## Divisional Structure

A divisional structure is based on extensive delegation of authority, built on a division basis. Each division operates as a semi-independent unit.

### Four Ways to Organise Divisions

1. By geographic area

2. By product or service

3. By customer

4. By process

Functional activities are performed both centrally (at HQ) and within each division separately.

### Advantages

Advantage	Detail
Clear accountability	Division managers responsible for sales and profit; high morale
Career development	Creates growth paths for managers
Local control	Divisions can respond to local conditions
Competitive climate	Internal competition across divisions drives performance
Scalability	New businesses and products added easily

### Disadvantages

Disadvantage	Detail
Higher cost	Needs functional specialists both at divisions and HQ; elaborate control systems
Conflict	Divisional managers may favour their own divisions; inconsistent company-wide practices

Worked example

### Example 1

Exam application: A retail chain with stores in North, South, East, and West India organises each region as a separate division with its own marketing, operations, and HR teams, all reporting to corporate HQ. This is a geographic divisional structure — clear accountability per region, but higher costs due to duplicated functional roles.

⚠️ Common exam mistakes

Listing only product-based divisions — always mention all four types (geographic, product/service, customer, process).
Missing the 'higher cost' disadvantage — specifically, functional specialists needed at both divisional and HQ levels.
Not drawing the diagram if asked — the question explicitly asks for a diagram of divisional structure.

Reference:

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