Question

Six Mark Question:
What is meant by 'Divisional Structure' of an organisation? For which type of business enterprises is this structure most suitable? State any four advantages of this form of organisational structure.

Answer 1

Divisional structure Under the divisional structure an organization is divided into different divisions or units on the basis of products or geographical area.

Advantages of a divisional structure are:

Decisions are taken much faster in divisional structure.

It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.

It leads to specialization of physical facilities and human talent.

Disadvantages of a divisional structure are:

There is a duplication of physical facilities and functions.

It suffers from the under-utilization of plant capacity.

Conflict may arise between different divisions on an allocation of funds and other resources.