Which structure involves creating divisions based on product types?

The divisional structure is a type of organizational framework that organizes a company into semi-autonomous units or divisions based on various factors, such as product types, geographical locations, or customer segments. In this case, when divisions are created based on product types, each division is responsible for a specific product line and operates like a small company within the larger organization. This allows for greater specialization and focus on the particular product, enabling teams to be more agile in marketing, production, and customer service related to that specific product.

This structure can foster innovation and quicker decision-making within the divisions, as managers can tailor strategies and operations directly related to their specific products without needing to fit into a broader functional hierarchy. Additionally, it supports clear accountability and performance evaluations based on the success of each product line, which can contribute to overall organizational effectiveness.

In contrast, a matrix structure combines elements of functional and divisional structures, leading to dual reporting relationships that can sometimes create confusion and complexity. The market structure typically focuses on customer segmentation rather than product types, while the functional structure is organized around specific functions (like marketing or finance) rather than products and does not allow for the same level of focus on individual products as the divisional approach does.