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A divisional organizational structure divides a company’s operations into three primary divisions: product, market, and geography. Employees are grouped according to product or service lines, regions, or target audience. This structure allows companies to meet the needs of each customer based on their market.
A divisional organizational structure occurs when a company divides its operations into three primary divisions. The three major divisions of this type of organizational structure are product, market, and geography. Additional subcategories fall under each of the three primary divisions of the organizational structure.
When a company produces different products or services, the employees of the company can be grouped according to these product or service lines. For example, a company that makes hygiene products might have a line of deodorants, a line of toothpastes, and a line of shampoos and conditioners. The company would organize employees so that each product line had a full set of employees.
With this structure, the toothpaste division would include various employees. The toothpaste line would have its own set of people operations. It would also contain its own group of marketing employees, sales associates and financial professionals. This is a common practice in product based companies offering various lines or brands. A good example of a real company doing this is Proctor & Gamble.
In addition to product lines, a divisional organizational structure can also group employees based on the regions or areas in which the company sells. This structure is closely related to the sales portions of the organizations, it spreads to other areas of the company. For example, a cable television service provider that covers the entire state of Florida may divide its sales divisions by region: North, Central and South, for example.
The final option for a divisional organizational structure is by market. In this case, market refers to the target audience or market for the product or service. These are the people that the company is looking to buy the product or service or who are buying the product or service. For example, a company that sells services to a consumer group and a business group may divide and organize operations into a consumer market and a business market.
The division into markets allows the company to concentrate all its efforts. For example, marketing efforts towards a consumer base will be completely different than towards a commercial base. The needs, wants, desires and more are different according to the difference in the markets. Establishing a company with this type of divisional organizational structure allows the company to meet the needs of each of its customers based on the market in which they are located.
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