Explain the concept of ‘divisional structure’. Also, explain any four advantages of divisional structure.
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What is divisional structure? State its advantages.
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Draw a diagram depicting a divisional structure.
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With the help of a diagram, explain divisional structure and state some of its advantages,
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Neha and Rekha entered into a partnership business for manufacturing leather bags. As the business flourished they decided to produce market leather jackets and leather shoes. Suggest an organisation structure to them.
Divisional structure: An organisation structure, in which various departments are created on the basis of products, territory or region, is called a divisional structure.
Suitability Such structures are suitable for those business enterprises, where a large variety of products are manufactured using different productive resources.
(i) All the activities related to one type of product are grouped under one division, which brings integration and coordination in the activities.
(ii) With more initiative and flexibility, decisions are taken much faster in divisional structure.
(iii) It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.
(iv) Fixation of responsibility and accountability is easy, as. divisional heads are responsible for the profits and losses of their divisions.
(v) It helps the managers to develop varied skills related to a product and facilitates managerial development.