The forefather of divisional structures is General Motors, although the first development of the concept and the beginning of the implementation of divisional management structures date back to the 20s, and the peak of their industrial use occurred in the 60s-70s.
The need for new approaches to organizing management was caused by a sharp increase in the size of enterprises, the diversification of their activities and the complication of technological processes in a dynamically changing external environment. The largest organizations were the first to begin restructuring the structure according to this model, which, within the framework of their giant enterprises (corporations), began to create production departments, giving them a certain independence in carrying out operational activities. At the same time, the administration reserved the right to strict control on general corporate issues of development strategy, research and development, investments, etc. Therefore, this type of structure is often characterized as a combination of centralized coordination with decentralized control (decentralization while maintaining coordination and control).
The key figures in the management of organizations with a divisional structure are not the heads of functional departments, but managers (managers) heading production departments.
The structuring of an organization into departments is usually carried out according to one of three criteria: by products produced or services provided (product specialization), by orientation towards the consumer (consumer specialization), by territories served (regional specialization). Organizing divisions along product lines (Figure 6) is one of the first forms of divisional structure, and today most of the largest consumer goods manufacturers with diversified products use a product organization structure.
Rice. 6.
When using a divisional-product management structure, departments are created for the main products. Management of the production and marketing of any product (service) is transferred to one person who is responsible for this type of product. The heads of support services report to him.
Some businesses produce a wide range of products or services that meet the needs of several large consumer groups or markets. Each group or market has clearly defined, or specific, needs. If two or more of these elements become particularly important to an enterprise, it may use a customer-oriented organizational structure in which all its departments are grouped around specific customer groups (Figure 7). This type of organizational structure is used in quite specific areas, for example in the field of education, where recently, along with traditional general education programs, special departments have emerged for adult education, advanced training, etc. An example of the active use of consumer-oriented organizational structure is commercial banks. The main groups of consumers using their services are individual clients (private individuals), pension funds, trust firms, and international financial organizations. Buyer-oriented organizational structures are equally characteristic of trading firms selling wholesale and retail.
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Rice. 7.
If the activities of the enterprise cover large geographical areas, especially on an international scale, then an organizational structure along a territorial principle may be appropriate, i.e. at the location of its divisions (Fig. 8). A regional structure makes it easier to resolve problems related to local laws, customs and consumer needs. This approach simplifies the connection between the enterprise and its customers, as well as communication between its divisions.
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Rice. 8.
A well-known example of regional organizational structures is the sales divisions of large enterprises. Among them you can often find units whose activities cover very large geographical areas, which, in turn, are divided into smaller units, divided into even smaller blocks.
This concept is widely used in the automotive industry. General Motors' automobile assembly divisions are scattered throughout the world. In recent years, Toyota, Daewoo, and Ford cars have been assembled in many Russian cities. VAZ also has assembly units in some regions of Russia.
Advantages and Disadvantages
Different types of divisional structure have the same goal - to ensure a more effective response of the enterprise to a particular environmental factor.
The product structure makes it easy to handle the development of new products based on competition, technology improvement, or customer needs. The regional structure allows for more effective consideration of local legislation, socio-economic systems and markets as market areas expand geographically. As for the consumer-oriented structure, it makes it possible to most effectively take into account the needs of those consumers on whom the enterprise most depends. Thus, the choice of divisional structure should be based on which of these factors is most important in terms of ensuring the implementation of the enterprise's strategic plans and achieving its goals.
The divisional structure significantly speeds up the enterprise's response to changes occurring in the external environment. As a result of expanding the boundaries of operational and economic independence, departments are considered as profit centers that actively use the freedom given to them to increase operational efficiency.
At the same time, divisional management structures have led to an increase in hierarchy, i.e. vertical management. They demanded the formation of intermediate levels of management to coordinate the work of departments, groups, etc. The duplication of management functions at different levels ultimately led to an increase in the costs of maintaining the management apparatus.
Divisional organizational structure(English) divisional structure) assumes fairly broad autonomy for some units, called divisions. A division may be engaged in the production of a certain type of product, work in a certain territory or in a special market.
Divisional structures- structures based on the allocation of large autonomous production and economic units (departments, divisions) and the corresponding levels of management, granting these units operational and production independence and transferring responsibility for making a profit to this level.
Divisional (departmental) management structures are the most advanced type of hierarchical type organizational structures.
Divisional structures are characterized full responsibility of department heads for the results of the activities of the departments they head. In this regard, the most important place in the management of companies with a divisional structure is occupied not by the heads of functional departments, but by the managers heading production departments.
The divisional management system is a consequence of the increasing complexity of organizations in terms of the product produced, consumer differentiation and geography of activity. This became the basis for the creation three main types of divisional management structures:grocery, consumer and regional . There is also mixed divisional management structure , which combines elements of three main types.
divisional-productive structures;
customer-oriented organizational structures;
divisional-regional structures.
With divisional product structure, the authority to manage the production and sales of any product or service is transferred to one manager, who is responsible for this type of product. Heads of functional services (production, procurement, technical, accounting, marketing, etc.) must report to the manager for this product.
Companies with this structure are able to respond more quickly to changes in competition, technology and customer demand. Activities for the production of a certain type of product are under the leadership of one person, coordination of work is improved.
A possible disadvantage of the product structure is an increase in costs due to duplication of the same types of work for different types of products. Each product department has its own functional divisions.
When creating customer-focused organizational structures, divisions are grouped around certain groups of consumers (for example, the army and civilian industries, products for industrial, technical and cultural purposes). The goal of such an organizational structure is to satisfy the needs of specific customers as well as a company that serves just one group of them does.
If the company's activities are spread over several regions, which require the use of different strategies, then it is advisable to form a divisional management structure on a territorial basis, i.e. apply a divisional-regional structure.
All activities of the company in a certain region in this case must be subordinate to the appropriate manager, who is responsible for it to the highest governing body of the company. The divisional-regional structure facilitates the solution of problems associated with local customs, peculiarities of legislation and the socio-economic environment of the region. Territorial division creates conditions for training management personnel of departments (divisions) directly on site.
The following are the most common types of international divisional structures:, which are based on a global approach:
1. Globally oriented product (commodity) structure(Worldwide Product Structure), based on a divisional structure with product divisions, each of which independently operates on the entire world market. This structure can be used by companies with highly diversified products, products that differ significantly in their production technology, marketing methods, sales channels, etc. It is used primarily by those companies for which the differences between the types of products they produce are more important than the differences between the geographic regions in which these products are sold. This type of structure contributes to the international orientation of the company, however, it is characterized (although like any other type of divisional structure) by weakening coordination between the individual divisions of the company; increased duplication of their activities.
2. Globally oriented regional structure(Worldwide Regional Structure), also based on a divisional structure, but using the geographical principle of construction. at the same time, the national market is often considered only as one of the regional divisions. It is most advisable to use this type of structure by companies for which regional differences are more important than differences in products. Often, globally oriented regional organizational structures are used in industries with technologically slowly changing products (automobiles, drinks, cosmetics, food, petroleum products). The advantages of such a structure include close relationships with geographic regions and high coordination of activities within them, while the disadvantages include weak coordination of the work of individual departments and duplication of their activities.
3. Mixed (hybrid) structure(Mixed Structure, Mixed Overlay), where, along with an emphasis on a specific product (geographical region, functions), structural connections of the territorial and functional (product and functional or territorial and product) type are built in. This type of structure arose due to the fact that each of the above structures can have strengths and weaknesses; there is not a single organizational structure that could be considered ideal. The organizational structure of management must correspond to the specific operating conditions of the company, and for large objects they are quite complex and varied and no single organizational structure in its pure form can be adequate to them. The mixed structure is currently very popular among American multinational corporations (especially those with highly diversified activities).
Summarizing the above, we can highlight the following advantages and disadvantages of divisional management structures:
Advantages:
The use of divisional structures allows a company to devote as much attention to a specific product, customer, or geographic region as a smaller specialized company, resulting in a faster response to change. occurring in the external environment, adapt to changing conditions;
this type of management structure focuses on achieving the final results of the company’s activities (production of specific types of products, meeting the needs of a specific consumer, saturation of a specific regional market with goods); reducing the management complexity faced by senior managers;
separation of operational management from strategic management, as a result of which the company's top management concentrates on strategic planning and management;
transfer of responsibility for profit to the division level, decentralization of operational management decisions; such a structure helps to bring management closer to market problems; improved communications;
development of breadth of thinking, flexibility of perception and entrepreneurship of heads of departments (divisions).
Flaws:
Divisional management structures have led to an increase in hierarchy, i.e. vertical management. They demanded the formation of intermediate levels of management to coordinate the work of departments, groups, etc.;
the opposition of the goals of the departments to the general goals of the company’s development, the discrepancy between the interests of the “tops” and the “bottoms” in the multi-level hierarchy;
the possibility of interdepartmental conflicts, in particular, in the event of a shortage of centrally distributed key resources; low coordination of the activities of departments (divisions), staff services are disunited, horizontal connections are weakened;
inefficient use of resources, inability to use them fully due to the assignment of resources to a specific department; an increase in the cost of maintaining the management apparatus due to duplication of the same functions in departments and a corresponding increase in the number of personnel;
difficulty in exercising control from top to bottom; multi-level hierarchy and within the departments (divisions) themselves, the effect in them of all the shortcomings of linear functional structures;
possible limitation of the professional development of department specialists, since their teams are not as large as in the case of using linear-functional structures at the company level.
It should be noted that the most effective use of divisional management structures is under the following conditions:
in large companies, when expanding production and business operations;
in companies with a wide range of products;
in companies with highly diversified production;
in companies in which production is weakly susceptible to fluctuations in market conditions and depends little on technological innovations;
with intensive penetration of companies into foreign markets, i.e. in companies operating on a wide international scale, simultaneously in several markets in countries with different socio-economic systems and legislation.
The divisional structure was first used in the management practice of General Motors (GMC) by Alfred Sloan; the first divisions appeared in 1928 - 1929. However, divisional organizational structures began to develop widely only in the 60s of the last century, when intense competition for consumers began and high adaptability of companies to changes in the competitive environment has become vital.
Examples of enterprises with a divisional organizational management structure
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"Divisional (divisional) organizational structures of enterprise management"
Page 17
06.11.2018 17:44 Angela What are the advantages and disadvantages of a divisional management structure? |
06.11.2018 19:56 Consultant Mikhail Zhemchugov, Ph.D. No organizational structure, by itself, has either advantages or disadvantages. Only the use of specific structures in specific enterprises has advantages and disadvantages. |
17.02.2019 13:10 Maxim Does it apply? Divisional organizational structure in the field of physical culture and sports? If so, where exactly? |
17.02.2019 23:54 Divisional structures can be widely used in the field of physical education and sports. These are organizations present in several regions - with divisions in different cities; organizations that work with different sports - having divisions with different sports; Divisions can also be organized according to other characteristics. |
03.05.2019 14:09 Taisiya Give more examples with a divisional management structure |
04.05.2019 11:35 Consultant Zhemchugov Mikhail, Ph.D. In a dynamic environment, most large enterprises that produce different types of products or have territorial divisions (product or territorial diversification) simply cannot be quickly managed from a single center. To ensure efficiency, they provide their main product and territorial divisions with a certain independence and responsibility for achieving socio-economic results - they tie the personal results of managers and staff to the results achieved by these divisions. You can find examples of such enterprises in a wide variety of fields. |
12.09.2019 5:49 NIC Please name Russian enterprises that use a divisional management structure. |
12.09.2019 10:03 Consultant Zhemchugov Mikhail, Ph.D. As noted in the article, the Russian Aluminum (Rusal) company has a divisional structure; we worked with this company; each of its divisions is registered as a legal entity. The Rublevsky company, with which we also worked, also has a divisional structure; its divisions are legal entities - these are several meat processing plants, trading houses and other structures. |
A divisional management structure is a set of independent divisions that are part of an organization, spatially separated from each other, having their own sphere of activity, independently solving current production and economic issues. The diagram of the divisional management structure is presented in Appendix No. 1.
With a territorial approach to building the structure of such an organization, each of its divisions specializes in producing a full range of products and services for the needs of a given region. This allows you to save money by concentrating commercial operations in one place, better take into account local conditions, and maintain personal contacts.
With a product approach to the formation of the structure of an organization, each of its divisions is focused on producing one type of product or service for all groups of consumers living in the territory where the company operates. Due to the specialization of production, it is possible to significantly increase its quality and efficiency, and orient it to the real needs of the market.
The market approach to the formation of an organizational structure is that each division produces products or provides services, focusing on a certain group of buyers, which together form the market.
Finally, the innovative approach involves the creation within the organization of special centers involved in the development, development and deployment of production of new types of products and services. It turns out that while some divisions are producing products that are currently in demand, others are already preparing replacements for them. This provides the organization with additional competitiveness and sustainability.
Thus, the scope of application of the divisional management structure: James L. Gibson, D. Ivantsevich, James H. Donnelly - Jr. "Organizations: behavior, structure, processes." - M.: Infra - M, 2000. S. 263
· diversified enterprises;
· enterprises located in different regions;
· enterprises carrying out complex innovative processes.
· the divisions that form the divisional structure are united among themselves, as well as with a common center through production, financial and administrative connections.
Production connections can be both technological and product. Technological ones are based on the fact that each department performs only individual operations in the production chain of the final product. Their activities are not embodied in a finished product that has independent meaning. Product ties imply that there is an exchange of finished products that are intended for use not only within the organization, but also externally.
Within the framework of administrative relations, the management of the organization communicates to the divisions binding decisions aimed at achieving specific results, sets goals and basic standards for their activities, and monitors their implementation.
Financial ties are realized either through the formation within the organization and subsequent redistribution between its divisions of a centralized fund of funds, or through financial control over their activities. The latter monitors the correctness of spending money, the timeliness of their receipt, etc.
Specific management tasks under a divisional management structure: James L. Gibson, D. Ivantsevich, James H. Donnelly - Jr. "Organizations: behavior, structure, processes." - M.: Infra - M, 2000, p. 268
· justification of criteria, identification of projects and product groups;
· careful selection of department heads;
· ensuring a unified innovation policy in all product groups;
· prevention within a brand concept between product groups;
· prevention of autonomous separatist development of product groups;
· priority of line managers over specialists.
Large modern organizations with a divisional structure exist, as a rule, in the form of joint-stock companies and their associations.
The advantages and disadvantages of the divisional management structure are indicated in Appendix No. 1.
However, sometimes divisional structures are not flexible enough in the extremely complex and dynamic environment that high-tech companies face. Lafta J.K. Efficiency of organization management./Tutorial - M. Russian business literature, 1999. P. 209
The change in the operating conditions of firms entailed a transition to more flexible organizational structures - matrix and project models. But from the fact that the matrix structure is the most modern of the types of organizational structures considered, it does not at all follow that the functional and divisional structures are dying out.
So it is clear that there is no best structure for all companies. Moreover, during the life of one company, it may be necessary to change the form of the organizational structure several times, bringing it into line with the new goals and operating conditions of the organization. It can be argued that for every company at every stage of its development there is an effective structure in which the goals of the company are achieved in an optimal way.
Currently, there are three characteristics of an effective organizational management structure: “Management of the organization.” Edited by Z.P. Rumyantseva and N.A. Solomatina. - M.: Infra - M, 1995. P. 375
· the structure corresponds to the organization's strategy.
· the structure corresponds to the operating environment of the organization.
· absence of contradictions in the organizational structure.
In order to bring the organizational structure into line with the organization's development strategy, it is necessary, first of all, to clearly define the main activities and key links in the value chain, which are of fundamental importance for the successful implementation of the strategy. These are the links that should be the main elements of the organizational structure.
For each individual company, the set of key activities will be different. To identify them, it is necessary to determine those types of activities that must be performed especially efficiently and in a timely manner in order to achieve the company’s strategic goal, as well as to determine which types of activities, poor performance, pose a threat to the company’s existing and potential competitive advantage. These types of activities should have been key.
However, it should be noted that the set of key activities changes with changes in the company's strategy. Naturally, it is necessary to reconsider the organizational structure of management. Otherwise, it will hinder the development of the company.
Next, you need to determine whether non-core activities can be carried out outside the company more successfully and efficiently than by the company itself. The outsourcing strategy is now very popular in the West. Outsourcing involves subcontracting to small and medium-sized firms that are highly productive and efficient. In Russia, the dominant opinion is that by transferring certain types of activities to third parties, the company loses control over them, which undermines the stability of the company.
To a certain extent, this position is justified, given the low supply discipline existing in Russia. However, the potential of outsourcing in the field of cost reduction is not used, and the company's resources and attention are diverted to activities that do not affect the formation of its competitive advantage. Thus, it is advisable to outsource activities that they can perform cheaper, faster and with better quality.
Typically, a firm's achievement of competitive advantage cannot be achieved through the best execution of each of the strategic activities separately. Long-term success is ensured through the coordinated implementation of strategic activities supported by supporting and supporting units.
Thus, a management structure will be consistent with strategy if it provides good coordination of related activities. Moreover, they can be connected in different ways. For example, the sequence of operations of the technological process, the same clientele or the use of common product distribution channels, similarity of technology and personnel skills. Naturally, all aspects of strategically significant activities should be accountable to one leader. However, there are situations in which the subordination of related activities to one person is inappropriate.
This is due, first of all, to the fact that there are objective limits to expanding the sphere of responsibility of a manager without losing the controllability of the system. That is, it is necessary to find the optimal controllability rate, which in turn depends on a number of factors. This includes the importance of the work performed: the more responsible the employee’s work, the more attention his activities deserve. Therefore, fewer people are directly subordinate to the company president than lower-level managers who make less responsible decisions.
When determining the standard of control, it is also necessary to take into account the level of standardization of work processes: the more an organization relies on the standardization of work processes, the higher the standard of control can be. This is due to the reduced need for direct control by the manager. As an example, we can take organizational units in enterprises of mass machine production, where the labor of low-skilled workers is used and there are from 50 to 90 workers per foreman. Lafta J.K. Efficiency of organization management./Tutorial - M. Russian business literature, 1999. P. 98
This leads to the next factor - the level of professional training of the employee. The more trained the employees, the less attention they require from the manager and the greater the controllability rate can be.
Often, to coordinate management tasks at an enterprise, a mechanism of mutual agreements is used. Peer negotiation processes are effective in small groups. Researchers note that already in the case of 10 people, fragmentation into fractions occurs. Therefore, 5 - 7 people are considered the optimal number for reaching consensus. Reiss M. “Optimal complexity of management structures” // Problems of management theory and practice. - 2001. - No. 5. P. 61
The personal abilities of the leader and his desire for power also influence the standard of controllability. For example, a “natural” leader may significantly exceed the recommended values developed for managers with average abilities.
Any organizational structure must have clear connections between units of strategically significant activities, as well as ensure the necessary coordination. The next step is to determine the amount of authority that is necessary to lead each department. At the same time, it is desirable to ensure an effective balance between the advantages of centralization and decentralization.
There are situations when it is not possible to subordinate related activities to one manager. Hence, divisions become isolated from each other, which is greatly facilitated by differences in goals and styles of interpersonal interactions. To resolve these problems, companies are building in special interaction tools. These may be direct contacts between managers, connecting departments, special groups and teams, intermediary managers.
A bridging job position is introduced into the organizational structure when there is a need to coordinate the activities of two or more departments, bypassing vertical channels of subordination. It should be noted here that this position does not have formal authority in relation to the connected units, but it has the information necessary for these units, which provides the “connector” with great influence in this area of interaction.
A special group is created to solve a specific problem and is disbanded after completing the task. Group members meet regularly to discuss common issues throughout the period from development to launch of new products into mass production. Another method of coordination is the standing committee, which is an interdepartmental group whose members meet on a regular basis to discuss issues of common interest.
An integrator manager is a connecting position with official authority over certain aspects of the activities of coordinated units. Seven notes of management. M. ZAO "Journal Expert". 1997. C 37
These powers may include the right to sanction decisions or the right to participate in the process of their preparation, as well as control over the process of implementing decisions. If the integrator manager has the right to manage financial resources, then his role increases significantly. However, in any case, the integrator manager is not vested with direct power over the employees of the coordinated units, which remains with the heads of the units. Examples of integrative managers are the brand manager and project director in companies organized along functional lines.
The divisional management structure is a structure that is based on the allocation of large autonomous production and economic units, as well as the levels of management that correspond to them, providing such units with complete independence in conducting operations. In addition, departments are transferred to this level of responsibility in order to increase profits.
Features of the structure
Today, the divisional management structure is considered the most advanced type of modern organizational structures that pursue a hierarchical system of work. Such structures are characterized by the fact that managers are fully responsible for the results of the activities of the units they head. In this regard, the most important place in a company that uses a divisional management structure is occupied not by the person who manages the functional unit, but by those people who supervise the production departments.
What types are there?
The structuring of the company into separate divisions is carried out according to one of three main principles. In particular, according to the product principle, it is carried out taking into account the characteristics of the manufactured products or services, depending on the orientation towards a particular consumer, as well as according to the regional principle, depending on which territory the given company serves.
In this regard, there are three main types into which the divisional management structure is divided:
- Divisional-productive.
- Organizational.
- Divisional-regional.
Divisional-productive
This divisional structure of enterprise management provides for the transfer of all the powers of specialists associated with the management of the production and marketing of certain commercial products or services to one person, who becomes responsible for the entire product line. All other heads of functional services, in turn, will provide detailed reporting to the manager on this product.
Companies that use such a structure will be able to respond more quickly to any adjustments in competitive conditions, as well as the introduction of new technologies and changes in customer demand. The production of a particular product is supervised by one person, which ensures improved coordination of the work of all employees.
A possible disadvantage of this structure is that there are more costs involved since the same types of work are used for different types of products. Each individual product department has its own functional divisions.
Organizational
The divisional organizational management structure, which is focused directly on the client, provides for the grouping of divisions around certain groups of clients. The goal of this structure is to fully satisfy the needs of specific consumers as perfectly as a company that serves only one group of people does.
Thus, the divisional organizational management structure provides for maximum efficiency and an individual approach to each individual client in order to achieve the highest possible results and develop the company’s profitability.
Divisional-regional
If the company's activities extend to several regions, but in each of them it is necessary to use an individual strategy, then in this case it is best to use a divisional structure, which is based on the territorial principle.
When such a divisional management structure of an organization is used, all employees in a certain region report to one manager, who, in turn, is directly responsible to the top management of the company. This structure makes it possible to significantly simplify the solution of various problems that may be associated with local customs, peculiarities of the current legislation and, of course, the socio-economic environment. The territorial division also makes it possible to train the management personnel of the departments directly at the place of work.
Specific structures
There are several specific technologies that are actively used by companies in the current market, and each individual divisional management structure differs in its advantages and disadvantages. You will see an example of such structures below; it is recommended that you familiarize yourself with all of them and choose the most optimal one for yourself in accordance with the needs and characteristics of the company.
Globally oriented product structure
This structure is based on a divisional structure in which divisions are distributed by product, and each of them separately operates in the entire world market. The use of such a structure is quite common among companies with highly diversified products, that is, those products that differ significantly from each other in the production technology used, marketing technologies, as well as sales channels and a number of other characteristics.
First of all, such a divisional-functional management structure is used in those companies for which the differences between several manufactured products are more important than the differences between the various territories in which these products are sold. This type of structure ensures a more effective international orientation of the company, but at the same time it is characterized by lower coordination between individual divisions, as well as increased duplication of their activities. Thus, there are advantages and disadvantages of a divisional management structure, so its use may not be possible in all situations.
Globally oriented regional structure
In this case, the divisional structure is also used as a basis, but at the same time the geographical principle of construction is present. It is worth noting that in this case the national market is considered by management as one of the regional divisions. The most relevant is the use of this format of structures by those companies for which regional differences between clients are more important than differences in manufactured products. In the vast majority of cases, the use of such systems is found in areas in which products are technologically changing slowly, such as automotive production, petroleum products and many others.
The advantages of such a system include the fact that there is the closest possible relationship between several geographical regions, and the highest possible coordination of activities within them is achieved. The disadvantages are rather weak coordination of the work of individual departments, as well as duplication of work.
Mixed structure
In such a system, in parallel with the emphasis on a specific product, connections of functional and territorial types are also added. This format of structures appeared due to the fact that each individual of the above structures has both its own advantages and disadvantages, which significantly limited the possibilities of their application, and there is no such divisional type of management structure that could be called ideal. The organizational structure must be built in full accordance with the specific operating conditions of the company. Such conditions for fairly large objects are quite complex and varied. They cannot be matched by any organizational structure made in its original form.
Recently, the use of a mixed system has become quite common in various companies operating in the United States.
What are the advantages and disadvantages of all such systems?
Taking into account all the information presented above, we can highlight the following disadvantages and advantages of a divisional management structure.
Advantages
- The use of divisional structures allows a company to devote the same amount of attention to a specific product, customer, or geographic region as a specialized company that operates only in a specific area. Thus, the fastest possible response to any changes that arise in the external environment is achieved, and extremely rapid adaptation to changes in certain conditions is ensured.
- This format of the management structure provides an opportunity to focus on achieving the final results of the company’s activities, including the production of specific types of products, meeting the needs of a specific consumer, as well as saturation of a certain regional market with goods. Among other things, this structure simplifies management, making it much easier for senior managers to work.
- Operational management is completely separated from strategic management, as a result of which representatives of the company's senior management begin to concentrate on management and strategic planning.
- Responsibility for profit is transferred entirely to the level of individual divisions, and decentralization of any management decisions that require urgency is ensured. In this way, management begins to become more attuned to market issues, and communication also improves significantly.
- The breadth of thinking is significantly developing, as well as the flexibility of perception and entrepreneurship on the part of the leaders of each department.
Flaws
- The linear-divisional management structure significantly increased the growth of hierarchy. In other words, there was a requirement for the formation of intermediate levels of management in order to coordinate the work of individual groups of employees.
- The goals of each specific department can be opposed to the general goals of the company’s development, that is, when the interests of the top and bottom managers in the hierarchy begin to diverge.
- Various conflicts between departments may appear in the process of work, for example, when there is a shortage of key resources that are distributed centrally. In addition, there is also not the highest coordination of the activities of departments, disunity of headquarters services and, accordingly, a weakening of horizontal ties.
- In most cases, there is far from the most efficient use of resources, but at the same time there is absolutely no opportunity to use them fully, since the resources are completely assigned to a specific department. At the same time, the amount of expenses for maintaining the management apparatus also increases, because the same functions are duplicated in departments, and, consequently, the number of personnel also increases.
- It is far from easy to control the entire process from top to bottom, since a multi-level hierarchy is used within the boundaries of the departments themselves. In addition, they may exhibit all the shortcomings that linear, functional, matrix, and divisional management structures have.
- There may be limitations in professional development on the part of department specialists, because their teams are not as large as is observed in the case of using a linear-functional structure at the level of various companies.
What to choose?
The most developed divisional management structures today include those systems that are based on the use of strategic business units. The use of such a structure is often found in companies that have a large number of independent divisions that are quite close to each other in terms of their activity profile. In this case, in order to coordinate them with each other, specialized intermediate management bodies are used, which are located between top management and departments.