(1) Divisional structure is the framework which the diversified organisation should adopt.
One of the reason in support of divisional structure is that divisional structure facilitates growth and expansion as new divisions can be added without disrupting the existing operations by merely adding another divisional head and staff for the new product line.
(2) Following are the limitations of the divisional structure :
(i) Expensive – Each department is required to maintain all resources and types of services. This gives rise to duplication of efforts which results in high operating costs.
(ii) Narrow focus – Managers of each department focus on their own product without thinking of the rest of the organisation.
(iii) Clash of interests – Divisional manager may have different approach from organisation’s approach. There may be clash of interests.