Multi-divisional structure

Most multi-national corporations, including British Petroleum and ICI are now organized into a variety of divisional structures. In such a structure, the company as a whole may be split into several distinct divisions. Each distinct product line or business unit is placed in its own self-contained unit or division, with all support functions. The result is a higher level of horizontal differentiation. 

This is an innovative structure which has similar advantages to a matrix structure but it is much easier and less costly to operate. Task activities are divided along product or project hues to reduce bureaucratic costs and to increase management s ability to monitor and control the manufacturing process. Functional specialists are organized into cross-functional teams on 

ICI adopted this kind of structure in the early 1990s when it embarked on a major re-shaping of its operations in order to increase profitability and achieve greater penetration of international markets. It now has five international groups of businesses paints, materials, explosives, industrial chemicals and regional businesses. 

In a divisional structure, each business operates as a self-contained business unit, each division possesses a full array of support services, although some services such as engineering and telecommunications are provided on a company-wide basis. For example, each has self-contained accounting, sales and personnel departments. Each division operates as a profit centre, making it much easier for corporate headquarters staff to monitor and evaluate each division s activities. 

To illustrate divisional structure, ICI is headed by the Chief Executive who has four Executive Directors with overall strategic responsibility for operations, finance, personnel and planning. Each of the five businesses in ICI is headed by a chief executive (CE) who is accountable for its profits. The five CEs meet regularly with Id s Chief Executive and his four Executive Directors to monitor performance and consider policies and objectives of the group. 

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The bureaucratic costs of operating a multi-divisional structure are high, the size of its corporate staff is a major expense and, as can be seen by the number of divestments and demergers currently operating within the top chemical corporations, are subject to continuing downsizing. Similarly, the use of product divisions, each with its own specialist support functions is a major expense. Constant performance review is essential to ensure that these costs are outweighed by increased profitability and enhanced reputation. 

Each division possesses its own specialized functions such as finance, research and development and multi-divisional structures which are expensive to run and manage. R D is especially costly to run so some companies centralize such functions at the corporate level to serve all... 

As in any reexamination of the field, chemists and chemical engineers should ask serious questions about current practices. Does the divisional structure in academic chemistry departments discourage multi-investigator research, or encourage artificial distinctions Are the traditional divisions still the best structure... 

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