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    Advantages & Disadvantages of Divisional Organizational Structure

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    moumita mishra
    Divisional organizational structures segregate large sections of a company into semi-autonomous groups or divisions that focus on specific products, services, or customers. [1] Divisions have strengths like increased focus and autonomy to support strategic objectives, but can also experience weaknesses like inter-divisional politics and lack of compatibility between products. [2] Large companies using this structure must have strong executive leadership to coordinate divisions and ensure strategic alignment and resource sharing across the organization. [3]

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    Advantages & Disadvantages of Divisional Organizational Structure

    Uploaded by

    moumita mishra
    293 views1 page
    Divisional organizational structures segregate large sections of a company into semi-autonomous groups or divisions that focus on specific products, services, or customers. [1] Divisions have strengths like increased focus and autonomy to support strategic objectives, but can also experience weaknesses like inter-divisional politics and lack of compatibility between products. [2] Large companies using this structure must have strong executive leadership to coordinate divisions and ensure strategic alignment and resource sharing across the organization. [3]

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    Divisional organizational structures segregate large sections of a company into semi-autonomous groups or divisions that focus on specific products, services, or customers. [1] Divisions have strengths like increased focus and autonomy to support strategic objectives, but can also experience weaknesses like inter-divisional politics and lack of compatibility between products. [2] Large companies using this structure must have strong executive leadership to coordinate divisions and ensure strategic alignment and resource sharing across the organization. [3]

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    293 views1 page

    Advantages & Disadvantages of Divisional Organizational Structure

    Uploaded by

    moumita mishra
    Divisional organizational structures segregate large sections of a company into semi-autonomous groups or divisions that focus on specific products, services, or customers. [1] Divisions have strengths like increased focus and autonomy to support strategic objectives, but can also experience weaknesses like inter-divisional politics and lack of compatibility between products. [2] Large companies using this structure must have strong executive leadership to coordinate divisions and ensure strategic alignment and resource sharing across the organization. [3]

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    Advantages & Disadvantages of Divisional Organizational Structure

    by Jason Gillikin, Demand Media


    A divisional organizational structure gives a larger business enterprise the ability to segregate large sections of the company's
    business into semi-autonomous groups. These groups are mostly self-managed and focused upon a narrow aspect of the
    company's products or services. As with any organization structure, divisions have both strengths and weaknesses.

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    Definition
    A divisional organizational structure usually consists of several parallel teams focusing on a single product or service line.
    Examples of a product line are the various car brands under General Motors or Microsoft's software platforms. One example of a
    service line is Bank of America's retail, commercial, investing and asset management arms.

    Unlike departments, divisions are more autonomous, each with its own top executive--often a vice president--and typically
    manage their own hiring, budgeting and advertising. Though small businesses rarely use a divisional structure, it can work for
    such firms as advertising agencies which have dedicated staff and budgets that focus on major clients or industries.

    Advantages
    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. Having its own president or vice president makes it more likely the division will receive the
    resources it needs from the company. Also, a division's focus allows it to build a common culture and esprit de corps that
    contributes both to higher morale and a better knowledge of the division's portfolio. This is far preferable to having its product or
    service dispersed among multiple departments through the organization.

    Related Reading: Advantages & Disadvantages of Vertical Organizational Design


    Disadvantages
    A divisional structure also has weaknesses. 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. Thus, one division will sometimes
    act to undermine another. Also, divisions can bring compartmentalization that can lead to incompatibilities. For example,
    Microsoft's business-software division developed the Social Connector in Microsoft Office Outlook 2010. They were unable to
    integrate Microsoft SharePoint and Windows Live until months after Social Connector could interface with MySpace and
    LinkedIn. Some experts suggested that Microsoft's divisional structure contributed to a situation where its own products were
    incompatible across internal business units.

    Alternatives
    Large organizations that want the focus of a division could instead spin off into a free-standing subsidiary. Smaller organizations
    can work through major projects via dedicated departments or ad-hoc cross-functional work teams.

    Making It Work
    To be successful, divisions must be well managed. Executive leadership is the single most important determinant of success for a
    company using a divisional structure. The top leaders need to understand what each division is doing and provide leadership to
    the division chiefs on how to accommodate new strategic directions or more effectively partner across divisions. In addition, the
    executives should have a solid grasp of resource use. Having a shared pool of centrally-managed resources like administrative
    support or office equipment can reduce costs and organizational complexity.

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