Groupings

• Functional:

  Splitting into departments such as HR, Marketing.
• Functional

  advantages

  • specialisation - each department focuses on its own work.
  • accountability- someone is responsible for this section.
  • communication and team working within the department should be good.
• Functional

  disadvantages

  • communication problems between departments.
  • staff loyalty is to the department rather than the organisation.
  • rivalry between departments.
• Product/Service:

  Each division will concentrate on their specific product or service e.g. Virgin.
• Product/Service:

  advantages

  • expertise can develop in dealing with each product/service.
  • managers could easily identify how each product is performing.
  • decisions can be more responsive to changes in the business environment.
• Product/Service:

  disadvantages

  • duplication of functions (e.g. different sales force for each division).
  • divisions may find themselves competing with each other.
  • lack of central control over each separate division.
• Customer:

  Staff resources organised to meet needs of different groups of customers, e.g. personal banking, investment banking.
• Customer

  advantages

  • customer needs identified as a priority so customer loyalty is built up.
  • services are tailored to a group/specific customer.
  • can respond much faster to customer needs.
  • customer gets feeling of receiving a personal service, even when dealing with a large firm.
• Customer

  disadvantages

  • administration can be time consuming to meet individual customer needs.
  • large staff costs.
  • can be duplication of staff and resources.
  • can be competition between groups.
• Place/Territory/Geographical:

  Where there will be different divisions in different areas of a country or throughout the world.
• Place/Territory/Geographical

  advantages

  • serve local needs better.
  • can help overcome language/cultural barriers in different countries.
  • can respond faster to changes in customer needs.
• Place/Territory/Geographical

  disadvantages

  • conflict between local and central management.
  • duplication of resources and functions.
• Technology:

  Organised so different processes needing different equipment are carried out in separate factories.
• Technology

  advantages

  • staff become very specialised.
  • quicker to train new staff as there is only one process to learn.
  • problems in the production process can be identified exactly.
• Technology

  disadvantages

  • work on the one process will be repetitive and staff may be less motivated.
  • capital intensive, so expensive to set up.