Question

State any three limitations of divisional structure of an organisation.

State any two disadvantages of divisional structure

Discuss the disadvantages of Divisional Structure.

State any three disadvantages of divisional structure of organization.

Answer 1

Limitations of divisional structure:

1. Departmental Conflicts: With simultaneous functioning of multiple departments, it may happen that a conflict arises between departments with regard to decisions such as allocation of funds and resources. For example, a conflict may arise with regard to the division of workforce among departments
2. Increase in Cost: As each division functions separately, several activities which are common to the organisation are performed for each division separately. In other words, there is the duplication of activities. This leads to an increase in the overall cost for the organisation
3. Ignorance of Overall Objectives: It may happen that in achieving the divisional goals, the overall organisational goals take a backseat. In other words, while focusing on divisional objectives, divisional managers ignore the overall organisational objectives.

Answer 2

The disadvantages of divisional structure are as follows:

1. Duplication: Every section handles its own marketing, production, and other tasks. Duplication of effort like this raises expenses.
2. Conflicts: Divisions may clash on how to divide up the money. At the expense of other divisions, a certain division may aim to optimise its own profits.
3. Misuse of autonomy: Every division chief is in charge of all division-related operations. He might rise to prominence and try to establish his independence at the expense of the organization's interests.

Answer 3

1. Ignore Organisational Interest: Money has control over a division; in order to demonstrate his independence, he may ignore organisational interests.
2. Conflict: Conflicts may emerge among departments over resource allocation.
3. Higher Costs: Maintaining many divisions raises administrative and operational costs by duplicating tasks and giving each division its own set of identical functions.