Briefly state two disadvantages of product‑wise departmentalisation for a service firm such as a hotel chain.
Answer
Higher coordination cost between product units and duplication of support functions across units.
The correct answer is Higher coordination cost between product units and duplication of support functions across units. — List the two identified disadvantages as the final answer.
Step-by-step solution
- Recall that product‑wise departmentalisation groups activities by product or service line.
- Consider a service firm like a hotel chain where each product unit would be, for example, a luxury brand, a budget brand, etc.
- Identify that separate product units need to coordinate with each other for common services (e.g., procurement, HR), leading to higher coordination costs.
- Note that each product unit may maintain its own support functions (HR, finance), causing duplication of effort and resources.
- List the two identified disadvantages as the final answer.
Common mistake: Listing advantages (e.g., focus on product) instead of disadvantages.
Concept tested: Disadvantages of departmentalisation
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