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Need Opinion: Two Companies vs. Two Divisions

Hi,

We need independent opinion on what is better: Two Companies or Two Divisions in Navision.

Let#%92s imagine CRONUS Furniture Company that has two Divisions:
- Furniture Division – production – represent 95% of business
- Wood board – whole sale – represent 5% of business

Each Division has separate ownership structure so It is absolutely necessary to be able to generate Balance, Income statement, Cash Flow and all other reports by Division.

They use separate bank accounts and one division can not pay in behave of another. Customer should not pay in one check invoices from different divisions. (Even so it can happen few times per year)

Furniture Division has about 60 000 different Items in item master. Board Division has about 1000 different items that also exist in the Furniture Division as raw materials for production. Physically inventory stored separately and divisions use different costing systems. It is impossible to use the same item numbers for two divisions. (Company has internal requirements that Board for production has to have different item number from Boards from Wholesale).

Whole sale division can sell boards from Production Inventory and Production can use boards from Whole Sale Inventory. In this case they must process Inter-company Sell-Buy transactions to recognize appropriate profit by division. This is low volume operations – few sell-buy transactions per week. (Furniture division process 100K of invoices per year and Board division 5K)

Some customers are the same in the both Divisions. Customers have different credit limits per Division and in most cases different Salespeople per division. Salespeople have different commission structure. Customers have different business classifications in different divisions. But user should be notified if Customer is over credit limit or has overdue balance in any of divisions (modification required in both cases).

Total company has about 100 users. Only few of them work/process operations in both companies:
- A/P person – process vendor Invoices and Payments
- Controller – setup customers, Vendors, G/L Accounts, Account Schedules
- Wholesale Users – look at Production Inventory and process Sell-Buy transactions if necessary (2 users)
- Production User - look at Wholesale Inventory and process Sell-Buy transactions if necessary (2 users)
- IT Support people (4)
All other ~90 user do not even need to know that other Division exists.

Management looks at these two Divisions as two different businesses with different costing structure, different profit structure and different operations rules… As example Sale with profit 5% can be considered OK in Board division and unacceptable in Furniture division (unless it is closeout). Most of reports have to be printed by Division to make since.
Only few reports and one screen should show information from both companies.

What is better?
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