Divisional Organizational Structure Homework Help: Definition, Advantages and More!
What is Divisional Organizational Structure?
Divisional organizational structure is one where the activities of the company are organized in accordance with certain geographic locations, the market, and the kind of product or service. Each division operated in such a way that it is responsible for its entire set of action, starting with production to marketing, sales and everything in between. That is, each division is to work as if it were an individual entity. For instance one division of the organization could be in Europe, another in the States and a third one in China.
This kind of structure is very effective because it helps in making immediate decisions with respect to the local needs and conditions. Flexibility is introduced in the functioning which would be absolutely absent in the absence of a divisional structure. Additionally, it helps the company to perform in accordance with production or consumption need of a particular area.
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Advantages of Divisional Structure:
The growing companies have adopted this approach because it certainly has some advantages. Some of the benefits which come along with a divisional organizational structure are:
- It becomes more convenient to divide the duties and responsibilities since the management of every division is responsible for its performance. Accountability improves and so does the profits.
- The flexibility gives a competitive advantage. Since local managers have the power to respond to change, they can take immediate decisions to keep up with changing local market conditions.
- When a company has a variety of products to offer, or it caters to various regional tastes, it only makes sense if it adopts a divisional structure since that would make the local operations easier.
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