What is an example of divisional structure?
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Take Career Match Quiz Pass Quiz for Free What Is Divisional Organizational Structure?Organizational structure describes how activities within a company or business are delegated, and how different roles, responsibilities and authority are managed by the organization to best serve the needs of the business. The more efficient and suitable the organizational structure is for the business, the better it can operate. There are several different ways in which an organization can be structured, each with its advantages and disadvantages.
Divisional organizational structure is the name given to the way a business separates its activities. Often operating in parallel, each division has complete control of the business functions from sales and marketing, research, engineering, HR and accounting. Decision-making at the divisional level means that quick reactions to local conditions protect the business as a whole, and a transparent accounting process and responsibility for the division helps the parent organization to see where performance is exceptional – and where it is not. How Does a Divisional Organizational Structure Work?Businesses that choose a divisional operational structure tend to have one or more similar characteristics, including:
The way a business chooses to divide its activities usually falls under one of three boundaries: ProductLarger companies and global conglomerates can offer a wide range of products but, more importantly, they can also offer a differing type of product. This might include companies like Hershey’s, who are known for their chocolate bars but also sell popcorn and low-calorie snacks. Kit Kat and Reece’s are two more examples. Division on product type means that the research and development, production, sales and every other aspect of the business are focused on the specific type of product. CustomerFor businesses that operate in both the business-to-business and business-to-customer market, divisions based on customer needs is a good way to ensure that each customer gets the service and/or products that they need in the right way. Customer divisions can also be based on specific demographics, with different business areas for the teen market or the over-50s, for example. GeographicalFor global businesses, a division based on geography often makes the most sense, as different countries or continents will have specific market needs that must be met. Many large businesses operate a US division, a European division, and an Asia-Pacific, Africa and Middle East division – making use of the different consumer bases and best business practices. In many cases, divisions are combined across products and locations, or customers and locations. Divisional Organizational Structure: Everything You Need to KnowExamples of a Divisional StructureMcDonald’s CorporationAs one of the best-known companies in the world, McDonald’s is a geographically widespread business that has developed from a geographical divisional structure to a more performance-based structure. McDonald’s used to have three separate divisions: US; Europe; and Asia-Pacific, Middle East and Africa, but since 2015 the divisions are:
McDonald’s also has a global hierarchy with corporate control, which sends directives and mandates to middle managers and into both company-owned restaurants and franchises around the world. Part of the business is a function-based organization, which covers much of the corporate core business like HR and the supply chain. PepsiCoPepsiCo is a good example of divisional organizational structure based on both product and geography. PepsiCo operates as a parent company for several other brands, which makes it a great candidate for a successful divisional organizational structure. As with many corporations of this size, there is a global hierarchy for top-down communications, monitoring and control. The main business areas of PepsiCo are market divided:
Again, corporate organization is functional – with divisions for HR, Talent Management, Legal and Operations. BRITAThe well-known water brand is based in Germany but has divisions organized by both geography and product. From their headquarters in Oxfordshire, BRITA UK has complete control of every aspect of the business in their geographical area. Marketing, communications, finance, HR, talent management and even production take place almost completely independently from the global business – with the same shared goals and visions. BRITA UK has many of the same products as other locations, especially in Europe, but the way they are marketed, how they are packaged and priced, and the manufacturing processes are all managed in the division, along with the financial and accounting processes to make it happen. In short, this divisional organizational structure operates under a global hierarchy but is almost completely independent in day-to-day operations. Advantages of Divisional Organizational Structure
Disadvantages of Divisional Organizational Structure
Where Does a Divisional Organizational Structure Work?Divisional organizational structures work best in larger corporations that operate on a global scale. These are large enough in terms of employees and products to absorb the costs of setting up divisions. This type of organizational structure also suits a parent company that acts as an umbrella for smaller businesses and allows each business to operate independently but still under the auspices of the parent company – like PepsiCo and their different businesses. This structure works best when divisions can communicate with each other, understand their position in the global organization, and have equal access to funding, research and other resources. Final ThoughtsDivisional organizational structures can cause morale problems and a silo mentality if not managed correctly. However, with the right senior managers, executives and overarching company vision in place, these issues can be avoided. This type of structure works best for large organizations with multiple areas of focus, including geography, product or market. It can be an efficient way for the global team to monitor performance at every level. What company has a divisional structure?Divisional structure
Examples of companies applying a divisional structure are McDonald's Corporation and Disney. These brands can't help but split the entire organization by location to be able to adjust their strategies for audiences representing different markets.
What is divisional structure of organization?Divisional organisation structure in which various departments are created on the basis of products, territory or region, is called a divisional structure. Each unit has a divisional manager, who is responsible for performance and has authority over their division.
What are the three types of divisional structures?Example of the Divisional Organization Structure. Commercial division. Focuses on all commercial customers, and has its own product development, production, accounting, and sales employees.. Retail division. ... . International division.. What are the different types of divisional structures?Types of organizational structures. Hierarchical org structure.. Functional org structure.. Horizontal or flat org structure.. Divisional org structures (market-based, product-based, geographic). Matrix org structure.. Team-based org structure.. Network org structure.. |