Grouping methods

• Functional grouping

  This is the traditional method of organising a firm into departments based on their core activities such as marketing or finance. This means that staff with similar expertise work together.

  Advantages – Brings together employees with similar skills allowing expertise to develop.Less duplication of resources

  Disadvantages -Can lead to slow decision making and poor communication. Can become unresponsive to external changes in the market
• Product/service grouping 


  This is when an organisation is divided into divisions based on a product they make or a product range.
• what are the advantages and disadvantages of product/service grouping?

  Advantages -Departments can respond more quickly to change in their specialist area. It encourages customer loyalty. Easier to identify products that are poorly performing. Disadvanatges- Departments based on products may end up competing with each other. There can be duplication of effort and resources
• Customer grouping

  This is when an organisation divides its operations by types of customer.
• customer grouping advantages and disadvantages

  Advantages -

  • encourages customer loyalty as customers are the main focus of the department
  • individual departments are more responsive to customer changes and needs

  Disadvantages -

  • Can be duplication of effort and resources
  • Competition between departments may occur
  • difficult to share resources and expertise across departments
• place/territory grouping

  This is where the organisation divides its operations by geographical area.
• Place/territory grouping advantages and disadvantages

  Advantages -

  Each department can meet the needs of local markets and can react quickly to external factors.

  Communication is better, for example with different languages or cultures.

  Failing departments can be easily identified.

  Disadvantages -

  Naturally high cost due to duplication of effort and resources.

  Departments may begin to compete with each other.

  New departments need to be created when the business wants to trade in a new area.
• technological training

  This is where the organisation divides its operation by the type of technology they require.
• Technological Grouping Advantages and disadvantages

  Advantages -

  Specialists are all working together which may result in a higher quality product

  Wastage and costs may be reduced due to specialist equipment and staff knowledge

  Disadvantages -

  High training costs

  duplication of effort and resources

  can only be used in very larger organisations