Limitations of divisional structure are:
(i) Departmental conflicts: Conflict may arise among different departments with respect to allocation of funds. Particular department may seek to maximise its profit at the cost of other departments.
(ii) Costly: Each product division has to maintain its own facilities, equipments and personnel. It may lead to increase in operating cost.
(iii) Ignore organisational interests: Divisional structure provides managers with the authority to supervise all activities related to a particular division. Managers focus on their own product without thinking of the rest of the organisation.