The communication is much efficient, and everyone knows what the other person needs from them. This situation leads to conflicts among the various divisional heads. As with all organizational structure types, the divisional structure offers distinct advantages and disadvantages. A better understanding of each other helps in achieving the pre-set goals and targets, no matter how difficult they are. What are the disadvantages of using a chart? This can result in a duplication of resources that might not be present in a more centralised structure. Disadvantages: 1. 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. Advantages Committee Organization Structure :- • Pools up the organisational resources in terms of knowledge skills and experience • Coordinating plans as well as in facilitating their execution. 6. Note that this is different than what is known as a functional organization structure, even though divisions may be separated according to function. The communication barriers amongst divisions are low or non-existent and the need to react to external environment changes is high. Decentralised decision making. The organizational culture can help people interact better with each other. Advantages of divisional organizational structure Easy to grow General manager with wide point of view. Competition is good until it becomes cruel. Advantages, Disadvantages, and Contingencies of Divisional Structures Advantages We cover stories to empower you with the knowledge, tools & advice to help you thrive in life and business. Loss bearing divisions can be shut down completely while more investments can be made in profit earning divisions. An organizational chart also clarifies the areas of responsibility assigned to specific departments and directors, as well illustrating how the official chains of command work within the organisation.. A well-c… The two most common types of organizational structure are known as functional and divisional. Examples of a product line are the various car brands under General Motors or Microsoft's software platforms. Companies are divided into departments of specialization, and then within those units, they are separated further into projects and products. This is a more democratic structure where the divisions are free to make their own decisions based on their analysis of the situations. Advantages of Divisional Structure Accountability. A company comprised of competing divisions may allow office politics instead of sound strategic thinking to affect its view on such matters as allocation of company resources. Organizational structures increase efficiency by ensuring that all employees know to whom they report and from whom they take direction regarding their work activities. A divisional structure can be extremely efficient and successful if practiced in a large organization. For example, the total work activities of an enterprise may be divided into various functions like purchases, production, marketing , finance, quality control. It becomes easier for them to evaluate staff and divisional performances and base their compensations on their success rate. Organizational structure also provides a systematic means to conduct the everyday operations for the company as well as an avenue to deal with problems, issues and challenges that may arise. Generally speaking, divisions work best for companies with wide variance in product offerings or regions of geographic operation. If you want to learn more about organizational structure types in Project Management you should check out our 100% Online and Self-Paced Project Management Professional Certification Training . There are several global divisions including North America Beverages (NAB), Frito-Lay North America (FLNA), Quaker Foods North America, Latin America, Europe Sub-Saharan Africa (ESSA) and Asia, Middle East & North Africa (AMENA). A divisional structure is a common organizational form used in business. The divisional structure can be useful because it affords the company greater operational flexibility. The major disadvantage of using charts and graphs is that these aids may oversimplify data, which can provide a misleading view of the data. Each division would have its own advertising, sales, production, clerical, accounting, and development staff. Divisions facilitate quick responses to external changes like natural disasters, financial crises or weather changes. Conflict: There may be conflicts among different divisions over allocation of funds. Disadvantages of divisional structure are as under: 1. Economies of scale are the cost savings when an organization produces goods or services in a large quantity. Organizations producing products that are relation with each other might find it difficult to integrate divisions producing those complementary (related) products. 2. They may also place multiple demands on people, thereby creating stress. A divisional structure also has weaknesses. In addition, the executives should have a solid grasp of resource use. An organization is the result of the organizing process and can be defined as a structured grouping of people working together to achieve organizational objectives. There are three main types of organizational structure: functional structure, divisional structure and a blend of the two, called matrix structure. Press Esc to cancel. Let's take a look at the advantages and disadvantages of each so you know what you're up against when you join a new structure. Divisions become quicker in responding to external changes such as weather change, natural disasters, financial crisis, trade union matters and so on. The advantages and disadvantages of a hierarchical organizational structure involve communication, innovation, and collaboration. Divisional leaders also become experts in their areas of work and work very efficiently. 18+ Risks and Disadvantages of Technology, How to Build Your Business Identity on a Tight Budget. The divisional structure allows this type of culture to persist in a division. Some experts suggested that Microsoft's divisional structure contributed to a situation where its own products were incompatible across internal business units. For example, the electronics department of Samsung is completely responsible for its own actions. The advantage of the division structure is that each division is performing their own set of functions, it is easy to manage and measure its performance. In this article, we are going to review the advantages and disadvantages of each organizational structure: Functional, Projectized, and Matrix. An organizational structure provides a framework for the chains of authority within the company. Advantages: 1. It is a combination of the functional and divisional structures. The leader sets goals along with his/her employees and works alongside them to achieve those goals. Thus, one division will sometimes act to undermine another. His various degrees in the liberal arts have helped him craft narratives within corporate white papers, novellas and even encyclopedias. The divisional organizational structure allows people in a single division to interact with each other. Smaller organizations can work through major projects via dedicated departments or ad-hoc cross-functional work teams. 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