Divisional Structure
September 28, 2020

Opening a business has become a task that can be compared to a game of snake and ladders. Nobody knows at what time you reach the height or when you can counter a downfall; having bitten by a snake in the form of problems come in the way of doing it.

The divisional organizational structure manages the functionalities of the business according to the:-

  • Geographical market
  • Product
  • Service group

It means a company is managed on divisional lines could have operating groups which we shall discuss later.

This divisional structure methodizes business activities into specific entities. The sole purpose of this structure is to create work teams that can produce similar products corresponding to the needs of the individual groups.

A divisional structure is a common organizational form used in business. It is used where regional segments are built to provide products or services to specific locations.

In this sense, it is a manner of designing an association so that it is bisected into semi-autonomous called divisions such as purchase, production, Marketing and Finance. Although these divisions have control over day to day operations, still they are answerable to a central command.

Let us see how a business firm drives itself through the divisional structure and what can one do to procure its various components through a finance company, accommodated as a bolster.

Travails of Divisional Structure in a nutshell

When the organization is large and is producing more than one type of product, then activities related to one product are grouped under one division. These divisions are devised based on products and the demand generated among the customers.

It is known that every core product is systematized as a discrete division. Each unit and division has a categorical manager responsible for the performance and who has authority over the unit or the division.

Every individual division looks after the production, sales and finance of one product line and it has multi-functional attributes because within each divisional function like production, marketing, finance, purchase etc., are performed together to achieve a common goal. 

Moreover, each division functions as a profit hub. It is where the divisional head holds the responsibility of business gains or losses of his department. In that order despite focusing on master lines, this structure works on individuals based on the products or projects, they are possessing.

Let us know about the procedure of Divisional Organisational Structure:

Suitability

Undoubtedly, this style of structure emulsifies the expertise of a much different skill set in a single union. Divisional structure is most likely to be suitable for:

  • The enterprise wherein a large variety of products are manufactured using various productive resources.
  • Where a firm grows and needs to add more employees, more departments and introduce new levels of management.

We must not forget that its suitability also depends upon the nature of your business and helps you to regulate as per the circulated demand.

Dissimilarities on the opinions

A business firm should be also familiar with the pros and cons of this structure which are laid down with the experiences of existing officials.

Pros

  • Product specialization- all type of activities related to a kind of product is classified under a single department only. The divisional head gains experience in all functions associated with a particular product. Product specialization helps in the development of various skills in a divisional head, and this prepares him for higher positions.
  • Greater Accountability- in this structure, the performance of individual departments is easily being assessed, and one can hold the department accountable for non-accomplishment of objectives. Therefore, a divisional head is responsible for the profits of all departments, as revenues and costs.
  • Flexibility and more Initiative– it promotes flexibility and initiates because each division functions as an autonomous unit which lead to faster decisions- making.
  • Growth and Expansion- it facilitates growth and expansion as new divisions can be added without disturbing the existed operations.

Cons

  • Conflicts– conflicts may arise among different divisions concerning the allocation of funds. Also, a particular division may seek to maximize its profits at the cost of other divisions.
  • Costly– each section demands all the resources as every division works as an independent unit. It may lead to the increment of costs.
  • Inefficiencies– due to numerous functional areas spread among many divisions; no functional area will be efficient in its work.

Why should you approach this structure?

You can understand the answer to this query with the reasons stated below:

  • Based on formation, this structure is based on the product
  • Its accountability is reflected in the freedom of divisional departments
  • Since all departments are compiled in one, it shows the coordination
  • Appropriate for big firms offering an array of products including different features
  • Managerial development is easy

Financial intervention from lenders

A business firm works on many aspects and enunciates various affirmations related to production. All this requires a huge capital input to thrive. Therefore, there is a loan facility in the form of money lending.

Money lenders in Ireland are working upon these things to provide monetary help to one who feels the need for it at any time.

INFERENCE

However this approach of Divisional Structure is useful when decisions making be assembled at the division level to retaliate more hastily to local conditions. The divisional structure is specifically helpful when a company has distinct imputes, though it can cause a higher cost and can present the small results.

Yet it does not prove that managing a task of this level cannot be flourished. You can see AMAZON as a great example of Divisional structure where one can get all the items of his needs and interests.

Let me ask you ‘what stops you from going with the dreams you see for your company?’

GO WITH IT! Because of YOU WORTH IT!

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