Disadvantages of Multidivisional Organizational Structure
include the duplication of functions, such as sales or manufacturing, at each division, which precludes the achievement of corporate-level economies of scale and increases operating costs. The duplication of functions can also lead to a lack of standardization and inefficiencies. It’s likely that division-specific corporate incentives, such as bonuses, will lead to division rivalries, which might result in one division undercutting the operations of another division.