Identify the correct combination of two demerits of Divisional Structure.

(A) Promotes flexibility and facilitates expansion and growth of new divisions.

(B) Product specialisation and managers become over powered

(C) Leads to increase in cost and conflict may arise among various divisions.

(D) Conflict mag arise as interest of two departments may not be compatible and inflexibility of people

(E) Less emphasis on overall objectives and costly Choose the correct answer from the options given below :

(C) only

The correct answer is option (4) : (C) only

Divisional Structure

The organisation structure comprises of separate business units or divisions. Each unit has a divisional manager responsible for performance and who has authority over the unit. Generally, manpower is grouped on the basis of different products manufactured. Each division is multifunctional because within each division functions like production, marketing, finance, purchase, etc., are performed together to achieve a common goal. Each division is self-contained as it develops expertise in all functions related to a product line.

Disadvantages

The divisional structure has certain disadvantages. Some of them are as follows:

(a) Conflict may arise among different divisions with reference to allocation of funds and further a particular division may seek to maximise its profits at the cost of other divisions.

(b) It may lead to increase in costs since there may be a duplication of activities across products. Providing each division with separate set of similar functions increases expenditure.

(c) It provides managers with the authority to supervise all activities related to a particular division. In course of time, such a manager may gain power and in a bid to assert his independence may ignore organisational interests.