What is a Divisional Structure?

What is a Divisional Structure?

The divisional organization structure can be seen as one type of functional structure, or as a seperate organizational strucure.
It is often broken down into three types of divisional structures:
1. Product divisional structure,
2. Market divisional structure, and
3. Geographic divisional structure.

Welcome to the Organization Chart forum of 12manage.

Here we exchange knowledge and experiences in the field of Organization Chart.

❗Sign up now to gain access to 12manage. Completely free.

Continue for free

Please sign up and login to continue reading.

Here we exchange knowledge and experiences in the field of Organization Chart.

❗Sign up now to gain access to 12manage. Completely free.

Comments by date▼

Comments by rating

Rating

Jaap de Jonge
Editor, Netherlands

Multiunit Enterprise

You'll find an indepth article by David A. Garvin and Lynne C. Levesque describing the geographic divisional structure in HBR June 2008, p105-117). Actually the authors call this type "The Multiunit Enterprise" and position it versus the multidivisional enterprise.
Examples of Multiunit Enterprises mentioned in the article include Citigroup, Hertz, Home Depot, Marriot International, UPS, Wal-Mart.
Typical for the multiunit enterprise is:
- it resembles a Russian nesting doll, in that the P&Ls of one level are incorporated in those of the level immediately above.
- also they are characterized by their four levels of field managers: Store Managers, District managers, Regional Vice Presidents and Division Presidents (or SVPs).

Mariano Talanchuk
HR Consultant, Argentina

Structural Configurations

According to Mintzberg, what you describe is a similar to bureaucratic (functional) organization.
Divisional structure is a group of several mechanic (functional) organizations working together as a coordinated entity.

Jaap de Jonge
Editor, Netherlands

The Multidivisional Structure or Functional Structure and Innovation

A conventional approach for companies that are growing bigger and bigger is to move from a functional to a multidivisional structure. These divisions could, like Irvine said, be responsible for a product segment (like phones, computers, components), a market (like pharmaceutical, travel, energy), or a region (like Europe, US, Asia).
But interestingly, when Jobs returned to Apple in 1997, he changed the org structure back from product/market divisional (including Macintosh Products, Information Appliances, and Server Products) back into a functional one because Jobs believed these divisions and their GM's were inclined to fight with one another, stifling innovation at the corporate level. While for a high tech company like Apple, making the right technological strategic bets was and still is clearly crucial.
Apple's current structure is still predominantly functional: Design, Hardware Engineering, Hardware Technologies, Software, Services, Machine Learning and AI, Marketing, Operations, Sales, Retail, People, Finance, Legal, Corporate Communications, Environment, Policy & Social; Corporate Development).
For more on Apple's rare functional organization at this size and how that's geared towards innovation, see Joel M. Podolny and Morton T. Hansen, "How Apple is Organized for Innovation", HBR Nov-Dec 2020, pp.86-95.