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Product based organizational structure

Updated March 23, 2017

An organizational structure is a framework in which companies outline the different responsibilities in their company. A product-based organizational structure separates the company by products, activities, projects or geography. This allows a company to have a particular focus on specific items in its business operations.

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Significance

Companies implement a product-based organizational structure to take advantage of the multiple product lines within the business. Each portion of the structure can focus as an individual unit inside the whole company. The structure may also have several layers of managers and employees.

Features

Business owners, directors or executive officers typically make up the top level of a product-based organizational structure. Next are operational managers or vice presidents. Lower levels will include various front-line managers, such as sales, manufacturing or finance, followed by employees.

Advantages and Disadvantages

Product-based structures allow companies to remain flexible in the business environment. This allows the company to add or remove structure sections as necessary. However, it can prohibit companies from achieving company-wide goals since each unit operates on its own.

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