Divisionalization
From MediaWiki
Companies organize as divivions
- Geographical regions
- Product lines
Why
- Delegation and control closer to the product
- Motivation
- Quicker decisions
- take account of regional issues
- Exploit managerial expertise
- Divs may be in competition
- Top mgt loses control
- Risk avoidance - because no divsersified portfolio at div level
- Increased costs - duplication, lack of scale
Prerequisites
- Alignment and Integration
- Are div's 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
