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Output-Oriented Divisionalized Forms - PowerPoint PPT Presentation

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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

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Output oriented divisionalized forms l.jpg

Output-OrientedDivisionalized Forms

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Product Line Departmentalization

Product line structure is a design that groups similar or

related products together.

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Product Line Divisions withCorporate Support Units

This structure provides centralized support

functions/services for the needs of several different

product lines.

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Product Team Structure

Product Development Teams

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PTM -Product Team Mgr

●-Functional specialists

Product Division

Product Division

Product Division

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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.

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Process Departmentalization

Process structure is a design that group similar

organizational processes together. These processes

are usually technologically-based, but not always.

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An Example – Process Departments

A metalworking company

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Customer Departmentalization

Customer-based structure is a design that groups similar

customer groups together.

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Geographic/Territory Departmentalization

Geographic or territorial structure is a design that groups

similar/localized regions together.

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Wal-Mart’s Corporate Structure

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)

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.”