Divisional management structure: characteristics, disadvantages and advantages

The system of business management can be different. The most common and used is the divisional. Let's consider in more detail its main content, shortcomings and advantages.

Divisional management structure (from the division "division") implies the existence of such a system, in which there is a clear division of management by products and functions. The key figures in this case are the managers who lead the leading production units.

Divisional management structure begins to be formed when there is a sharp increase in the size of the enterprise, diversification of its activities (versatility), technological processes become more complicated in a situation when the external environment is very dynamically changing.

The fact is that adding new levels of hierarchy to it leads to the fact that the head of the company can not make tactical decisions in these areas of activity. The divisional management structure allows to delegate basic powers to managers who head these directions, providing limited independence. But the head of the company reserves its strategic development.

Therefore, thanks only to delegation of authority, the usual functional structure can be turned into a divisional one. The key figures are top managers, who head a number of production departments.

Structuring in accordance with the divisions should be made according to one of the selected criteria:

• By the nature of the products (services or products) the system becomes multi-divisional;
• By the presence of orientation to specific consumer groups, it turns into a consumer one;
• By features of served territories the structure differs regional specialization;
• On the availability of several sales outlets or large groups of consumers, it is market;
• By the type of products and regions of implementation, a global system is allocated.

Divisional management structure implies that most functions (accounting, financial management, planning, etc.) are transferred to production units. This will allow to fully or partially take responsibility for the development, production and marketing of products. This will release the company's top echelon in order to solve strategic tasks.

The disadvantages of the divisional structure are the following:

First, such management of small business is distinguished by the presence of a large number of "floors" in the vertical of the leadership.

Secondly, in this case, the staff structures of the offices are separated from the main divisions.

Thirdly, communications in the organization are vertical. Therefore, there are traditional shortcomings - paper red tape, congestion of some departments, the presence of poor interaction.

Fourth, there may be duplication of authority at different "levels".

Fifthly, the presence of high costs for the maintenance of managers.

Advantages of the division structure are the following:

First, it is able to provide management of a multi-profile enterprise, in which the total number of employees is large and which has geographically remote units.

Secondly, the structure can provide flexibility and quick response to the presence of changes in the immediate environment of the company.

Thirdly, due to the expansion of the boundaries of branches, they can become a "profit center", working actively to improve the quality of this production.

Fourthly, there is a close relationship between the consumer and production.

Therefore, at large enterprises, the divisional management structure is the most optimal option.