Divisionalization: Difference between revisions
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===Prerequisites=== | ===Prerequisites=== | ||
* Alignment and Integration | * Alignment and Integration | ||
* Are divisions similar or diverse | * Are divisions similar or diverse? | ||
* Some functions could be centralized and others at Div level | * Some functions could be centralized and others at Div level | ||
Revision as of 10:20, 28 September 2011
Divisionalization
Companies who organize as divisions can do so along:
- Geographical regions
- Product lines
Why?
- Delegation and control closer to the product
- Motivation
- Quicker decisions
- Take account of regional issues
- Exploit managerial expertise
- Divisions may be in competition
- Top management loses control
- Risk avoidance - because no diversified portfolio at division level
- Increased costs - duplication, lack of scale.
Prerequisites
- Alignment and Integration
- Are divisions similar or diverse?
- Some functions could be centralized and others at Div level
Broken down into
- Cost Centers- Providing services to other divisions - focus keeop costs down
- Investment Center - provides services - maximise ROI
- Profit Center - focus on selling
