A divisional structure comprises of seperate business units or division. Each unit has a divisonal manager responsible for performance and who has authority over the unit. Generally, manpower is grouped on the basis of different product manufactured.
(i) Skill Devleopment: Product specilisation helps in the devleopment of varied skills in a divisional head and this prepares him for higher positions as he gains experience in all funciton.
(ii) Accuntability: Divisional heads are accountable for profit, as revenues and costs related to different department, can be easily identified and assigned to them. This provives proper basis for performance measurement.
(iii) Quick Decision-Making: It promotes flexibility and inititative because each division functions as an autonomous unit which leads to faster decision making.
(iv) Facilitates Expansion: It facilitates growth as new division can be added without interrupting the existing operations, by merely adding another divisional heads and staff for the new product line.