Divisional structure

Divisional organization

Divisional structure is one of the basic organizational structures as well as functional organizations and matrix organization ,and this organization is divided into roles according to the products and services provided.(ex. Television Division, Refrigerator Division, etc.)

In addition, it is applied not only to each product or service, but also to each region and customer.
Basically, it is an organizational structure adopted by companies engaged in multiple businesses.

The division organization was devised by DuPont and it is believed that Alfred Sloan applied to General Motors.


Type of divisional structure

The divisional organizational structure is divided into three main types, and the type of organization to be adopted is determined according to the type of industry.
The criteria to be adopted are generally product or technology centric or customer centric or by such a “business definition”.


Product division structure

Product-based division structure is the most commonly adopted division organization, and defines the business based on products and technologies.
It is an all-in-one type in which all departments such as the development department, the production department, the sales department, and the accounting department are packed for each product / service.


Customer division structure

Customer-based business structure is the organization of business defined by business centered on the customer base.
The customer base is a comprehensive product that points to gender, age, family and life stage, and also annual income, occupation, lifestyle, etc., and it is impossible to meet those needs with a single product, so each customer base Will develop products and services.


Regional division structure

Regional-based division structure is an organization of businesses centered on the regions and areas.
Automobile companies are suitable for this type of organization, and each region such as Tohoku, Kanto, Tokai, Kansai and Kyushu is regarded as a division and each has its own functions of manufacturing and selling cars. You are


Advantages of divisional structure

Easy to grow General manager with wide point of view.

The divisional organization always gives priority to overall success compared to functional organizations that are easy to create a leader specializing in one function, and the head of the division is all departments such as development, production, sales and accounting.
Because you have to make a comprehensive judgment while watching, there is an advantage that it is easy for the general manager with an overall optimum viewpoint and the next managerial candidate to grow.

Clear whereabouts of responsibility.

In departmental organizations, authority is delegated to each business department, and business operations are conducted in a complete business.
Instead of being given great authority, the business manager will be responsible for profit as the head of the business, and the responsibility will be clear.

In addition, since the profit and loss statement is prepared for each division, profit responsibility is also clearly defined, and there is also the advantage that incentives for further improvement of operations are easy to work.
Also quick decision making is possible, so organizational response will be smooth.

Quick decision making and communication.

The demarcation by organization by function is that the decision-making and communication are slow because it is divided by function, but in a division-based organization, all the market research, sales, and accounting are performed within the division.
In addition, it has the advantage of being easy to understand the market and making quick and flexible decision making and communication.


Disdvantages of divisional structure


The division system has the disadvantage that resources such as commonly available personnel and parts, and functions such as the sales department and the factory will be duplicated.
For example, although there are businesses A and B, and there are sales organizations and factories that can be used in common, it is inefficient to use them separately and independently.

Division logic tends to be prioritized over the whole company logic.

In the organization according to function, while making one product with each whole function in accordance with the whole logic, in the division system, when authority is delegated to the division and the business operation complete with business is left, the division logic tends to take precedence over the whole logic.

Of course, it is convenient for people who work in the field to work in the field logic, but it is easy to proceed with the work, but if each business unit has different logic and work, as a whole, as a single company.
It has the disadvantage that it will be difficult to maintain the identity of

Difficult to create new services that cross business divisions

Divisional organization is independent of each divisional division, so it is difficult to deal with comprehensive products and services that fall in the gaps between divisions or across divisions, as well as new technologies.
Is a disadvantage.
As a countermeasure, each business department is made to respond uniquely, and it is possible to fill up gaps freely, to straddle freely, to cross over, to solve by internal competition etc. when duplication occurs, or to coordinate among business departments. Establishment of an organization, and reorganization of the division itself.


Related Terms

The matrix organization is an organizational structure that has the characteristics of both a divisional organization and a function-based organization. A matrix means a matrix in mathematics in which numbers and letters are arranged vertically and horizontally, and as shown in the figure above, it ...
Functional structure
Function structure is one of the structures of a management organization, and refers to an organization that is organized according to work content such as development, sales, production, personnel, and accounting, along with divisional organization and matrix organization. This is the basic organizational structure of ...
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Divisional structure

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