Compare the Functional Structure to That of the Divisional Structure

question 83

Essay

Compare the functional structure to that of the divisional structure on the basis of their respective advantages and disadvantages.

---

Definitions:

Normal Return

The minimum profit necessary to keep a factor of production in its current use, essentially the opportunity cost of using resources.

Investment

The allocation of resources, such as capital or time, into a venture with the expectation of generating future returns.

Retained Earnings

The portion of net income that is not distributed to shareholders but instead reinvested back into the company.

Tangible Capital

Physical assets owned by a firm that are used in the production process, such as buildings, machinery, and equipment.