1.

People with common skills share information for problem solving or accomplishing a
task. Learning from peers increases skills and abilities. Besides, people can
supervise each other and meet work schedules. Peer supervision is key if work is
complex because supervision from above is difficult. Moreover, peers working closely,
peers develop norms and values that increase their effectiveness and loyalty.

2. Communication Problems - Functions communicate poorly because of subunit
orientation.
Measurement Problems - Evaluating the cost and contribution of each function to a product
is difficult.
Location Problems - With regional offices, a company must balance decision-making
betweencentralized functions and regional managers.
Customer Problems - New types of customers require customized products to meet
their needs.
Strategic Problems - Solving daily coordination problems prevents top managers from
focusing on long-term strategic issues, resulting in a loss of strategic direction.

3. Three Kinds of Product Structure - As the number of products and/or services increase,
tasks are grouped by product and function. A product structure groups products into
separate divisions. A company must determine the difference and complexity of products
and coordination methods between support functions and product divisions. Support
functions can be centralized at the top or grouped for each product division. These
decisions determine a companys product division, multidivision, or product team
structure
Geographic Structure - As a company expands into different regions, it needs to organize
its core competences to meet the needs of different regional customers. The geographic
divisional structure permits some functions to be centralized and others to be
decentralized. This structure increases both horizontal and vertical differentiation. A
regional hierarchy is added.
Market Structure - The customer is the focus in a market structure: commercial, consumer,
corporate, and government customers. Each division develops products for its customers
but uses centralized support functions. This structure permits a quick response to market
changes.

4. Product Division Structure - A product division structure with centralized support
functions is appropriate when products are similar and target the same market.
Multidivisional Structure - A multidivisional structure is appropriate if products are
different and are sold in many markets.
Product Team Structure - A hybrid of the product division and the multi division
structures, the product team structure customizes products, speeds development time, and
reduces costs.

5. Increased organizational effectiveness, due to a division of labor between corporate and
divisional managers. Besides, it increased control, because corporate managers monitor
divisional managers and make comparisons. Moreover, it leads to profitable growth,
because capital can be allocated to divisions with the greatest potential return on
investments. An internal labor market, because good divisional managers are promoted to
corporate management.

6. A hybrid of the product division and the multidivision structures, the product team
structure customizes products, speeds development time, and reduces costs. The poor
communication leading to slow development in the multidivisional structure is avoided.
Functional specialists serve on self-contained, product division teams. A team manager
oversees design and manufacturing activities, and employees become loyal to product not
function. Decentralization and integration facilitate rapid decision-making.