This type of structure is devised by the SUMSUNG when they are dealing in different categories of products. It helps in coping with the emerging complexities due to diversification of products.
In a divisional structure, the various departments or divisions are created on the basis of different products manufactured in the enterprise. In each department or division, different functions like production, purchase, finance, sales etc. are performed in order to achieve organisational goals.
Each division has a divisional manager who is responsible for the working of his division and has full authority over it. In each department, functional structure automatically develops.
But functions of each division are different, depending upon the nature of the product to be produced. Also, the divisional head of each division is responsible for the profit or loss of his division so that each division acts as a profit centre.