what are the advantages of divisional structure

Advantages of Divisional Structure

• Accountability. The divisional organizational structure allows each division of a firm to be accounted for in isolation.
• Team working. The divisional organizational structure allows people in a single division to interact with each other.
• Responsiveness to external changes. When in a divisional organizational structure, a division...

Full Answer

What are the advantages of a divisional structure in a company?

Each division can work as an independent unit. Each division gets adequate freedom. Division managers become experts in their area. Separation of strategics and operating control. Good training ground for strategic management. This structure can create career development chances.

What is a divisional organizational structure?

Companies employing the divisional organizational structure create divisions devoted to product lines, geographical location or a customer type. Called strategic business units, or SBUs, these divisions stand alone, operating as if they were independent businesses in and of themselves.

What are the advantages of divisional level decision making?

It improves problem-solving abilities and approaches. Permitting the divisional heads’ decision-making power gives them a lot of autonomy. The smaller workforce population enhances this since the problems are few and unique to them.

How does divisional structure affect economies of scale?

Economies of scale are the cost savings when an organization produces goods or services in a large quantity. Divisional structure prevents organizations from getting the most out of economies of scale. As a single division does not produce enough to take great benefits out of the economies of scale.

What are the advantages of divisional structure Class 12?

Advantages of divisional structure are: Decisions are taken much faster in divisional structure. It facilitates expansion and growth as new divisions can be added without interrupting the existing operations. It leads to specialisation of physical facilities and human talent.

What are advantages and disadvantages of divisional structure?

Cons or disadvantages of divisional structure: This structure is not suitable for small organizations. Headquarters find it difficult to control each division. Duplication of activities may happen in different divisions. Can be very expensive, When each division is engaged in independent service cost may increase.

Which is an advantage of the divisional structure quizlet?

there is little duplication of services across divisions. Which is an advantage of the divisional structure? -it increases employee participation.

Which is not an advantage of divisional structure?

Divisional Structure is a type of departmentation in which positions are grouped according to similarity of products, services or markets. Individuals are unable to develop in-depth areas of specialization to the same extent as in a functional structure. Hence, option (c) is not an advantage of divisional structure.

What is the strength of divisional structure?

Specialization. A divisional structure allows for a high degree of specialization. Because each division is typically responsible for producing one particular product or service, it develops expertise in that area.

What is an example of divisional structure?

Divisional. In a divisional structure, people are grouped together based on the product or service they provide, not the work they do. For example, a large corporation such as General Electric has divisions for electronics, transportation, and aviation, each with its own team of accountants, marketers, etc.

What do you mean by divisional structure?

Divisional organisation structure in which various departments are created on the basis of products, territory or region, is called a divisional structure. Each unit has a divisional manager, who is responsible for performance and has authority over their division.

Which of the following is are an advantage of team structure?

Which of the following is an advantage of a team structure? It empowers employees and makes them more involved.

Which of the following is an advantage of matrix structure?

Perhaps the biggest advantage of a matrix structure is that it brings together highly skilled team members from different departments, allowing the organization to capitalize on the resources it already has rather than seeking expertise and recruiting project team members from outside of the organization.

What are the features of divisional structure?

Businesses using a divisional structure may have one or more of the following characteristics:Selling a wide range of customer-facing product lines.Offering both businesses-to-customer and business-to-business services.Advertising to a wide variety of demographics.Marketing their brand in different geographic locations.More items...

Which of the following is disadvantages of divisional structure?

The entire set of functions (e.g., production, marketing, financial, personnel, etc.) is required for all divisions. It gives rise to duplicity of efforts among divisions. Hence, resources are misused and cost of operations is unnecessarily increased.

What are the disadvantages of divisional organizational design?

Disadvantages of the Divisional Organization Structure The key points against the divisional structure involve the cost of duplicating functions and a reduced focus on the overall direction of the company.

Which of the following is the primary disadvantage of divisional structures?

A major disadvantage of a divisional structure is that when divisions are separated to manage individual product markets, there is a separation of strategic and operational control.

What are the disadvantages of functional structure?

Disadvantages of the Functional Organizational StructureBoring. ... Leads to conflicts. ... Poor communication. ... No sufficient cooperation. ... Low morale. ... Rigid. ... A department can become too autocratic and put its goals above those of the organization as a whole. ... Growth.

Why do businesses need divisional structures?

Businesses typically need organizational structures in order to perform at their best. Divisional structure is one system a company may use to improve different aspects. While there are many advantages to a divisional organization, there are also some disadvantages, so it can be important to know both to understand how they may impact a business. In this article, we define divisional structure, list the pros and cons of using it and provide a solution for each con.

What is a divisional structure?

A divisional organizational structure is a system in which a company segments its employees based on products or markets, as opposed to their job roles. Some companies have marketing, sales and communications departments, while a divisional organization has trams dedicated to a specific region or product. This is most useful for larger companies that benefit from organizing their workforce into relatively independent groups. Businesses using divisional structure may have one or more of the following characteristics:

How does divisional organization improve company culture?

Using a divisional organization may improve company culture by allowing for unique perspectives at different levels. Senior managers may also feel more capable of modeling expected behavior when they're setting an example for a smaller group. Companies can promote a unified culture even with segmentation by establishing company values that are broad enough for employees to interpret in a way that's applicable to their work. For example, if a global hotel chain's main mission is politeness and respect, it can still account for regional etiquette differences.

How does division affect employees?

When divisions act on their own terms, they usually form a stronger bond with each other but at the cost of distancing their work from other divisions. One way to avoid this is to create projects where different divisions need to work together, such as a sales promotion for a software company that includes multiple products in one package.

Why do divisions have their own management groups?

Because divisions have their own management groups to lead them, it's easier to hold individuals accountable for their actions. You can track which actions led to which results and assign responsibility accordingly. Each division works in their own best interest, which also means there's more transparency in who deserves credit for positive outcomes.

Why is it important to organize divisions by country?

For example, if two competing CRM services are both available internationally, the company that organizes divisions by country is likely to perform better because it can probably translate its user interface into more languages at a faster pace.

Why do divisions have to be separate?

Separate divisions may feel encouraged to treat each other as competitive rivals instead of part of the same company. Having independent goals can lead to increased office politics and management groups attempting to gain advantages. Sometimes senior leadership distributes the company budget based on performance, which can also cause gaps between divisions. To prevent this, consider establishing quarterly corporate events or monthly company-wide meetings as ways to provide them a shared vision of responsibilities and inspire cooperation among all divisions.

Why is divisional organizational structure important?

The divisional organizational structure allows people in a single division to interact with each other. When all of them are working towards a single goal, the success of their division, the motivation is higher than ever. The communication is much efficient, and everyone knows what the other person needs from them.

Why is division important in organizational structure?

When in a divisional organizational structure, a division focuses just on its own product, service or region. This helps them focus better on external factors that can affect their operations. Divisions become quicker in responding to external changes such as weather change, natural disasters, financial crisis, trade union matters and so on.

What is organizational culture?

Organizational culture is the values and the practices that persist in an organization. The divisional structure allows this type of culture to persist in a division. The organizational culture can help people interact better with each other. It also helps create bonds between them.

What is the cost savings of an organization when an organization produces goods or services in a large quantity?

Economies of scale are the cost savings when an organization produces goods or services in a large quantity. Divisional structure prevents organizations from getting the most out of economies of scale . As a single division does not produce enough to take great benefits out of the economies of scale.

What is divisional leadership?

In the divisional structure, each division has its own leader. The leader sets goals along with his/her employees and works alongside them to achieve those goals. The direct control from the top leadership of the firm is no longer a necessity. The upper leadership can indulge in strategic decisions. Divisional leaders also become experts in their areas of work and work very efficiently.

What happens when divisions don't communicate?

This lack of knowledge might hamper the organization in the form of extra taxes, fines, lack of finance available because a division might have spent extra on CSR (corporate social responsibility) and so on.

Why do divisions want other divisions to perform badly?

Divisions would want other divisions to perform badly, instead of performing better themselves, in order to get past them and get the reward. The employees think themselves as a part of a certain division, but they forget that they are still a part of a much bigger organization.

Why use divisional structure?

Businesses wishing to foster the strategic and leadership skills needed by future executives can use the divisional structure to move middle managers from specialists in a particular aspect of the company to generalists.

What is a divisional organizational structure?

Companies employing the divisional organizational structure create divisions devoted to product lines, geographical location or a customer type. Called strategic business units, or SBUs, these divisions stand alone, operating as if they were independent businesses in and of themselves.

What is a divisional manager?

A manager overseeing a strategic business unit gets the chance to run operations as if in charge of a company. Concerned with creating and enacting strategies that will make an SBU competitive in the short to medium term, divisional managers must also consider and plan for the long term. Such big-picture thinking is typically the purview of upper management. Businesses wishing to foster the strategic and leadership skills needed by future executives can use the divisional structure to move middle managers from specialists in a particular aspect of the company to generalists.

Why is divisional decision making more effective?

Decisions and actions are more effective because the divisional head understands the internal and external forces that may affect their competitive advantage since the focus is on one product or service, which he has studied well. He also understands the customer’s needs concerning the product.

Why is divisional team effective?

Divisional teams are lean groups, making communication and interaction better and faster. They can discuss and improve any flaws in the processes quickly. It ensures that mitigation measures are developed and implemented in the shortest time possible . It also reduces the chances of encountering business risks.

Why are divisions important?

A division focuses on a specific product, service, or region. As a result, the teams have an in-depth understanding of the product, service, or region. It improves the performance and quality of services or products. It also relieves the next team from that set of tasks and makes them focus on other duties.

What is organizational structure?

Organizational structures are frameworks used by companies to describe the flow of power and authority between various departments. It also classifies the professional activities performed to meet Company goals and objectives. Organizational structures vary from one company to another depending on various internal and external factors. The topic is ‘Advantages and Disadvantages of Divisional Organizational Structure’.

Why is the head of an organization not overwhelmed with roles, responsibilities, and decisions?

The organization’s head is not overwhelmed with roles, responsibilities, and decisions because the tasks are at divisional levels. Respective managers tackle problems related to their team only. Each manager makes decisions and actions for their team. In addition, each division has its own set of departments that tackle issues related to their expertise areas. It reduces the number and frequency of problems reaching the organization’s head or head office.

How does lack of integration affect teams?

Lack of integration and cohesiveness reduces performance, profitability and yields negative publicity.

Why is there a reduction in workload?

There is a reduction of workload because various departments exist in each division. They can produce the desired results using fewer resources and time because their focus is on one product, service, or region. It gives them a better understanding of the business environment and ways of overcoming challenges that may arise. The team has more impact on the market because it understands the products, services, and customer needs.

What are the disadvantages of divisional management?

Cons or disadvantages of divisional structure: 1 This structure is not suitable for small organizations. 2 Headquarters find it difficult to control each division. 3 Duplication of activities may happen in different divisions. 4 Can be very expensive, When each division is engaged in independent service cost may increase 5 When each divisional manager safeguards his interest alone, he/she ignores the common goal of the organization. 6 The conflict between the divisional head. 7 Can focus on short term performance. 8 The difference in image and quality may occur across the division. 9 In this structure, every division tries to display better performance sometimes even at the cost of other divisions. This shows their selfish attitude. 10 Require a skilled management force. 11 Require an elaborate control system. 12 In this structure, the competition among divisions can become so intense as to be dysfunctional. 13 This structure can lead to limited sharing of ideas and resources. 14 Some regions/products/customers may receive special treatment.

What is duplication of activities?

Duplication of activities may happen in different divisions. Can be very expensive, When each division is engaged in independent service cost may increase. When each divisional manager safeguards his interest alone, he/she ignores the common goal of the organization. The conflict between the divisional head.

Can each division work as an independent unit?

Each division can work as an independent unit.

Divisional Structure Meaning

Advantages of Divisional Structure

• Accountability and Responsibility
  The first and foremost advantage of divisional structure is that since each division acts as a profit center and division managers are given full autonomy over the operations of divisions, it is the divisional managers who are accountable as well as responsible for the performance of the divis…
• Flexibility
  In case of this structure divisional head are decision making authority and they do not have to consult company head before making day to day decisions it leads to faster decision making apart from giving flexibility to the divisional head as far as matters of divisions are concerned.

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Disadvantages of Divisional Structure