Understanding Functional and Divisional Organizational Structure

Abstract

Most management students have had limited exposure to issues concerning organizational structure. This exercise offers a brief in-class experience of the differences of working in a functional structure versus a divisional structure. The instructor guides students to think about certain events, or challenges, confronting their simulated organization. Some of these challenges are best handled by a functional organizational structure, while others are much more taxing if organized that way. Conversely, a divisional organization can produce agile responses to certain initiatives but poses difficulties in coordinating across multiple divisions. Students can begin to sense how structure exerts a major influence on decision making.