SAV, Inc., started out just making hair dryers. However, as the company expanded, it produced automobiles, life insurance, and furniture. Considering this, the CEO has decided to change from a functional structure to a ____structure.
A geographic.
B product
C market
The correct answer and explanation is:
The correct answer is B. product.
Explanation:
A product structure is typically used by companies that produce a wide variety of products, as in the case of SAV, Inc. This structure is designed to help organizations focus on specific product lines by grouping employees, resources, and activities around each distinct product. As SAV, Inc. expanded from hair dryers to automobiles, life insurance, and furniture, it became necessary to manage each of these different product categories more effectively. A product structure allows for more focused management of each product line, with dedicated teams handling the specific needs, challenges, and marketing of each product.
The reason for this shift in structure is that with such diverse products, a functional structure (which organizes employees based on specialized functions like marketing, finance, and human resources) may no longer be sufficient. Instead, a product-based structure provides more flexibility, enabling the company to have different departments or divisions that specialize in particular product lines. For example, the automobile division would have its own teams for marketing, production, and sales, distinct from the teams handling the furniture or insurance products.
A geographic structure would be more appropriate for companies that operate in multiple regions or countries, focusing on organizing teams based on location. A market structure would be ideal for businesses that cater to different types of customer groups, such as children, adults, or businesses, and would organize teams based on those market segments.
By switching to a product structure, SAV, Inc. would be better positioned to handle the complexities and diverse needs of each product line effectively, ensuring that resources are allocated in a way that supports the unique requirements of each category.