Flexibility. The divisional structure alludes to organizations that structure initiative as per diverse items or tasks. The advantages are: Accountability. It simply states who works for who. 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. ADVANTAGE OF DIVISIONAL STRUCTURE Product specialisation. The matrix structure can get a bit confusing. Often, organizations will divide the company into various product departments; however, since my company was in … Alignment of corporate and divisional goals. Hybrid Organisational Structure: Exhibit 10.9 (a) illustrates the hybrid organisational structure. They may also place multiple demands on people, thereby creating stress. Two common organizational structures are multi-divisional and matrix. Companies are divided into departments of specialization, and then within those units, they are separated further into projects and products. There’s the more traditional functional structure, the divisional structure, the matrix structure and the flatarchy structure. 7. 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. The matrix structure followed by Starbucks coffee is one of the best organizational structure examples. Fast Decisional Making. Hole Inc. is an ideal case of this. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. 2. 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. Adaptability and flexibility in divisions. Divisional structures developed from the traditional functional structure, which features departments built on related work tasks, such as marketing. The key points in favor of the divisional structure involve placing decision making as close to the customer as possible. Functional Organizational Structure In a functional organization structure, the project manager and all the resources work in the same company division, such as the sales and marketing department. After providing a brief introduction into the discipline, it identifies and discusses eight major characteristics of matrix organizations. Generally speaking, divisions work best for companies with wide variance in product offerings or regions of geographic operation. Companies need to employ more managers and employees when using this type of organizational structure. 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. Advantages of the divisional approach are: - 1. 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. The divisional structure can be useful because it affords the company greater operational flexibility. Additionally, companies use more financial resources for distribution, printing and other expenditures when employing a multi-divisional structure. ...Advantages & Disadvantages of Divisional Organizational Structure X Chris Joseph is a freelance writer residing in Pennsylvania. Disadvantages: 1. DISADVANTAGE OF DIVISIONAL STRUCTURE Each … 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. Functional expertise and efficiency. 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. For example, the person heading the IT department will have the education and skill necessary to shoulder this responsibility and successfully run his team. 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. 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. What are the disadvantages of using a chart? The advantages of divisional structure in organizations are specialization and efficiency. As with all organizational structure types, the divisional structure offers distinct advantages and disadvantages. As with all organizational structure types, the divisional structure offers distinct advantages and disadvantages. Multi-divisional structures can be costly. Each has its inherent advantages and disadvantages. The major disadvantage of using charts and graphs is that these aids may oversimplify data, which can provide a misleading view of the data. More advantages and disadvantages of divisional structures, as well as its contingencies, are cited below. The primary reason for the firm’s success is its structure. 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. Consequently, labour expenses can be higher. Functional Organization : All of the companies define its organizational structure to determine the reporting relationships that will exist in the company. Functional Structure is one in which the reporting relationships of the organization are bifurcated according to their functional area. 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. Advantages of a Divisional Structure. It is a combination of the functional and divisional structures. This approach makes it much easier to assign responsibility for actions and results. Functional Structure 2. Different organizational structures that combine to form Starbuck’s matrix structure are divisional structure, functional structure, and team-based structure. 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. Chron.com, 03 June 2010. Generally speaking, divisions work best for companies with wide variance in product offerings or regions of geographic operation. Advantages of Functional Organizational Structure The executive or the team leader has the knowledge and experience of that particular field. 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. The article is a review of the literature on the key advantages and disadvantages of matrix organizational structures. A divisional organizational structure breaks the company down into units that are self-contained and generally independent from one another. Divisional Structure. Some of the advantages and disadvantages of a Divisional organizational structure are as follows. Advantages, Disadvantages, and Contingencies of Divisional Structures Advantages The department which is effective in making earnings while bearing losses can be readily seen. The disadvantage includes higher costs associated with maintenance of such structures. 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. He has written hundreds of articles for newspapers and the Internet on a variety of topics, including several on golf for GolfLink.com. There are three main types of organizational structure: functional structure, divisional structure and a blend of the two, called matrix structure. The divisional organizational structure is characterized by centralized decision-making and decentralized management. One person, alone, can start and run a small business, but when two or more people come together to accomplish a business goal, an organization is formed. Exhibit 10.9 (b) illustrates a combination structure. Divisions facilitate quick responses to external changes like natural disasters, financial crises or weather changes. You can change your ad preferences anytime. 3. ADVERTISEMENTS: Organizational Structure: Functional Structure and Divisional Structure ! Advantages: 1. 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. Advantages of the Divisional Organization Structure. Advantages of divisional organizational structure Easy to grow General manager with wide point of view. The structures may promote allegiance to department rather than organization objectives. While Gap is the organization, there are three unique retailers underneath the heading: Gap, Old Navy, and Banana Republic. 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. Matrix Organizational 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. 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. Divisional Structure Functional Structure: This is the simplest & the most prevalent form of organizational structure. The organizational structure can be classified under following two types: ADVERTISEMENTS: 1. Pros or advantages of divisional structure: Each division can work as an independent unit. Disadvantages Committee Organization Structure :- • It Is An … Expansion and growth. 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