The Divisional Structure
The divisional segmentation of employees may be decided by the product, the geographical location, or the target market.
Say a multinational company manufactures detergents, shampoos and toothpastes. Each product would have its own "division" and would function like a mini-company within the larger corporation. Each division would have individual resources without reference to other divisions.
Divisions may also be created for different regions (Asia-pacific, Europe, South America etc) or markets (rural, urban, Japanese, Indian), served by a company.
One obvious advantage of the divisional structure, is the fact that each division is also a profit-center. Also, the decentralized allocation of resources and the lack of dependence between divisions, makes the company more flexible and able to react faster to changes. It also encourages innovation and allows divisions to follow different strategies and policies within the overall company guidelines.
On the other hand, the divisional structure results in unnecessary waste, as many otherwise common resources and roles need to be separately procured and allocated to different divisions. Also, the divisions do not cooperate with each other or interact with each other on a daily basis, and this leads to a false sense of competition and self-sufficiency, where the larger structure of the company is not taken into consideration.