Grouping Flashcards
What is grouping?
This is the way that staff are grouped together according to different factors
What are the types of grouping ?
-Functional
-Product/Service
-Technological
-Geographical
-Customer
What is functional grouping ?
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.
What are advantages of functional grouping ?
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
What are disadvantages of functional grouping ?
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
What is product/service grouping
This is where staff are separated into divisions according to the product/service that they make or sell.
What are advantages of product/service grouping ?
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
What are disadvantages of product/service grouping ?
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
What is technological grouping ?
Staff are separated into divisions according to the technology or production processes that they are expert in.
What are advantages of technology grouping ?
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
What are disadvantages of technology grouping ?
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
What is geographical grouping ?
Staff are separated into divisions, each dealing with a different geographical area.
What are advantages of geographical grouping ?
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
What are disadvantages of geographical grouping ?
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
What is customer grouping
Staff are separated into divisions divisions according to the needs of different Groups of customers
What are advantages of customer grouping ?
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
What are disadvantages of customer grouping ?
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
