output-oriented divisionalized forms. product line departmentalization product line structure is a...
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Output-OrientedDivisionalized Forms
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Product Line Departmentalization
Product line structure is a design that groups similar orrelated products together.
President
VP- Soap Products
VP – CleansingProducts
VP – MargarineProducts
VP – RefineryProducts
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Insurance Company by Product Lines
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Product Line Divisions withCorporate Support Units
President
VP – Canned Soups Division
VP – FrozenVegetables Division
VP – Baked GoodsDivision
VP – Sales andMarketing
VP – Research& Development
VP – MaterialsManagement
VP - Finance
This structure provides centralized supportfunctions/services for the needs of several differentproduct lines.
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Levi Strauss – Product Lines with Corporate Support Units
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Product Team Structure
CEO
VP – R&DVP – Sales
& MarketingVP - Operations
VP – MaterialsManagement
VP - Finance
● ● ● ●
PTM
● ●● ●
PTM
● ●● ●
PTM
Product Development Teams
Product Division Product Division Product Division
PTM -Product Team Mgr ●-Functional specialists
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Product Team Structure
The Product Team structure is a cross between theproduct division structure where support functions arecentralized 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 ofspecialists is seen as not in the best interests of theproduct divisions.
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Process Departmentalization
President
VP – LatheCutting Division
VP – Treatment ofMaterials Division
VP – PaintingDivision
Process structure is a design that group similarorganizational processes together. These processesare usually technologically-based, but not always.
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An Example – Process Departments
President
Heavy CastingDivision
StampingDivision
Screw MachineDivision
Plastic ExtensionDivision
Accounting
A metalworking company
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Customer Departmentalization
President
VP – ConsumerGoods Division
VP – IndustrialGoods Division
VP – CustomProducts Division
Customer-based structure is a design that groups similar customer groups together.
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Geographic/Territory Departmentalization
President
VP – SouthernRegion
VP – MidwestRegion
VP – West Coast Region
Geographic or territorial structure is a design that groupssimilar/localized regions together.
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A Geographical Division Firm
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Wal-Mart’s Corporate Structure
CEO
COO
NorthernUS
MaterialsManagement
Sales and Marketing
SouthernUS
EasternUS
WesternUS
InternationalOperations
A geographically-based set of divisions, including international
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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
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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
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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
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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
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The Conglomerate Design(Multi-Divisional, SBU)
CEO
PeriodicalOperations
PublishingOperations
EntertainmentOperations
InvestmentBanking Operations
Oil ServicesOperations
Fine ChinaOperations
Pearson PLC, a British firm, uses a conglomerate formto manage several unrelated businesses. Conglomerateforms usually result from unrelated diversification, andact as a “holding company.”