Alison

Why does a divisional structure make it hard to negotiate with firms that supply our basic materials like cardboard for packaging?

In a divisional structure, you have redundancies like multiple finance departments or multiple marketing groups, which increase costs.

Each SBU is treated as a separate customer by your suppliers, so you cannot gain greater economies of scale.

Having multiple divisions increases the number of suppliers you have, so there just isn't enough attention for each negotiation.

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