The activities and employees in ?Elegance Pvt. Ltd.?, a footwear manufacturing company, can be broadly grouped into five departments namely; production, purchase, marketing, accounts and personnel. Over the years the company has grown and expanded its operations manifolds. The company now intends to diversify into leather bags segment. So its management has decided to restructure its operations. They plan to create separate product divisions for each product line wherein the functioning of each division will be further divided into five departments namely; production, purchase, marketing, accounts and personnel.
In context of the above case:
How is the company?s future organisational structures likely to be different from the existing one? State any three points of differences between the two types of organisational structures

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Solution

Dear Student
At present company have functional structure that is grouping similar kind of jobs on the basis of function and company wishes to switch to divisional structure that is on the basis of product line.
Three difference between funstional and divisional structure are -
1. Functional structure is based on function whereas divisional structure is based on product lines.
2. Functional structure is economical whereas divisional structure is costly as there are duplications of jobs.
3. In functional structure it is difficult to coordinate when there are many products of a company whereas in divisional structure it is easy to coordinate as all the jobs related to one product are integrated.

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