5CO01 AC 1.1 Answer

5CO01 AC 1.1 Evaluate the advantages and disadvantages of both a divisional structure and a matrix structure. Include reasons underpinning each structure

Divisional Organizational Structure

An organisation with a divisional structure is divided into units that are semi-autonomous and each in charge of a particular product line, service, or geographical area. With its own resources and capabilities, including marketing, sales, and production, each division runs independently. A product-based divisional organisation functions best when its products are autonomous in their development, promotion, sale, and management and do not overlap (Ellis, 2023). Geographic divisions enable each division to operate autonomously, customising operations to meet the needs of certain markets and clients (Dahlan, Abdullah, and Suhaimi, 2021). Similarly, market-based segmentation aims to satisfy a variety of customer needs. The business might be divided, for instance, according to whether it offers retail or online products. Large companies that provide a wide range of goods and services in several markets frequently feature this structure.

The divisional structure’s ability to concentrate on particular market sectors and improve response to consumer demands and market shifts is one of its main advantages. General Motors, for example, uses a divisional structure whereby each of its brands—Chevrolet, Buick, and Cadillac—operates as a unique division, enabling customised strategies that serve various clientele. Within each section, this autonomy promotes flexibility and prompt decision-making. However, because each division may create its own departments for related tasks, this structure may result in resource duplication and higher operating expenses. Furthermore, divisions may create silos that impede cooperation and communication within the company. This disarray may make it difficult to exchange best practices and result in inconsistent corporate policy. A divisional structure favours organisations with multiple lines of products or services that demand different approaches and a high level of specialisation. It allows each segment to focus on its own market, which promotes consumer fulfilment and innovation.

Matrix Organizational Structure

Employees under the matrix organisational structure report to several managers, usually a functional manager and a project or product manager, as it combines aspects of divisional and functional structures into a grid-like framework. By combining the advantages of both formats, this dual-reporting system fosters adaptability and dynamic resource allocation.

The matrix structure’s ability to facilitate collaboration among departments and resource sharing is a noteworthy benefit. Employees can add their knowledge to a variety of initiatives, which fosters creativity and problem-solving skills (Dahlan, Abdullah, and Suhaimi, 2021). Companies like Boeing, for instance, use a matrix structure to manage intricate projects that call for input from several specialities, guaranteeing effective use of technical talent in the aerospace sector. However, there may be difficulties with the matrix structure, especially when it comes to the dual-reporting system. Roles and responsibilities may become unclear as a result of employees receiving contradictory instructions from different managers (Dahlan, Abdullah, and Suhaimi, 2021). Effective communication and conflict-resolution procedures are required because of this complexity in order to avoid any power struggles and guarantee clarity. Organisations working in dynamic situations that require flexibility and cross-functional cooperation can benefit from the matrix structure. It works especially well for project-based businesses where effective use of specialised knowledge is essential.

Ultimately, divisional and matrix organisational models both have unique benefits and difficulties. The organisation’s strategic goals, operational complexity, and the type of goods or services it offers should all be taken into consideration while choosing between them. Maintaining competitiveness in the market, encouraging innovation, and increasing efficiency all depend on a well-designed organisational structure.

References

Dahlan, M.K.M., Abdullah, N. and Suhaimi, A.I.H. (2021) ‘The Propose Organization Structure for Digital Workplace,’ IEEE, pp. 31–35. https://doi.org/10.1109/isci51925.2021.9633508.

Ellis, C. (2023) WHAT ARE DIVISIONAL ORGANIZATIONAL STRUCTURES? https://theorg.com/iterate/divisional-organizational-structures.

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