Organisation Grouping

Question 1

Define location grouping

Answer 1

This is grouping an organisation into geographical divisions

Question 2

Describe the advantages of Location Grouping

Answer 2

Each divisions can meet the needs of its local market, eg different tastes or fashions in different areas or countries

The business can react to changing external (PESTEC) factors quickly

It is easy to identify a failing area and hold regional managers accountable

Question 3

Describe the disadvantages of location grouping

Answer 3

Duplication of resources, such as administration staff or computer equipment across each group is inefficient

Divisions may compete against each other and forget the overall objectives of the organisation as a whole

Question 4

Define Product Grouping

Answer 4

This is grouping an organisation into divisions that deal with different products or services.

Question 5

Describe the advantages of product grouping

Answer 5

The business can react to changing external factors that effect each particular groups market quickly

It is easy for managers to identify struggling products or services

Question 6

Describe the disadvantages of product Grouping

Answer 6

Duplication of resources can occur

A new group needs to be set up every time the business launches a new product - meaning more staff, premises and equipment costs

Question 7

Define Customer Grouping

Answer 7

This involves grouping the organisations resources into divisions that each deal with a different type of customer

For example, a division for retail customers, wholesale customers and online customers