The disadvantage includes higher costs associated with maintenance of such structures. 5 Advantages and Disadvantages of the Matrix Organizational Structure November 23, 2020 When a business initiates a project, it can be crucial to have an organizational structure in place to define all the aspects of the project. One person, alone, can start and run a small business, but when two or more people come together to accomplish a business goal, an organization is formed. The divisional organizational structure is characterized by centralized decision-making and decentralized management. An organizational structure wherein the organizational functions are classified into divisions as per product or service lines, a market is called Divisional Structure. He has written hundreds of articles for newspapers and the Internet on a variety of topics, including several on golf for GolfLink.com. Functional Structure is one in which the reporting relationships of the organization are bifurcated according to their functional area. Functional Organization : All of the companies define its organizational structure to determine the reporting relationships that will exist in the company. Hybrid Organisational Structure: Exhibit 10.9 (a) illustrates the hybrid organisational structure. The divisional structure is a type of organizational structure that groups each organizational function into a division. The divisional structure can be useful because it affords the company greater operational flexibility. After providing a brief introduction into the discipline, it identifies and discusses eight major characteristics of matrix organizations. 1 Every organization must choose an overall structure that meets its needs best and allows interactions among individuals and departments to attain the its goals. For example, the person heading the IT department will have the education and skill necessary to shoulder this responsibility and successfully run his team. Chron.com, 03 June 2010. 3. 2. Disadvantages Committee Organization Structure :- • It Is An … Companies need to employ more managers and employees when using this type of organizational structure. They may also place multiple demands on people, thereby creating stress. Advantages Committee Organization Structure :- • Pools up the organisational resources in terms of knowledge skills and experience • Coordinating plans as well as in facilitating their execution. Consequently, labour expenses can be higher. It is a type of organizational structure that groups each organizational function into a division. Divisional structures developed from the traditional functional structure, which features departments built on related work tasks, such as marketing. You can change your ad preferences anytime. It is a combination of the functional and divisional structures. Advantages of the divisional approach are: - 1. Often, organizations will divide the company into various product departments; however, since my company was in … It simply states who works for who. Also learn about its advantages and disadvantages! An organization is the result of the organizing process and can be defined as a structured grouping of people working together to achieve organizational objectives. Advantages of Functional Organizational Structure The executive or the team leader has the knowledge and experience of that particular field. DISADVANTAGE OF DIVISIONAL STRUCTURE Each … Companies are divided into departments of specialization, and then within those units, they are separated further into projects and products. In other words, it combines decentralized management with independent accounting and allocates responsibility and authority to each division to a maximum degree, thus enabling the top leaders to get rid of daily production operations to become a truly powerful decision-making body. Hole Inc. is an ideal case of this. Two common organizational structures are multi-divisional and matrix. Each division gets adequate freedom. ADVERTISEMENTS: Organizational Structure: Functional Structure and Divisional Structure ! Different organizational structures that combine to form Starbuck’s matrix structure are divisional structure, functional structure, and team-based structure. Advantages of the Divisional Organization Structure. Functional expertise and efficiency. While Gap is the organization, there are three unique retailers underneath the heading: Gap, Old Navy, and Banana Republic. Matrix Organizational Structure. Generally speaking, divisions work best for companies with wide variance in product offerings or regions of geographic operation. Generally speaking, divisions work best for companies with wide variance in product offerings or regions of geographic operation. Divisional Structure Functional Structure: This is the simplest & the most prevalent form of organizational structure. Adaptability and flexibility in divisions. Advantages: 1. The primary reason for the firm’s success is its structure. Functional Organizational Structure In a functional organization structure, the project manager and all the resources work in the same company division, such as the sales and marketing department. Advantages of divisional organizational structure Easy to grow General manager with wide point of view. Each organizational structure comes with different advantages and disadvantages and may only work for companies or organizations in certain situations or at certain points in their life cycles. Additionally, companies use more financial resources for distribution, printing and other expenditures when employing a multi-divisional structure. Advantages and Disadvantages of Functional Organizational Structure In this type of organization, the emphasis is on managing some functions wherever the function may be performed in the enterprise. Disadvantages: 1. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. The matrix structure followed by Starbucks coffee is one of the best organizational structure examples. Flexibility. Let's take a look at the advantages and disadvantages of each so you know what you're up against when you join a new structure. The matrix structure can get a bit confusing. By pulling resources from these departments to devote to a specific product, location or customer, the divisional organizational structure gains some advantages the functional structure lacks. Organizations choose their organizational structure based on many factors like: size, its geographic location, the manner of delivering different products and services that they will offer. Some of the advantages and disadvantages of a Divisional organizational structure are as follows. ...Advantages & Disadvantages of Divisional Organizational Structure X Chris Joseph is a freelance writer residing in Pennsylvania. Expansion and growth. The advantages of divisional structure include flexibility in terms of usage of product structure, geographical structure and market structure depending upon the need of the organization. Your business and its needs also impact whether one type of organizational structure is better suited for your business than the other, or whether you should consider a different organizational structure for your company. The major disadvantage of using charts and graphs is that these aids may oversimplify data, which can provide a misleading view of the data. The structures may promote allegiance to department rather than organization objectives. Functional Structure The department which is effective in making earnings while bearing losses can be readily seen. As with all organizational structure types, the divisional structure offers distinct advantages and disadvantages. A divisional organizational structure breaks the company down into units that are self-contained and generally independent from one another. The advantages are: Accountability. Alignment of corporate and divisional goals. Advantages & disadvantages of divisional organizational structure Chris Joseph - Updated February 06, 2018 Large companies that serve a varied customer base or operate in a number of geographic regions may choose to operate with a divisional structure. The key difference between functional and divisional structure is that functional structure is an organizational structure in which the organization is divided into smaller groups based on specialized functional areas such as production, ... “Advantages & Disadvantages of Divisional Organizational Structure.” Chron.com. More advantages and disadvantages of divisional structures, as well as its contingencies, are cited below. Each has its inherent advantages and disadvantages. Pros or advantages of divisional structure: Each division can work as an independent unit. Advantages of a Divisional Structure. Advantages, Disadvantages, and Contingencies of Divisional Structures Advantages Potential advantages of divisional structures: More flexibility in responding to environmental changes Improved coordination across functional areas Clear points of responsibility Expertise focused on specific customers, products, and regions Greater ease in restructuring 7. The main difference between functional and divisional structure is that in functional organization is described as an organizational structure wherein, the employees are classified on the basis of their area of specialization. As with all organizational structure types, the divisional structure offers distinct advantages and disadvantages. What are the disadvantages of using a chart? The divisional structure alludes to organizations that structure initiative as per diverse items or tasks. There are three main types of organizational structure: functional structure, divisional structure and a blend of the two, called matrix structure. The key points in favor of the divisional structure involve placing decision making as close to the customer as possible. The article is a review of the literature on the key advantages and disadvantages of matrix organizational structures. The organizational structure can be classified under following two types: ADVERTISEMENTS: 1. Divisional Structure. This approach makes it much easier to assign responsibility for actions and results. Functional Structure 2. Functional Vs. Divisional Organizational Structure. ADVANTAGE OF DIVISIONAL STRUCTURE Product specialisation. Also, you can check out the advantages and disadvantages of organizational structure to know more about it. There’s the more traditional functional structure, the divisional structure, the matrix structure and the flatarchy structure. Fast Decisional Making. An organizational structure, so designed that it is bifurcated into semi-autonomous divisions on the basis of product, service, market etc, is known as divisional structure. The advantages of divisional structure in organizations are specialization and efficiency. Divisions facilitate quick responses to external changes like natural disasters, financial crises or weather changes. Multi-divisional structures can be costly. Exhibit 10.9 (b) illustrates a combination structure. 7. 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