Groupings Flashcards
What to consider when choosing grouping
Size of organisation
Products or services being offered
Target markets
Functional grouping advantages
Specialisation each department focuses on its own work
Accountability so someone responsible for each section
Clarity in knowing your roles
Functional disadvantages
Departments can become resistant to change
Coordination may take too long
Closed communication lead to lack of focus
Product advantages
Expertise in each product can develop
Managers easily see how each product is performing
Decisions more responsive to change in business environment
Product disadvantages
Duplication or functions
Divisions may find themselves competitive
Lack of central control over each separate division
Place advantages
Serve local needs better
More effective communication between firm and local customers
Better knowledge of local staff
Place disadvantages
Conflict between local an central management
Duplication of functions
Customer advantages
Customers need sbejnf prioritised causes customer loyalty to build up
Services are tailored
Can respond much faster to customer needs
Customer feels like personal service is received
Customer disadvantages of
Administration can be time consuming to meet individual needs
Larger staffing costs
Competition between groupings of customers
Duplication of functions
Technological advantages
Staff become very specialised
Quick to train staff as there is only one process to learn
Problems in the production process are easier identified exactly
Technological disadvantages
Staff may be less motivated as work is repetitive
Expensive to set up as capital intensive
