A function-oriented structure in which firms have “vertical” groupings such as Marketing, Finance, Operations, R&D, or Customer Service. Each function has a specialty, and these specialties are critical to the performance of the firm. This kind of structure is effective when the organization’s product lines are fairly narrow or serve defined market areas.
The Product Manager’s Survival Guide.
And now for product-oriented structures:
A** product-oriented **structure is commonly used by midsize to larger firms that are divided into product groups, product lines, or even product divisions.
These firms effectively manage products and portfolios in a holistic manner and are often focused on innovation, advanced technologies, product enhancements, and other areas in order to improve efficiency and bottom-line performance.
The Product Manager’s Survival Guide
Often met the companies that try to take product-oriented approach, without clarifying the ownership aspect. The moment you’re split into product-oriented structure and retain classical “function-oriented” organisational structure - product division becomes a hoover that generates profits but doesn’t get any internal investment:
The ownership of the product or portfolio’s overall performance in a firm with a product-oriented structure is often a general manager or divisional president (a business leader). This profit-center approach allows each business leader to balance investments across the product portfolio, consistent with the strategies of the enterprise.