specific functions and well defined role in the overall work. Departments in a functional structure include but are not limited to accounting, administration, operations, HR, marketing, design and engineering (Jones).

The corporate staff is limited and there is a chief executive officer who governs the business. Functional departments work under the supervision of functional line managers. Functional structure accommodates specialists who can make rational decisions in their respective specialty areas. However, managers may be biased and work for their departments’ interests instead of the organization as a whole. As compared to the functional structure, the multidivisional structure is quite integrated and differentiated, both vertically and horizontally.

In the multidivisional structure, there are operating divisions. Each of the operating divisions holds its own business. It is the responsibility of the top corporate officer to assign specific works to specific division managers on daily basis. These works include business strategy and related operations. The multidivisional structure enables corporations to expand operations. Units work with one another in harmony. However, units may occasionally compete with one another because of the scarcity of resources like finance.

Sometimes, it becomes cumbersome for separate units to coordinate with one another. In functional structure, the products vary in form, type and complexity, thus making the control difficult to achieve. A company changes from a functional to a multidivisional structure because it enables them to produce identical and simple products that significantly reduce the control issues. Works cited: Jones, Gareth. Organizational Theory, Design, and Change. 6th ed. NJ: Prentice Hall. 2007.