Page 6 - Lesson Note 2

Divisional Structure

Divisional structure, as the name suggests perceives an enterprise as the
integration of independent divisions. We must note that such a structure

is adopted in large and complex enterprises which handle diverse
products. This is because although an organization produces a
homogeneous set of products, it can deal in a wide variety of

differentiated products. Again, the organization does this to deal with
complexity.

We must remember that in such a structure, the organization is divided

into separate business units or divisions which are a bit independent and
multifunctional in their operations. Each unit has a divisional manager at

the apex that looks after all the operations within a division.

Further, each division performs most of the functions like production;

finance etc. to achieve a common goal. In a nutshell, each enterprise is
divided into various divisions which further adapt the functional

structure. For example, the Reliance group has various product lines like
clothing, communications, electronics etc.

Advantages

• Here each divisional head looks after all the aspects of the division

which is his responsibility. As a result of this, instead of fixation on
specialization the divisional head develop various skill sets which

ultimately make him a suitable candidate for higher job positions.

• Again each division is the complete responsibility of the division head.

Consequently, the division head looks after all the operations within the

division. Hence, this helps in performance measurement. Additionally,