Analyse two advantages to CP of changing to a product-based organisational structure.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2023). The mark or mark type is shown in brackets.

1. [1] Definition or explanation of product-based organisational structure – one where people in the company are divided according to which product line they work on.
2. [1] Definition or explanation of functionally based organisational structure – one where people in the company are divided according to their job role, such as marketing or finance.
3. [1] Employees in each product area are specialised in that product.
4. [1] Increased focus on each product and the market it sells in.
5. [1] Costs and revenues can be allocated more accurately to each product.
6. [1] Communication between departments will be more direct.
7. [1] Coordination between functions for each product is easier and quicker.
8. [1] Focus will be on products and their marketing.
9. [1] Competition for resources between functions will be less. Efficiency increases.
10. [1] Quicker reaction time to market changes.
11. [1] Quicker decision making as focus on particular product, rather than having to wait for input from other departments.
12. [1] CP produces paint for three markets – internal and external paints, aircraft industry.
13. [1] Production, development and marketing for each of these are different.
14. [1] Increasing competition and innovative distribution channels in the markets.
15. [1] Currently organised by function: five departments.
16. [1] Research centre for R&D into improving qualities of paints such as durability.
17. [1] Rising costs, customer dissatisfaction because of centralisation and poor communication.
18. [1] Improved focus on customer needs in each of the paint markets, leading to increased sales revenue, and potentially profit due to increased efficiency.
19. [1] Easier and less costly to implement and focus marketing strategies for each paint product, leading to more effective strategies.
20. [1] Specialisation and focus on product mean closer to market so quicker to react to changes, potentially leading to first mover advantage and higher market share.
21. [1] Accurate allocation of costs and revenues means loss makers and profitable paints can be identified clearly and quickly, leading to more efficient portfolio management and lower costs as weak performing products may be discontinued.
22. [1] Research centre projects can be more closely linked to the different market requirements, leading to meeting customer needs, higher sales and increased revenue and profit.
23. [1] Functions integrated with products so more efficient production and marketing – lower costs.