Divisional Structure: Advantages, Disadvantages and Characteristics

The divisional structure is an organizational model characterized by the division of labor into autonomous units, in which each division has autonomy to manage and apply its own budget, personnel, and procedures to achieve the objectives established by management general.

The divisional structure is a model of organizational structure characterized by divisions of labor in different areas, which have some autonomy, so that it does not depend on a hierarchical structure more than the general direction.

Although it is not an organizational structure widely implemented by companies, it is useful in those companies whose divisions are focused on products, different services or markets, each division has specialized personnel and its own budget, acting independently within it company.

To better understand what this model or organizational approach is about, let's define what the divisional structure is, advantages, disadvantages, characteristics and examples.

What is the divisional structure?

The divisional structure is an organizational model that is based on criteria for division of work areas as autonomous units, in which each of the divisions or areas has autonomy to apply its own policies, procedures, or methods, to achieve the objectives established by the general management.

However, although they have autonomy, they are under the guidance of a general management, who establishes the policies and objectives to continue in the long term for the entire group that represents the company, it also establishes management control policies and solution of conflicts.

In the same way, in this type of structure a central staff in charge of the evaluation of long-term projects prevails and improve management control methods, based on information collected from central management and the divisions of job.

Advantages of the divisional structure

The divisional structure has a series of advantages that benefit companies that decide to implement it as their organizational model, these advantages are:

• It helps to focus efforts on satisfying each type of customer and market: Well, this type of structure is implemented by companies that offer various types of products or services in a market, focusing each division on a product or service to improve customer satisfaction, although it is also applied by companies that offer the same products and services, but in different markets, in which each branch acts as a division, focusing its efforts on taking advantage of the market conditions in which participates.
• The degree of commitment, productivity and efficiency of the work teams is strengthened: Being a structure that provides autonomy to each work division, the members of each division assume greater degree of responsibility and commitment, since the results obtained fall on their decisions and Actions.
• Internal processes are more dynamic: With this divisional structure, the different internal processes are much more agile and efficient, for example, decision-making and response capacity; since, having autonomy, it does not depend on chains of command, or other divisions of work, only on the general guidelines established by the general management and the central staff.
• Companies can operate in different markets without losing their competitiveness: In this case, companies establish a divisional structure for each branch, where you are, having their autonomy, they can establish their own strategies that allow it to adapt to the reality of the market in which it operates, making them more competitive, in accordance with management guidelines general.

Disadvantages of the divisional structure

Although a divisional structure can provide great advantages, it also has disadvantages that prevent many companies from applying this structure, these disadvantages are:

• It is more expensive to implement than other organizational structures: This is because each division of labor has more roles and responsibilities to assume; therefore, it requires a greater number of employees than other types of organizational structures, which implies higher operating costs.
• It is more difficult for the general management to apply management control: Well, it requires greater supervision and evaluation of the methods and procedures that each division of labor applies as part of its autonomy, to be able to know if each division is correctly directed towards the achievement of the established objectives of the management general.
• Rivalries between divisions can be generated: Since the divisions do not depend on each other, they are not motivated to cooperate and work as a team to achieve the objectives of the organization; which can lead to rivalries and unfair practices to undermine other divisions and thus obtain advantages, such as a higher budget.
• Barriers are generated that prevent the transfer of skills and knowledge: As each division of labor enjoys autonomy to apply and manage its own procedures internally, barriers are created between divisions that prevent the transfer of knowledge and skills.

Characteristics of the divisional structure

The characteristics that stand out in the divisional structure are:

• An organizational structure based on the division of labor into autonomous units, which can establish their own methods to achieve the long-term goals set by management general.
• It does not depend on other divisions of work, it only depends on the guidelines established by the general management and the general staff.
• It is a structure mostly implemented by companies that have commercial operations through branches in different markets. geographically remote from each other or by companies that offer different products and services to different types of customers or industries.
• It requires greater coordination and management control to focus the divisions on the objectives and interests of the general management.

Examples of divisional structure

Some practical examples in which this divisional structure is useful for companies are:

• In those companies whose products and services are different, offering a specialized team for each type of customer, such as consulting companies that offer advisory services (legal, accounting, labor, advertising and marketing, etc
• Companies whose factories or stores are geographically distant from each other, operating in different markets, whose autonomy allows them to adapt to the conditions of the market in which they participate.