Divisional structure refers to an organisational design which consists of separate business units or divisions. All the divisions have to report to a Divisional Head. Manpower is generally grouped on the basis of different products manufactured.
Advantages of Divisional Structure:
(i) Product Specialisation: Divisional structure leads to product specialisations as the Divisional head is able to gain experience in all the functions related to a particular product. This helps in preparing the divisional heads for higher position.
(ii) Greater Accountability: Divisional heads can be held accountable for the profits as the revenues and costs related to different departments can be easily identified and assigned to them. This provides a proper basis for performance measurement.