What is a divisional structure? Discuss its advantages and limitations
Answers
SOLUTION :
DIVISIONAL STRUCTURE :
In such type of structure and organisation is divided into different product lines known as division headed by their respective divisional manager. Each division works independently and each division is multi functional. In this structure divisional manager is only responsible for the gain or loss of their division.
ADVANTAGES OF DIVISIONAL STRUCTURE :
(a) Product specialisation :
Each division specialises in individual product. Divisional heads specialises in their respective product. For example divisional head for truck division specialises in truck manufacturing.
(b) Fixation of responsibility :
Each division works independently. Divisional heads are responsible for their own division’s profits, loss and overall costs.So fixation of responsibility becomes easy.
(c)Faster decision making :
As each division works independently, divisional heads can take their decisions without consulting others but this does not happen in case of functional structure.
(d) Expansion and growth :
Once the organisation starts growing , new divisions can be easily added for the further growth.
LIMITATIONS OF DIVISIONAL STRUCTURE :
(a) Sources of conflicts :
As different divisions depend upon some common resources like transportation of finished goods to the market, conflicts may arise among divisional heads.
(b) Increase in costs :
Due to repetition of small activities among different divisions, overall cost of the organisation tend to increase.
(c)Ignorance of organisational interest :
As division has its own targets and works independently , divisional heads may enjoy such freedom without keeping the interest of the organisation.
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Answer:
As with any organization structure, divisional structures have both strengths and weaknesses. Advantages of Divisional Organizational Structure. Divisions work well because they allow a team to focus upon a single product or service, with a leadership structure that supports its major strategic objectives.