Discuss the advantages of grouping functions into divisions that focus their efforts on the production and marketing of specific products.

Question

What will be an ideal response?

Answer 1

Grouping functions into divisions focused on particular products has several advantages for managers at all levels in the organization. First, a product structure allows functional managers to specialize in only one product area, so they can build expertise and fine-tune their skills in this particular product. Second, each division's managers can become experts in their industry; this expertise helps them choose and develop a business-level strategy to differentiate their products or lower their costs while meeting the needs of customers. Third, it allows corporate managers to create the best corporate-level strategy to maximize the organization's future growth and ability to create value. Corporate managers are likely to make fewer mistakes about which businesses to diversify into or how to best expand internationally, for example, because they can take an organization-wide view. Corporate managers also are likely to evaluate better how well divisional managers are doing, and they can intervene and take corrective action as needed.