Module 3 preparation of business plan


Product Organizational Structure



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MODULE 3 AGRI 11

Product Organizational Structure


This is another commonly used structure, where organizations are organized by a specific product type. Each product category is considered a separate unit and falls within the reporting structure of an executive who oversees everything related to that particular product line. For example, in a retail business the structure would be grouped according to product lines.



VP Coffee

VP Muscovado

VP Mushroom

VP Sanitizer



Purchase
Marketing


Finance

Purchase
Marketing
Finance

Production
Purchase
Marketing
Finance


Production


Purchase
Marketing
Finance

Organization structured by product category facilitates autonomy by creating completely separate processes from other product lines within the organization. It promotes depth of understanding within a particular product area and also promotes innovation. It enables clear focus with accountability for program results.


As with every model, this model also has a few downsides like requirement of strong skills specializing in the particular product. It could lead to functional duplication and potential loss of control; each product group becomes a heterogeneous unit in itself.

Geographic Organizational Structure


Organizations that cover a span of geographic regions structure the company according to the geographic regions they operate in. This is typically found in organizations that go beyond a city or state limit and may have customers all across the country or across the world.




North

East

South

West

Production


Marketing
Sales

Production
Marketing
Sales


Production


Marketing
Sales

Production
Marketing
Sales

It brings together employees from different functional specialties and allows geographical division. The organization responds more quickly and efficiently to market needs, and focuses efforts solely on the objectives of each business unit, increasing results.


Though this structure increases efficiency within each business unit, it reduces the overall efficiency of the organization, since geographical divisions duplicate both activities and infrastructure. Another main challenge with this model is that it tends to be resource intensive as it is spread across and also leads to duplication of processes and efforts.

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