What is one major disadvantage of a Divisional Organisational Structure?

A major disadvantage of a Divisional Organisational Structure is that it can face issues with effective communication. In a divisional structure, organizations are divided into semi-autonomous units or divisions, each responsible for a specific product line, service, or geographical area. This separation can lead to silos where divisions operate independently, which may hinder collaboration and communication between the different units. As a result, information sharing can become limited, making it difficult for the company to present a unified strategy or respond rapidly to changes within the market.

In contrast to this issue, while reduced flexibility in responding to market changes can occur as divisions focus specifically on their own goals, the structure itself is often designed to enhance a company's ability to adapt by concentrating on different market segments. Similarly, while each division does measure performance, typically with its own metrics, the presence of these metrics is a reflection of the divisional structure's intent to empower units rather than a disadvantage. Thus, the potential for miscommunication and lack of coordination across divisions stands out as a significant challenge within this organizational framework.