The business management system may be different. The most common and applicable is the divisional. Let us consider in more detail its main content, disadvantages and advantages.
The divisional management structure (from the French "division" - division) implies the existence of such a system in which there is a clear separation of management by products and functions. The key figures in this case are the leaders who lead the leading production units.
The divisional management structure begins to form when there is a sharp increase in the size of the enterprise, diversification of its activities (multidisciplinary), technological processes are complicated in a situation where the external environment is changing very dynamically.
The fact is that the addition of new hierarchy levels to it leads to the fact that the head of the company will not be able to make tactical decisions in these areas of activity. The divisional management structure allows the delegation of basic authority to managers who head these areas, providing limited independence. But the head of the company reserves its strategic development.
Therefore, thanks to only delegation of authority, the usual functional structure can be turned into a divisional one. The key figures are top managers who head a number of production departments.
Structuring in accordance with the divisions should be carried out according to one of the selected criteria:
- by the nature of the products (services or products) the system becomes multi-divisional;
- by the presence of orientation to specific consumer groups, it turns into a consumer;
- according to the characteristics of the served territories, the structure is distinguished by regional specialization;
- by the presence of several points of sale or large groups of consumers, it is a market;
- by type of product and region of implementation, a global system is distinguished.
The divisional management structure implies that most functions (accounting, financial management, planning, etc.) are transferred to production units. This will allow to fully or partially take responsibility for the development, manufacture and marketing of products. This will free the upper echelon of the company in order to solve strategic problems.
The disadvantages of the division structure are as follows:
Firstly, such management of a small business is characterized by the presence of a large number of "floors" in the leadership vertical.
Secondly, in this case, the headquarters structures of the departments are separated from the main departments.
Thirdly, the connections in the organization are vertical. Therefore, there are traditional disadvantages - paperwork, congestion in some departments, the presence of poor interaction.
Fourth, duplication of powers at different "levels" is possible.
Fifth, the presence of high costs for the maintenance of managers.
Advantages of the division structure are as follows:
Firstly, it is able to provide management of a multidisciplinary enterprise, in which the total number of employees is large and which has geographically remote units.
Secondly, the structure can provide flexibility and quick response to changes in the immediate environment of the company.
Thirdly, due to the expansion of the boundaries of the branches, they will be able to become a "profit center", working actively to improve the quality of this production.
Fourth, there is a close relationship between the consumer and production.
Therefore, in large enterprises, a divisional management structure is the most optimal option.