Most bureaucratic organizational structures can be divided into functional and divisional management structures.
Functional belong to the oldest and quite often used in practice. They can be said to be traditional, and therefore they are called classical. This is the result of the fact that management is divided into separate elements, each of which has its own task in management, that is, it performs a certain function. The functional structure works efficiently in small and medium-sized firms.
Large enterprises have been using a divisional management structure for several decades.
The word "divisional" came from the Latin language, which means "division into parts, divisions." The systematization process takes place on three grounds:
1. By product (product or service).
2. By customer groups.
3. By geographic region.
Departments of firms operate independently, these are almost independent organizations that are subordinate only to the central governing body of the company.
Divisional Product Structure
The need for its creation is caused by the growth in the number of large firms and corporations. They penetrate into new production areas that are very different from the previous ones. There is the emergence of new management departments that deal with a particular product.
The customer-oriented divisional management structure consists of separate units. Each of them, in turn, is aimed at the category of consumers that it needs. Almost all large corporations have such departments.
Regional divisional management structure.
Its creation, as well as grocery, is caused by the rapid growth of corporations. They quickly spread their influence over vast territories not only domestically, but also abroad.
Depending on which factor is especially important for the company, to ensure its strategic plans, the divisional management structure of a particular type is chosen: either by product, or by customer, or by geographical feature.
Advantages inherent in these management structures :
- First of all, they contribute to the rapid growth of the company.
- Secondly, they increase the independence of managers.
- Thirdly, they increase the degree of management responsibility for production.
- Fourth, contribute to the expansion of knowledge.
- Fifth, they create favorable conditions for the training of senior managers.
Along with the advantages, divisional structures also have disadvantages:
- Firstly, if there are weak information links between departments, duplication of activities is possible.
- Secondly, weak ties with the main management unit, as a result of which the top management of a company often cannot control the activities of its units (divisions), and, as a result, large losses.
The reasons for the shortcomings are as follows: weak and ineffective management of the company, insufficient budget, unspecific focus on the desired results. The negative aspects can be eliminated as follows: by strengthening leadership, introducing a clear system of motivation, budgeting, ACS, establishing horizontal ties, clearly delimiting powers.
A company with a similar type should be run by a person with a democratic leadership style, since he will have to transfer many powers to the heads of divisions, on which the effectiveness of company management depends. The divisional structure can work effectively not only in large, but also in medium-sized companies. This is shown by modern practice.