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Paper Topic:

Organizational Structure - Divisional Structure

Divisional structure splits employees into self-contained strategic business units (SBUs , with each operating as a profit center . Each of these self-contained divisions adopts either a functional or matrix structure . The top management or corporate headquarters coordinates the activities with and provides support services to each division . The employees are grouped either by product , market , or geographic location or region (Allen , 1998 Price , 2007 Baron and Greenberg , 1990

While a functional structure focuses on meeting the functional goals (i .e , marketing , finance , etc , a divisional structure focuses on achieving divisional goals . This structure

allows the company to quickly respond to the changes in the external conditions . Shifts in competition and customer needs can be easily identified as each division specializes in a specific product or service , market , or geographical location . In addition , it also encourages employees to work together as a team and promotes healthy competition among the divisions , the results of which could contribute to the overall effectiveness of the organization . The manageable size of each division makes coordination faster and easier (Baron and Greenberg , 1990 . However , duplication of functional departments within each division could result to loss of economies of scale . This is in contrast to the functional structure that promotes economies of scale as employees performing the same function work together and share resources . In contrast to the functional and divisional structure , the matrix structure , due to its cross-functional nature , allows the company to achieve economies of scale while rapidly responding to changes in the environment (Gordon , 1996 cited in Periasamy et al , 2002 . In addition , in a divisional structure problems with coordination across the different divisions may arise just as how a company employing a functional structure may develop inter-functional conflict (Baron and Greenberg , 1990


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, et al (2002 . Organizational structure for electronic commerce : a qualitative

study . Retrieved October 3 , 2007 from

http /msxml .infospace .com /_1_UR9U9B03RWSPHF__uk .inc .net2uk /clickit /sear ch ?r_aid 493BB786F226426DA47605B346D7ECE0 r_sacop 19 r_scoid 239170 r_sp f 0 r_cop Title r_snpp 19 r_spp 0 qqn SX1P4 40ug r_coid 239137 rawto htt br

/is2 .lse .ac .uk /asp /aspecis .pdf

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