Posted by Anjali Kaur on Dec 02, 2020

Divisional Structure of the Organization

There is 2 main structure of the organization, which includes the functional structure of the organization and the divisional structure of the organization. In this post, I will explain only the divisional structure of the organization.

Let’s learn more about it.

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What is the divisional structure of the organization?

When jobs related to 1 product are grouped under 1 department is called the divisional structure. This is particularly true for those enterprises which have more than 1 category of product to offer.

Business Studies for Class XII: Types of organizational structure -Divisional  structure

Advantages of divisional structure

1. Product Specialization

All the activities related to 1 type of product are grouped under 1 department only which brings integration and coordination in the activities.

2. Fast decision making

The decisions are taken much faster in it because there is no dependence on another department for taking a decision.

3. Accountability

In this structure, the performance of an individual department can easily be accessed and you can hold the department accountable for not achieving the objective.

4. Flexibility

It promotes flexibility and initiative because each division functions act as an independent unit which leads to faster decision making.

5. Expansion & Growth

It facilitates expansion and growth as new divisions can be added without interrupting the existing operations by merely adding another division head or staff for the new product line.

Disadvantages of Divisional Structure

1. Conflicts

Conflict may arise among different divisions with respect to the allocation of funds.

2. Cost

It may lead to an increase in cost since there may be duplication of activities across products.

3. Product Focus

Each department focuses on its product only and they fail to keep themselves as a part of 1 common organization.

Suitability of Divisional Structure

Divisional structure are suitable for:

  1. Organization producing multi-product or different line of products.
  2. An organization that requires product specialization.
  3. Growing companies which plan to add more lines of products in the future.
  4. An organization that requires each division to be self-contained as under divisional structure each department has production, sales, marketing, finance department, etc.

Thank You!

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