Kishan Packaging earlier was operating with just 10 employees, but due to increasing demand and expansion of the business it now has several departments employing around more than 200 employees. As a

Sandeep · 8 Dec 2024

Divisional structure is that organizational structure which is based on extensive delegation of authority and built on a division basis. The divisional structure can be organized in one of the four ways: by geographic area, by product or service, by customer, or by process. With a divisional structure, functional activities are performed both centrally and, in each division, separately. Advantages of Divisional Structure  Accountability is clear: Divisional managers can be held responsible for sales and profit levels. Because a divisional structure is based on extensive delegation of authority, managers and employees can easily see the results of their good or bad performances and thus their morale is high.  Other advantages: It creates career development opportunities for managers, allows local control of local situations, leads to a competitive climate within an organization, and allows new businesses and products to be added easily. Disadvantages of Divisional Structure  Higher cost: Owing to following reasons: (i). requires qualified functional specialists at different divisions and needed centrally (at headquarters); (ii). It requires an elaborate, headquarters –driven control system.  Conflicts between divisional manager: Certain regions, products, or customers may sometimes receive special treatment, and it may be difficult to maintain consistent, company- wide practices.