What is meant by “Divisional Structure” of an organisation? For which type of business enterprise is this structure most suitable? State any four advantages of this form of organisational structure.

Divisional structure is an organisational structure comprising of separate business units or divisions.

It is suitable for those enterprises:

  1. Where two or more products are manufactured.
  2. When an organisation grows and diversifies.

Advantages of divisional structure:

  1. Product specialisation helps in the development of varied skills.
  2. It helps in the fixation of responsibility as divisional heads who are accountable for profits, revenues and costs related to their departments.
  3. It promotes flexibility, initiative and faster decision making as each division is an autonomous unit.
  4. It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.
  5. It reduces the problem of coordination between departments as all activities concerning a particular product line are integrated together.

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