ENG M 402

Business Organisation – Function vs Product

Figure 1: Org. by Function

Parameter Advantages Disadvantages Control X (Direct reporting) Specialization X (Functional departments) Autonomy X (Delegated work) Mobility/Chance for promotion X (Vertical structure) Interaction X (Silos) Team Mentality X (Us – Them mentality) Profit control X (Work not product) Cost of services X (Centralized) Cost of oversight X (Few managers)

Owner

Sales Admin.Product

Engineering/

technical

Figure 2: Org. by Product

Product group contains: manager/supervisor, maintenance, technical and production staff (may include administrative staff also)

Parameter Advantages Disadvantages Control X (delegation) Specialization X (fragmentation) Autonomy X (Rapid reaction) Mobility/Chance for promotion X (similar responsibilities) Interaction X (different skills) Team Mentality X (pride in work) Profit control X (ownership of process) Cost of services X (duplication) Cost of oversight X (more managers)

Owner

Product 1Product 2

Product 3Product 4