Product Based Organisational Structures

• Product-based organizational structures

  1. Business organizes teams around each different product or product range

  2. Each team has its own marketing, operations, and finance departments

  3. Human Resources is usually centralized in a product-based organizational structure
• Advantages of product-based organizational structures

  • Well-focused expertise in each product line
  • More streamlined creations, innovations, decision making, and production
  • More accountability to Senior Management
• Product-based teams are more productive and efficient due to their niche expertise
• Efficiency in product-based teams

  Can be linked to a lower cost per unit
• Product lines are more accountable to Senior Management in product-based organizational structures
• Product-based organizational structures are useful when products are diverse and require specialized management
• Disadvantages of product-based organizational structures

  • Duplication of teams
  • Economies of scale issues due to duplication
  • Complex coordination between teams
  • Hindrance in collaboration due to silos
  • Mechanistic and rigid system
  • Slow reaction to external changes