Page 7 - Lesson Note 2

the division head is responsible for the poor performance of a division.

This also facilitates quick remedial actions.

• Each division functions as a self-sustaining and autonomous unit.

Accordingly, it promotes flexibility, initiative and faster decision making.

• A notable advantage of the divisional structure is that it promotes

expansion. Evidently, if an enterprise tries to step into a new product’s
market, it can simply do so by adding a new division for that product line

without interfering with the existing structure.

Disadvantages

• Divisional structure promotes the emergence of autonomous divisions

within an enterprise. Consequently, a division might try to compete with

other divisions to maximize its profits and hence cause hindrance to the

growth of the bigger entity that is the organization.

• Similar sets of functions are performed across all units. In that case,
there is a duplication of functions which lead to an overall increase in

expenditure.

• Lastly, this structure gives a lot of power to a divisional manager. This

may result in the rise of an independent manager who might hold the

division’s interests in higher regard than the organizational interests.

Difference between a Functional Structure and a Divisional Structure

Basis of
Difference Functional structure Divisional structure

It is created on the basis It is created on the basis of
Creation
of various functions in various product lines of