Which is an example of a divisional organizational structure?

Question

Options

• AAn organization which does not have a layered management structure
• BAn organization which has a different business unit for each of its products
• CAn organization which uses a grid of reporting relationships
• DAn organization which has arranged its teams in a hierarchical authority structure

• A
  3% (1)
• B
  81% (26)
• C
  6% (2)
• D
  9% (3)

Explanation

A divisional organizational structure groups the company into separate units based on products, services, markets, or geographic regions - each division operates somewhat independently. Option B is correct because having a distinct business unit for each product is the defining characteristic of this structure (e.g., a conglomerate with a division for automotive, another for healthcare, another for finance).

Why the distractors are wrong:

• A describes a flat organizational structure, which minimizes management layers.
• C describes a matrix structure, where employees report to both functional managers and project managers in a grid-like arrangement.
• D describes a hierarchical structure, which is about authority levels (chain of command), not how units are divided by product or market.

Memory tip: Think of the word division - like divisions of a company that each handle their own product line. If you can picture a company splitting itself into product-based "mini-companies," that's divisional.

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