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disadvantages of divisional structure

Each division is accountable in isolation under this organizational structure. While growth through expansion of same line of business forces an organization to organize on functional basis, growth through geographic and product diversification necessitates the adoption of divisional structure. Companies need to employ more managers and employees when using this type of organizational structure. It should also be noted that a number of experts, studying different types of organizational structures, tend to treat the divisional structure as a kind of traditional bureaucratic structures (Henry, 2007). Additionally, companies use more financial resources for distribution, printing and other expenditures when employing a multi-divisional structure. Disadvantages - A divisional structure also has a few weaknesses. 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. If an organisation wants to grow and diversify, the functional structure cannot cope, so instead the divisional structure should be adopted. It also enables to build bonds among them. The divisional structure enables a division to continue in this sort of culture. Disadvantages of the divisional approach are: - 1. Functional Vs. Divisional Organizational Structure. 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. Disadvantages: The divisional structure has certain disadvantages. Common disadvantages of this structure include operational inefficiencies from separating specialized functions – for example, finance personnel in one division do not correspond with those in another division. Multi-divisional structures can be costly. Divisional Structure: The second basic structural form employed by organizations is the divisional structure. The divisional structure is useful because failure of one division doesn’t directly threaten the other divisions. A) land, buildings B) assets, structures C) people, resources Should the company want to diversify further, it is easy to 'bolt on' another division. The disadvantages of divisional structure are explained below: Small organizations: Therefore, one of the disadvantages of the divisional structure is the high demand for the qualified managerial personnel (Henry, 2007). 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. They insulate divisional managers from other divisional managers thus inhibiting their ability to coordinate activities, share resources, and learn from each other. The culture of the organization can assist individuals to better communicate with each other. One of the disadvantages of divisional structure design is that they divide _____, _____, and knowledge. Consequently, labour expenses can be higher. Advantages & disadvantages of divisional structures Advantages . In the multidivisional structure, the subsidiaries benefit from the use of the brand and capital of the parent company. Disadvantages of divisional structure can include operational inefficiencies from separating specialized function. , and knowledge specialized function isolation under this organizational structure coordinate activities, share resources and! 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