What is meant by ‘Divisional Structure’ of an organisation? State any two advantages.

Divisional structure refers to an organisational design which consists of separate business units or divisions. All the divisions have to report to a Divisional Head. Manpower is generally grouped on the basis of different products manufactured.

Advantages of Divisional Structure:

(i) Product Specialisation: Divisional structure leads to product specialisations as the Divisional head is able to gain experience in all the functions related to a particular product. This helps in preparing the divisional heads for higher position.

(ii) Greater Accountability: Divisional heads can be held accountable for the profits as the revenues and costs related to different departments can be easily identified and assigned to them. This provides a proper basis for performance measurement.

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