Tom Brady's new job in Tampa didn't work out, but fortunately, he still has his appliance business. Patriot Appliances sells and services household appliances, such as washing machines, ranges, refrigerators, and dishwashers. Since it's beginning, the company has pursued a strategy based on superior customer service. Recently, some big-box retailers, including Best Buy, have opened stores that also sell appliances. However, to attract more customers, these stores also carry a complete range of consumer electronics, including televisions, smartphones, and computers. Tom Brady, the owner of Patriot Appliances, decided that if he is to stay in business, he must widen his product range and compete directly with the chains. Tom built a 20,000 square-foot store and service center, and he is now hiring new employees to sell and service the new line of consumer electronics. Because of his company’s increased size, Tom isn't sure how to organize his employees. Currently, he uses a functional structure—employees are divided into sales, purchasing and accounting, and repair. Tom wonders whether selling and servicing consumer electronics is so different than selling and servicing appliances that he should move to a product structure (see the figure below) and create separate sets of functions for each of his two lines of business. You are a local consultant whom Tom has hired to advise him on this crucial decision. Which structure do you recommend and why?
Tom Brady's new job in Tampa didn't work out, but fortunately, he still has his appliance business. Patriot Appliances sells and services household appliances, such as washing machines, ranges, refrigerators, and dishwashers. Since it's beginning, the company has pursued a strategy based on superior customer service. Recently, some big-box retailers, including Best Buy, have opened stores that also sell appliances. However, to attract more customers, these stores also carry a complete range of consumer electronics, including televisions, smartphones, and computers. Tom Brady, the owner of Patriot Appliances, decided that if he is to stay in business, he must widen his product range and compete directly with the chains.
Tom built a 20,000 square-foot store and service center, and he is now hiring new employees to sell and service the new line of consumer electronics. Because of his company’s increased size, Tom isn't sure how to organize his employees. Currently, he uses a functional structure—employees are divided into sales, purchasing and accounting, and repair. Tom wonders whether selling and servicing consumer electronics is so different than selling and servicing appliances that he should move to a product structure (see the figure below) and create separate sets of functions for each of his two lines of business.
You are a local consultant whom Tom has hired to advise him on this crucial decision. Which structure do you recommend and why?
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