Describe divisional organisational structure and critically analyse the advantages and disadvantages of divisionalisation (use academic papers). Bounce Ltd. is a leading manufacturer and retailer of one type of product, ProdX. It has divided its operations into three divisions, i.e.: – Division A: supply rubber – Division B: compound rubber with chemicals to produce finished rubber – Division C: produce ProdX Division B has offered to buy 65,000 meters of rubber per annum from Division A at a price of £45 per meter. Although the total capacity of the Division A is 135,000 meters per annum, its normal production levels are 118,000 meters per annum. The production costs per meter (under normal production of 118,000 meter) of rubber are as follows: Direct material £17 Direct Labour £13 Variable Overheads £6 Fixed Overheads (i.e. Total Fixed Overheads/118,000) £17 Total £53
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The divisional organizational structure varies from organization to organization based on the leadership or management style. Therefore, this task is expected to acknowledge both the advantages as well as the disadvantages of divisionalisation. It is imperative that the advantages and disadvantages are explored using academic papers to ensure that the paper is argued from a point with academic and research evidence. The discussions will consider the divisions provided about Bounce Ltd. including Division A, Division B, and Division C respectively. Another expectation is the link between the divisional organizational structure and accounting in an organization. This will link the advantages and disadvantages of the divisionalisation and accounting hence leading to an informed decision…
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