Divisional Management Structure: Advantages and Disadvantages

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Distinctive features of the divisional management structure
The concept of "division" has different meanings, including it can designate a division of a commercial organization. With a divisional management structure (DMS), a separate level of managers is formed in the company, who are responsible for separate areas of the enterprise's activities and manage the work of divisions in their area of ​​responsibility. For example, the division can be based on the allocation of product groups or correspond to the regional interests of the organization.

As a rule, such a system is practiced ] in large corporations, where it is difficult to ensure unified management of all business processes.

Divisional management structure

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Complicating the hierarchy by adding a new level of administrators has both disadvantages and advantages. On the one hand, this means increasing the bureaucratic element and lengthening the chains of information transfer and decision-making. On the other hand, such an order facilitates a clear distribution of functions and an increase in the quality of management.

With a divisional management structure, key issues remain within the competence of top management, such as defining a development strategy, financial planning, organizing scientific research, communicating with major business partners, etc. However, some of the powers and responsibilities are delegated to top managers, each of whom deals with their own area of ​​the company's work and has specialized units for operational actions under their control. This achieves a kind of golden mean between extremely strict centralization and management blurring, when most decisions are made at the grassroots level.

Divisions are structures that have a certain degree of independence.

Divisions are built into the overall management system and are directly linked to the company's management, but they also have immediate superiors. It is the leaders of such groups who begin to play an important role in the organization's activities - they receive general target settings from above, but they are engaged in planning and implementing plans independently.