Structural Organization in Businesses: Key Role, Function, Advantages, Disadvantages
In today's dynamic business landscape, the multidivisional structure, also known as a divisional structure, has emerged as a popular choice for large corporations. This organisational model divides a company into semi-autonomous divisions, each responsible for its own performance.
The multidivisional structure offers a host of advantages. For starters, it provides clear accountability and transparency. Each division has dedicated management, making it easier to track results and hold teams accountable for their successes or failures. This structure also allows for tailored company cultures, as divisions can develop their own values aligned with regional or product-specific needs, fostering cultural alignment at a more localised level.
Moreover, the multidivisional structure facilitates efficient decision-making, with autonomous leadership enabling divisions to make decisions quickly, improving problem-solving and teamwork efficiency without being bogged down by bureaucracy. The structure also empowers businesses to respond rapidly to changing market demands, providing a competitive advantage in local or niche markets.
Specialized teams dedicated to specific products or services enhance quality and customer satisfaction through concentrated efforts. Furthermore, the multidivisional structure supports organizational growth by easily adding new divisions for products or markets, facilitating streamlined expansion.
However, the multidivisional structure is not without its disadvantages. Semi-autonomous divisions may prioritise their own goals over corporate objectives, leading to misaligned strategies and internal competition. Independence can also limit information flow and sharing of best practices, hindering innovation and efficiency across the organisation.
Diverse divisions may struggle to foster a cohesive company-wide culture, weakening shared values and unity. Additionally, because divisions often have their own functional teams (e.g., marketing, HR), this can lead to resource duplication and increased expenses compared to functional structures.
Despite these challenges, the multidivisional structure is a valuable tool for companies aiming to manage large organisations, continue growing, and target new markets. Each business unit in a multidivisional structure operates independently and has its own business functions (marketing, operations, human resources, finance).
The corporate headquarters performs control and planning functions and allocates resources to business units. Business units are more responsive to changes in their market, allowing companies to expand their business into new markets and industries, making more money and achieving higher economies of scale.
The Walt Disney Company, for instance, operates several business segments such as television, theme park resorts, streaming media, consumer products, publishing, and international operations, demonstrating the versatility of this structure.
In conclusion, the multidivisional structure offers strong accountability, market responsiveness, and focus on products or regions, but it can create silos that affect communication, culture, and cost efficiency within the organisation. Companies must strike a balance between the benefits and drawbacks to reap the full potential of this organisational model.
The multidivisional structure fosters efficient financial management within each business unit, as dedicated finance teams ensure financial transparency and accountability. This structure also supports business growth and expansion into new industries, allowing companies to boost their revenue and achieve economies of scale.
Meanwhile, the independent decision-making power granted to divisions in a multidivisional structure can lead to innovative financial strategies, providing a competitive edge in various industries, such as the finance and investment sectors.
