Multidivisional Organizational Structure

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The way that a business is organized plays a large part in how well it operates. There are several different ways that you can organize your business structure, with some being more appropriate for certain types of businesses than others. If it would make sense for your company to have multiple distinct divisions that each serve a specific function within the company, the appropriately-named multidivisional structure could be a good option to meet your company's organizational needs.

Multidivisional Structure Definition

A multidivisional organizational structure is a business structure in which divisions within the company largely work autonomously to complete a single task or to control operations within a single region. These divisions all work toward the overall good of the company, but each is only concerned with maintaining its own operations instead of trying to keep up with the operation of the entire company.

A good example of this is The Walt Disney Company. It uses a variant of the multidivisional organizational structure to keep its massive entertainment empire functioning smoothly. While its film, television, theme park and other divisions all work toward the goal of enriching the company and even cooperate with each other to cross-reference content, each division is still only responsible for its own operation. They are not ultimately accountable to other divisions within the company aside from upper management and administration.

Note that this is different than what is known as a functional organization structure, even though divisions may be separated according to function. In a functional structure, the grouping occurs at the employee level by grouping employees with similar tasks to increase overall employee efficiency. In a multidivisional structure, the grouping occurs at the functional level itself and employees are hired within the divisions (or hired specifically to work for one division). In a functional organizational structure, the employee would be hired by the company in general and then grouped based on skill or a need to fill a certain role.

Creating and Organizing Divisions

Implementing a multidivisional organizational structure requires identifying the various functions that different parts of your business perform and dividing the business up according to those functions. Each division will have its own manager and chain of command, and resources may be allocated differently depending on the needs of each division.

Depending on the size of your business, the various divisions may be grouped in different parts of the same building or may actually have offices or other facilities in different locations. If certain divisions are focused on administrative or office-based tasks and others are focused on manufacturing or sales, you might also see multiple divisions spread out across a smaller number of locations according to need and function.

This does not mean that every specific job role needs to have its own division or that there can not be some functional overlap between aspects of two different divisions. Each division should have its function well defined within the company, but it should also have the workers, resources and functional capabilities that it needs to act as a cohesive unit.

As an example, you could have two different divisions that each perform manufacturing or that offer products or services to consumers as long as each division's purpose is unique enough that it would not make sense to group those aspects together in a single division.

Multidivisional Structure vs. Matrix Structure

You may have heard of a matrix organizational structure and think that it sounds similar to the multidivisional structure. When considering the multidivisional structure vs. matrix structure, the primary difference lies in how the individual groups within the company are organized.

The matrix structure, unlike multidivisional structure, takes some of its functionality from what is known as the projectized organizational structure. This means that employees are grouped by function within individual projects, allowing each project team to operate as its own entity within the company. These projects typically only last for a finite amount of time, however, and employees are reassigned or given new projects once each project is completed.

If your business is looking for long-term structuring by function, the matrix structure will not serve your needs very well since it is much more focused on creating a dynamic workplace that can adapt to new projects as they come along.

References

About the Author

Jack Gerard is a freelance writer and editor with over 15 years of experience writing about topics related to business and finance. His body of work includes copy for small businesses, how-to guides for entrepreneurs and even editing and copy work for international corporations.

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