Output-Oriented Divisionalized Forms

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Presentation transcript:

Output-Oriented Divisionalized Forms

Product Line Departmentalization Product line structure is a design that groups similar or related products together.

Insurance Company by Product Lines

Product Line Divisions with Corporate Support Units This structure provides centralized support functions/services for the needs of several different product lines.

Levi Strauss – Product Lines with Corporate Support Units

Product Team Structure Product Development Teams ● ● ● ● PTM ● ● ● ● PTM ● ● ● ● PTM PTM -Product Team Mgr ●-Functional specialists Product Division Product Division Product Division

Product Team Structure The Product Team structure is a cross between the product division structure where support functions are centralized and the multi-divisional structure where each division has its own support functions. It is used primarily where the focus of the industry is on product customization. The functional orientation of specialists is seen as not in the best interests of the product divisions.

Process Departmentalization Process structure is a design that group similar organizational processes together. These processes are usually technologically-based, but not always.

An Example – Process Departments A metalworking company

Customer Departmentalization Customer-based structure is a design that groups similar customer groups together.

Geographic/Territory Departmentalization Geographic or territorial structure is a design that groups similar/localized regions together.

A Geographical Division Firm

Wal-Mart’s Corporate Structure A geographically-based set of divisions, including international

Advantages of Divisional Forms Evaluate departments as autonomous profit centers Facilitate coordination between functions for rapid response Add flexibility to a firm’s structure Focus on client needs Develop broadly trained managers

Disadvantages of Divisional Forms Increase coordination problems between specialized functional/divisional areas Lead to decreased communication between functional specialists across divisions Contribute to a lack of clarity of functional area responsibilities and a duplication of services

Strengths of Divisional Forms Suited to fast change in unstable environment Client satisfaction because product responsibility & contact points are clear High coordination across functions Units adapt to differences in products/processes/territories Best in large organizations Best when several product/services are offered

Weaknesses of Divisional Forms Lose economies of scale in functional departments Poor functional coordination across division lines Lose in-depth competence & technical specialization Integration & standardization across division lines is difficult

The Conglomerate Design (Multi-Divisional, SBU) Pearson PLC, a British firm, uses a conglomerate form to manage several unrelated businesses. Conglomerate forms usually result from unrelated diversification, and act as a “holding company.”