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Generally speaking, divisions work best for companies with wide variance in product offerings or regions of geographic operation. After providing a brief introduction into the discipline, it identifies and discusses eight major characteristics of matrix organizations. Advantages & disadvantages of divisional organizational structure Chris Joseph - Updated February 06, 2018 Large companies that serve a varied customer base or operate in a number of geographic regions may choose to operate with a divisional structure. 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. In other words, it combines decentralized management with independent accounting and allocates responsibility and authority to each division to a maximum degree, thus enabling the top leaders to get rid of daily production operations to become a truly powerful decision-making body. The key points in favor of the divisional structure involve placing decision making as close to the customer as possible. Advantages of the Divisional Organization Structure. More advantages and disadvantages of divisional structures, as well as its contingencies, are cited below. The advantages of divisional structure include flexibility in terms of usage of product structure, geographical structure and market structure depending upon the need of the organization. 1 Every organization must choose an overall structure that meets its needs best and allows interactions among individuals and departments to attain the its goals. While Gap is the organization, there are three unique retailers underneath the heading: Gap, Old Navy, and Banana Republic. By pulling resources from these departments to devote to a specific product, location or customer, the divisional organizational structure gains some advantages the functional structure lacks. ADVANTAGE OF DIVISIONAL STRUCTURE Product specialisation. The structures may promote allegiance to department rather than organization objectives. Functional Structure is one in which the reporting relationships of the organization are bifurcated according to their functional area. Different organizational structures that combine to form Starbuck’s matrix structure are divisional structure, functional structure, and team-based structure. The advantages are: Accountability. Multi-divisional structures can be costly. Disadvantages Committee Organization Structure :- • It Is An … Fast Decisional Making. Exhibit 10.9 (b) illustrates a combination structure. The divisional structure alludes to organizations that structure initiative as per diverse items or tasks. An organizational structure, so designed that it is bifurcated into semi-autonomous divisions on the basis of product, service, market etc, is known as divisional structure. It is a combination of the functional and divisional structures. Your business and its needs also impact whether one type of organizational structure is better suited for your business than the other, or whether you should consider a different organizational structure for your company. The main difference between functional and divisional structure is that in functional organization is described as an organizational structure wherein, the employees are classified on the basis of their area of specialization. DISADVANTAGE OF DIVISIONAL STRUCTURE Each … As with all organizational structure types, the divisional structure offers distinct advantages and disadvantages. The divisional structure is a type of organizational structure that groups each organizational function into a division. ADVERTISEMENTS: Organizational Structure: Functional Structure and Divisional Structure ! Advantages of divisional organizational structure Easy to grow General manager with wide point of view. Matrix Organizational Structure. Companies are divided into departments of specialization, and then within those units, they are separated further into projects and products. The department which is effective in making earnings while bearing losses can be readily seen. Functional Organization : All of the companies define its organizational structure to determine the reporting relationships that will exist in the company. It simply states who works for who. Organizations choose their organizational structure based on many factors like: size, its geographic location, the manner of delivering different products and services that they will offer. Divisional structures developed from the traditional functional structure, which features departments built on related work tasks, such as marketing. For example, the person heading the IT department will have the education and skill necessary to shoulder this responsibility and successfully run his team. Expansion and growth. 3. Adaptability and flexibility in divisions. The organizational structure can be classified under following two types: ADVERTISEMENTS: 1. There are three main types of organizational structure: functional structure, divisional structure and a blend of the two, called matrix structure. Two common organizational structures are multi-divisional and matrix. The matrix structure followed by Starbucks coffee is one of the best organizational structure examples. Divisional Structure Functional Structure: This is the simplest & the most prevalent form of organizational structure. Also learn about its advantages and disadvantages! Each has its inherent advantages and disadvantages. Advantages and Disadvantages of Functional Organizational Structure In this type of organization, the emphasis is on managing some functions wherever the function may be performed in the enterprise. Hole Inc. is an ideal case of this. The primary reason for the firm’s success is its structure. The disadvantage includes higher costs associated with maintenance of such structures. Functional Structure Functional expertise and efficiency. 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. Advantages, Disadvantages, and Contingencies of Divisional Structures Advantages Disadvantages: 1. The article is a review of the literature on the key advantages and disadvantages of matrix organizational structures. 2. Some of the advantages and disadvantages of a Divisional organizational structure are as follows. The divisional structure can be useful because it affords the company greater operational flexibility. It is a type of organizational structure that groups each organizational function into a division. Additionally, companies use more financial resources for distribution, printing and other expenditures when employing a multi-divisional structure. 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. Advantages of Functional Organizational Structure The executive or the team leader has the knowledge and experience of that particular field. Divisions facilitate quick responses to external changes like natural disasters, financial crises or weather changes. He has written hundreds of articles for newspapers and the Internet on a variety of topics, including several on golf for GolfLink.com. Flexibility. Alignment of corporate and divisional goals. Advantages of the divisional approach are: - 1. As with all organizational structure types, the divisional structure offers distinct advantages and disadvantages. The divisional organizational structure is characterized by centralized decision-making and decentralized management. The key difference between functional and divisional structure is that functional structure is an organizational structure in which the organization is divided into smaller groups based on specialized functional areas such as production, ... “Advantages & Disadvantages of Divisional Organizational Structure.” Chron.com. 7. This approach makes it much easier to assign responsibility for actions and results. 5 Advantages and Disadvantages of the Matrix Organizational Structure November 23, 2020 When a business initiates a project, it can be crucial to have an organizational structure in place to define all the aspects of the project. Generally speaking, divisions work best for companies with wide variance in product offerings or regions of geographic operation. An organizational structure wherein the organizational functions are classified into divisions as per product or service lines, a market is called Divisional Structure. Each organizational structure comes with different advantages and disadvantages and may only work for companies or organizations in certain situations or at certain points in their life cycles. Consequently, labour expenses can be higher. 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 gets adequate freedom. Potential advantages of divisional structures: More flexibility in responding to environmental changes Improved coordination across functional areas Clear points of responsibility Expertise focused on specific customers, products, and regions Greater ease in restructuring 7. You can change your ad preferences anytime. They may also place multiple demands on people, thereby creating stress. Chron.com, 03 June 2010. The advantages of divisional structure in organizations are specialization and efficiency. Pros or advantages of divisional structure: Each division can work as an independent unit. The advantages of divisional structure are explained below: Accountability: The divisional organizational structure makes it possible to account in isolation for each division of a company. Hybrid Organisational Structure: Exhibit 10.9 (a) illustrates the hybrid organisational structure. A divisional organizational structure breaks the company down into units that are self-contained and generally independent from one another. There’s the more traditional functional structure, the divisional structure, the matrix structure and the flatarchy structure. Divisional Structure. Advantages: 1. The matrix structure can get a bit confusing. 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