Directorate of distance education master of business administration

ii.  
Lack of demarcation between line and staff 
 
Though theoretically line and staff authority is clear, often in 
practice, demarcation between line and staff is rarely clear.  Overlapping 
of basic functions and a gap could affect personal relationships..  This 
structure is useful when technology remains static and types of products 
are not many.  Prof. Drucker has defined this type of organization as 
“functional decentralization”. A typical diagram is shown in Fig. 2.1(a). 
This structure is useful and advantageous for smaller organizations but 
difficult for bigger ones.  This structure was found ineffective to face 
keen competition in market due to rapid advancement in technology and 
development of multiple products. 
The advantages of functional type organizations are 
 
ӹ Easier budgeting and cost control 
 
ӹ Better technical control since specialists are grouped together 
 
ӹ Flexibility in use of manpower 
 
ӹ Provide continuity in functional disciplines 
 
ӹ Better control on personnel 
 
ӹ Quick reaction capability.

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The disadvantages are 
 
ӹ No one individual is responsible for the entire operations / 
products  
 
ӹ Does not provide the production – oriented emphasis
 
ӹ Coordination becomes complex 
 
ӹ Does not provide single point contact for customers 
 
ӹ More response time to the customer 
 
ӹ Duplication and overlapping of responsibility.