In organizational design, which structure is defined by grouping departments around products?

In organizational design, which structure is defined by grouping departments around products?

• A. divisional structure
• B. functional structure
• C. product structure
• D. matrix structure

Answer: (C)

Grouping departments around products describes a product-based structure. In this setup, each product line becomes its own unit that includes the key functional areas—such as engineering, manufacturing, marketing, sales, and support—focused on that specific product. This arrangement makes the product team responsible for the full spectrum of activities tied to that product, which fosters clear accountability and a close alignment between what the product needs and how it’s developed, marketed, and supported. Decisions about design, pricing, and go-to-market timing can be made within the product team more quickly because all the necessary functions sit together for that product. This structure supports specialized attention to different products or product lines and can improve responsiveness to market changes or customer needs. However, it can lead to duplication of functions across products and higher costs, since each product area may maintain its own marketing, engineering, or manufacturing staff. Because of that, organizations often weigh the benefits of product-focused focus against the potential inefficiencies and may use cross-team coordination or shared services to address overlaps.

Grouping departments around products describes a product-based structure. In this setup, each product line becomes its own unit that includes the key functional areas—such as engineering, manufacturing, marketing, sales, and support—focused on that specific product. This arrangement makes the product team responsible for the full spectrum of activities tied to that product, which fosters clear accountability and a close alignment between what the product needs and how it’s developed, marketed, and supported. Decisions about design, pricing, and go-to-market timing can be made within the product team more quickly because all the necessary functions sit together for that product.

This structure supports specialized attention to different products or product lines and can improve responsiveness to market changes or customer needs. However, it can lead to duplication of functions across products and higher costs, since each product area may maintain its own marketing, engineering, or manufacturing staff. Because of that, organizations often weigh the benefits of product-focused focus against the potential inefficiencies and may use cross-team coordination or shared services to address overlaps.