Advantages of divisional structures
- Quicker decision making e.g. autonomous divisions do not have the long-winded process of a long chain of command when making competitive decisions. They can respond quicker and more flexibly to changes within the business environment without consulting a centralised Board.
- Greater focus and specialisation of activities as well as resources for market and product performance. This enables better customer focus e.g. closer to the local culture of different countries or customer groups, or more effective core competences developed.
- Independent divisions enable more isolation of a company's revenues and costs, therefore better 'ring fencing' of financial results to evaluate performance by aholding company or group.
- More empowerment to operational and tactical level e.g. greater motivation to divisional managers.
- Good training ground for 'grooming' future strategic managers.
- Frees up senior management time (the 'strategic level'). Head office or holding
- Company has more time for put into strategic planning instead of day-to-day tactical and Operational involvement in business matters.