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McDonald’s Corporation is one of the most popular fast-food chains in the world. But did you know that McDonald’s is primarily a meat-based restaurant? But why is it that we have the famous McAloo Tikki burger on Indian menus? The enterprise launched the new vegetarian-friendly burger because it wanted to tap into the Indian market. Clever, isn’t it?
Large enterprises such as McDonald’s customize their products and services on the basis of geographical location and local demands. It’s possible because McDonald’s has a divisional structure and every individual unit has the autonomy to make decisions based on geographical needs. Want to understand how a divisional structure functions? Read on!
What Is A Divisional Organizational Structure?
Organizations, whether big or small, need to organize their functions to grow and be profitable. Planning a structure helps employees drive business goals with greater efficiency because everyone has a job description that clearly outlines their duties. Furthermore, the flow of information is essential for an organization’s success. A structure helps establish clear communication lines and improve teamwork and efficiency.
The divisional structure of an organization represents one of the ways to organize various responsibilities. It creates several divisions or departments and groups of people on the basis of products or services, customers and/or geography. Each unit enjoys some degree of autonomy, with individual function units such as marketing, operations and human resources. A divisional structure is best suitable for chain stores and subsidiaries within and beyond the country.
Making Decisions In A Divisional Structure?
A divisional structure establishes clear patterns of accountability as it decentralizes decision-making. In other words, it enables the delegation of power between the parent organization (e.g., the headquarters) and its branches. It solves the problems of a centralized hierarchical organization.
Every division has the autonomy to make decisions, formulate strategies, adjust operations and customize product or service specifications; they respond to the needs and demands of the markets in their area of jurisdiction. This is especially important for unpredictable and dynamic market conditions.
Divisional structures are simple, which is why it’s easier to make financial projections (for example, risk assessment). It helps you analyze data and make decisions more efficiently.
Work Environment And Culture In A Divisional Structure
A divisional organizational structure clearly outlines the departments and their corresponding responsibilities. There is no room for ambiguity and chaos. Better communication gives way to a collaborative working environment, encouraging employees to different fields of specialization to exchange ideas and improve individual skills. It even increases the overall productivity and performance of an organization.
As a divisional structure allows for national and international subsidiaries, it exposes individuals to multiple cultures. Cultural considerations help to expand your outlook and look at problems from a different angle. Therefore, problem-solving and decision-making are much more efficient as you consider multiple viewpoints. You get the opportunity to learn, network and step outside your comfort zone.
The Two Sides Of Divisional Organizational Structure
While individuals enjoy the benefits of a divisional organization, there are several disadvantages that come along with it. Let’s explore the pros and cons of this organizational structure in detail.
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How It’s Helpful
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Accountability
As the responsibilities are split up among different divisions, you can easily differentiate the team performing well from the ones that are not. Loss-bearing divisions can either be shut down or trained to perform better. Every individual and department is responsible for their own actions.
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Competitive Edge
Divisional structures are ideal for competitive markets where you find several organizations offering similar products and services. Local managers and team leaders can efficiently carry out daily operations as they have decision-making powers. Moreover, an organization can simultaneously offer multiple products and services.
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Teamwork
People are split up according to their fields of specialization, which enables quick communication and better productivity. Team members can encourage and learn from each other by sharing their thoughts and opinions. Working toward common objectives prompts collaboration.
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What Can Go Wrong
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Unhealthy Competition
Specialized divisions are both a boon and a bane. While employees drive their team’s goals, they often feel the need to perform better than other teams. Department heads get absorbed in their division’s performance as teams work in silos. This affects the overall performance of an organization.
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Minimal Communication
Divisional structures encourage intrateam communication. However, communication outside the team is minimal, leading to infrequent collaboration and cooperation. One team may not be aware of what another team is doing and this lack of knowledge stumps productivity and efficiency.
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Strategic Focus
Every team within a divisional organization has different goals and milestones. The strategic focus of one team is bound to differ from another. Teams may lose focus of the organization’s mission and vision.
If your organization has a divisional structure and you want to make the best of it, understand how your workplace functions and the best ways of dealing with differences. Harappa Education’s Navigating Workplaces course will help you dig deeper into your workplace culture. The Thomas Kilmann model will guide you in navigating office politics and managing conflicts. Minimize differences and make room for effective collaboration with Harappa’s courses today!
Explore topics such as What is an Organizational Structure, Types of Organizational Structure, Matrix Organizational Structure, The Difference Between Functional and Divisional Structure & Example of a Divisional Structure from Harappa Diaries and understand how your workplace functions.
