1. Output-Oriented Divisionalized Forms

2. Product Line Departmentalization
Product line structure is a design that groups similar or
related products together.

3. Insurance Company by Product Lines

4. Product Line Divisions with Corporate Support Units
This structure provides centralized support
functions/services for the needs of several different
product lines.

5. Levi Strauss – Product Lines with Corporate Support Units

6. Product Team Structure
Product Development Teams
● ●
● ●
PTM
● ●
● ●
PTM
● ●
● ●
PTM
PTM -Product Team Mgr
●-Functional specialists
Product Division
Product Division
Product Division

7. Product Team Structure
The Product Team structure is a cross between the
product division structure where support functions are
centralized and the multi-divisional structure where
each division has its own support functions.
It is used primarily where the focus of the industry is
on product customization. The functional orientation of
specialists is seen as not in the best interests of the
product divisions.

8. Process Departmentalization
Process structure is a design that group similar
organizational processes together. These processes
are usually technologically-based, but not always.

9. An Example – Process Departments
A metalworking company

10. Customer Departmentalization
Customer-based structure is a design that groups similar
customer groups together.

11. Geographic/Territory Departmentalization
Geographic or territorial structure is a design that groups
similar/localized regions together.

12. A Geographical Division Firm

13. Wal-Mart’s Corporate Structure
A geographically-based set of divisions, including international

14. Advantages of Divisional Forms
Evaluate departments as autonomous profit centers
Facilitate coordination between functions for rapid response
Add flexibility to a firm’s structure
Focus on client needs
Develop broadly trained managers

15. Disadvantages of Divisional Forms
Increase coordination problems between specialized functional/divisional areas
Lead to decreased communication between functional specialists across divisions
Contribute to a lack of clarity of functional area responsibilities and a duplication of services

16. Strengths of Divisional Forms
Suited to fast change in unstable environment
Client satisfaction because product responsibility & contact points are clear
High coordination across functions
Units adapt to differences in products/processes/territories
Best in large organizations
Best when several product/services are offered

17. Weaknesses of Divisional Forms
Lose economies of scale in functional departments
Poor functional coordination across division lines
Lose in-depth competence & technical specialization
Integration & standardization across division lines is difficult

18. The Conglomerate Design (Multi-Divisional, SBU)
Pearson PLC, a British firm, uses a conglomerate form
to manage several unrelated businesses. Conglomerate
forms usually result from unrelated diversification, and
act as a “holding company.”