Which structure organizes a company's hierarchy according to its various product divisions?

A product-based structure organizes a company's hierarchy around its different product divisions or lines. This structure is particularly beneficial for companies that have diverse product portfolios, as it allows for focused management and specialization within each division. Each product division operates as a semi-autonomous unit, often having its own marketing, sales, production, and research and development teams tailored to the specific needs and dynamics of that product line. This specialization often leads to greater efficiency and responsiveness to market demands.

In contrast, a function-based structure organizes departments around particular functions or roles, such as marketing, finance, and operations, rather than around products. A geography-based structure, on the other hand, organizes the company based on different geographical regions which may be effective for multinational companies needing to focus on local preferences. A matrix or project-based structure combines functional and product-based elements, which can lead to complexity in reporting and management. Thus, when considering how best to structure a company around its product offerings, a product-based structure provides a clear and effective approach.