Grouping

Question 1

What is grouping?

Answer 1

This is the way that staff are grouped together according to different factors

Question 2

What are the types of grouping ?

Answer 2

-Functional​
-Product/Service​
-Technological ​
-Geographical​
-Customer​

Question 3

What is functional grouping ?

Answer 3

Staff are separated into divisions according to skills and expertise, for example Marketing and Finance.

-These functional areas work for the benefit of the whole org​
-Follow a system of Centralised decision making
-Decisions made for the organisation as a whole originating at the top.

Question 4

What are advantages of functional grouping ?

Answer 4

Allows for specialization in each functional area – function high standard​

There is a clear structure – staff know who to turn to if they need expertise e.g. the Accounting and Finance department for financial performance information​

There is strong leadership from top - everyone is aware of mission and vision of company​

Decisions made from viewpoint of entire company - more consistent experience for customers, so where there is functional grouping there will be a more consistent delivery to customers

Question 5

What are disadvantages of functional grouping ?

Answer 5

Staff are loyal to the department rather than to the organisation – conflict may arise​

Communication barriers may exist between departments leading to slow decision making​

May become and too large and unresponsive to changes in the market – dissatisfied customers

Question 6

What is product/service grouping

Answer 6

This is where staff are separated into divisions according to the product/service that they make or sell.

Question 7

What are advantages of product/service grouping ?

Answer 7

Often better informed regarding changes in customer fashions… can make more appropriate decisions to meet customer needs…

More experienced and knowledgeable staff so a better service is provided…

Staff within divisions empowered to make own decisions, motivates staff to be productive

Managers can easily identify how different products/services are performing – more responsive to needs of customers

Question 8

What are disadvantages of product/service grouping ?

Answer 8

May be rivalry between different product departments – counterproductive to relationships​

Each division requires own support staff (admin, HR, finance) - can cause duplication of resources which is costly​

If a new product is introduced new employees must be employed – time consuming and expensive

Question 9

What is technological grouping ?

Answer 9

Staff are separated into divisions according to the technology or production processes that they are expert in.

Question 10

What are advantages of technology grouping ?

Answer 10

Staff are expert in the technology that they are using - increased specialisation in production processes ​

Problems are easily pinpointed as staff are only responsible for one piece of technology - this can ensure that technology runs smoothly and the business is productive ​

Maximum use of capital equipment can cater for variety of diverse markets, the more technology a business has, and the more specialised the staff are in using it - therefore the more products they can offer to the customers​

Question 11

What are disadvantages of technology grouping ?

Answer 11

Divisions are required for every piece of technology – this is expensive​

Staff can be expensive to employ as they are often experts and engineers etc leading to high wage costs.. reduced profitability ​

Often requires support groups – this leads to duplication of resources and effort​

Question 12

What is geographical grouping ?

Answer 12

Staff are separated into divisions, each dealing with a different geographical area.

Question 13

What are advantages of geographical grouping ?

Answer 13

Can cater to the needs of customer groups who have different language and cultural differences – increased customer satisfaction​

More personal service for customers – means customer loyalty can be built​

Easy to identify a failing division – means divisional managers can be held accountable

Question 14

What are disadvantages of geographical grouping ?

Answer 14

Duplication of effort (e.g. several HR, Finance and Marketing departments) – costly and can reduce profitability​

Competition between divisions – bad because it is counterproductive to working relationships​

If employee moved from one region to another they will need to be retrained for new cultural needs – increases costs

Question 15

What is customer grouping

Answer 15

Staff are separated into divisions divisions according to the needs of different Groups of customers

Question 16

What are advantages of customer grouping ?

Answer 16

Allows for services to be tailored to each group of customers or a specific customer – increased customer satisfaction and good reputation​

Customers receive a more personal service – builds customer loyalty​

Marketing can be tailored to specific customers needs – this is good because it ensures finance is not wasted on ineffective advertising e.g. 18-30s holidays are advertised on Capital FM rather than Smooth RADIO​

The business will be able to respond much faster to customer needs which is good because the business will have a COMPETITIVE EDGE over their rivals

Question 17

What are disadvantages of customer grouping ?

Answer 17

Must have functional depts. for each group of customer – there is a duplication of effort​

New staff are needed if there is a new customer grouping or product created – large staffing costs​

Competition between customer groupings/departments can exist – counterproductive to relationships