What is product structure?

By Vaibhav Hariram3 min read · Posted Jun 13, 2023

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Product structure is a framework often used in business that outlines the elements that make up a product as well as its characteristics, also known as the bill of materials. Essentially, it’s all the steps it takes to create a product, good, or service and then how it’s distributed to different places.

What are the types of product structure?

  • Product based: In product-based organizations, teams are organized around specific products or product lines. A product-based structure is when each team focuses on creating, advertising, and selling a particular product. This structure is useful for companies that make many different products because it allows them to focus on each product and market it better.

  • Market based: In a market-based organization, teams are organized around certain markets or clientele. Each team is in charge of designing and promoting products that are aimed at a certain clientele. Utilizing this structure may be advantageous for businesses that serve a variety of markets and customer demands.

  • Geography structure: In a geographically oriented organization, teams are organized by geographic regions. Each team is in charge of creating and selling goods that meet the demands of consumers in a certain area. Companies that operate in many areas with diverse market demands and cultural diversity might benefit from using this structure.

  • Matrix structure: In a matrix structure, teams are organized around both products and functions. Teams work on specific products while also having access to the resources and expertise of different functional departments. The matrix structure allows for an efficient use of resources because teams include specialists from various departments. This reduces overhead costs and the amount of time needed to complete a project.

  • Project based structure: In a project-based structure, teams are organized around specific projects or initiatives. Each team is responsible for developing and executing a particular project or initiative. The advantage of a projectized organization is that it can be very flexible in terms of how it organizes its resources, which helps to ensure that the most appropriate people are assigned to each task at hand. This can be especially beneficial when the scope of a project changes significantly over time.

What are examples of product structure being used in real life?

  • Apple: Apple's organizational structure is built on products, with several teams responsible for designing, creating, and promoting certain devices like the iPhone, iPad, and Mac.
  • Procter & Gamble: Procter & Gamble manages its broad variety of consumer goods, including Pampers, Tide, and Gillette, using a product-based organization. A specialized staff is in charge of developing, promoting, and selling each product.
  • Toyota: Toyota has a structure that is centered on its products. It has different teams that work on developing and making specific car models like the Camry, Corolla, and Prius.
  • GE Aviation: GE Aviation manages its numerous product lines, such as jet engines, avionics, and aircraft systems, using a product-based organization. Each product has a specific team that is in charge of developing and producing it.

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