In divisional organization structure, business activities are divided in several segments on the basis of different geographical, services, market and product group. The divisional organizational structure is common in large companies that have a widely spread business in different countries and therefore for each state and region they have to organize a separate functional body. A divisional organization structure is a decentralized kind of structure where each division has an authority of making decisions regarding their own division. Each division has all kinds of functions and employees that have to run a particular division according to the situation, demand, customers, market condition and other factors. In divisional organization structure, there are several groups who are serving a single line of the business in several different regions that make a single company perfect in a single line of operation. There are several advantages and disadvantages of divisional organization structure that make it different from other organizational structure.
Divisional organization structures make a business self sufficient as all the divisions are acting like a separate company. Each division has their own management that helps them in making their own decisions without waiting for a long time for the approval of the parent company. Another best thing about divisional organization structure is the availability of highly skilled professionals that can help other divisions when they find any difficulty in solving a problem. In divisional organizational structure the employees have more chances of getting promotions and the job type is more secured and rewarding. In this type of structure the parent company has lots of specialized workers in different divisions and when they need to complete a project effectively, they can call specialized workers for each single area and can complete a project perfectly. Separate divisional managements make it effective for the employees as the management has to control a limited group of employees and they can easily understand the needs of their employees.
Similar to other organizational structures, the divisional organizational structure has also some weaknesses that make business owners think about several aspects before adopting the structure. The biggest obstacle in adopting a divisional organizational structure is high costs. Though, each division is working like a separate company however for investing in different functions they usually ask parent company to provide resources. Similarly for launching a new division the parent company has to support it until and unless the division start work properly. The structure is expensive in another way that each division needs to have proper equipment for daily operations and so the company has to provide double the amount of resources. There is no idea of sharing knowledge and information because each division has its own circumstances for work and every employee has to work in a different environment. If employees from one division move to another division for a project etc, the change of environment creates several difficulties for them in adjustment.
For the success of a divisional organizational structure it is important to have a strong unit in each division with the abilities to look after each and every function.