XYZ ltd is manufacturing female garments only. Now company wants to expand its business and also wants to manufacture male and kids garments for different market segments. Which type of organizational structure should it adopt? Give arguments in support of your answer.
Divisional structure: Under this structure, an organisation is divided into different divisions/units on the basis of products or geographical area. Each division is a self contained, semi-autonomous business unit. Each unit has a divisional manager responsible for performance and who has authority over the unit. There are certain matters, which are determined at the upper level only, for instance, goal determination and policy formation.
It is suitable for those enterprises where:
(i) A large variety of products are manufactured.
(ii) This organisation structure helps in more departments growth which require more employees.
Advantages of divisional structure are as follows:
(i) Product specialisation helps in the development of varied skills.
(ii) It helps in the fixation of responsibility as divisional heads are accountable for profits, revenues and costs related to their departments.