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Divisional structures

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Divisional structures

  1. 1. Divisional Structure
  2. 2. Divisional Structure Divisional structure is usually followed by big companies which manufacture more than one products or having operations in wide geographical area. The organization is classified into different autonomous units and Managers create a series of business units to produce a specific kind of product for a specific kind of customer
  3. 3. Types of Divisional Structures Product Divisionalisation Managers place each distinct product line or business in its own self-contained division  Divisional managers have the responsibility for devising an appropriate business-level strategy to allow the division to compete effectively in its industry Each division looks after production, sales, finance, Personnel of one product.
  4. 4. Product Structure Washing Machine Division CEO Corporation Lighting Division Television Division Corporate Managers
  5. 5. Territorial Divisionalisation This is a structure for huge companies functioning in different territories, such offices may have zonal offices and below them regional offices. this structure is followed by railways , Banks, Insurance companies , Transport companies etc.
  6. 6. Territorial Structure Northern Region Corporation Western Region Southern Region Eastern Region CEO Corporate Managers
  7. 7. Advantages of Divisional Structure • Each division can work as an independent unit • Each division gets adequate freedom • Division managers become experts in their area • Removes need for direct supervision of division by corporate managers • Divisional management improves the use of resources • Timely and effective decisions can be taken
  8. 8. Disadvantages of Divisional structure • This structure is not suitable for small organization • Duplication of activities may happen in different divisions • When each division is engaged in independent service cost may increase • Head quarters find it difficult to control each division • When each Divisional manager safeguards his interest alone, he ignores the common goal of the organization
  9. 9. Difference between Functional Structure and Divisional Structure Basis Nature Structure Authority Functional Structure Focuses on functional departments like production, finance, marketing, etc. Simple Centralized authority Divisional structure Focuses on product or regional level Complex Decentralised
  10. 10. Control Operational freedom Responsibility Suitability Easy Less freedom All department have collective responsibility Suitable for small organization Difficult More Freedom Each division has separate responsibility Suitable for Big organization
  11. 11. THANK YOU

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