Bob's Appliances sells and services household appliances such as washing machines,

dishwashers, ranges, and refrige

rators. Over the years, the company has developed a good

reputation for the quality of its customer service, and many local builders patronize the

store. Recently, other national retailers, including Best Buy, Lowe's, and Costco, have

begun to offer applia

nces for sale. To attract more customers, however, these stores also

carry a complete range of consumer electronics products

televisions, stereos, and

computers. Bob Lange, the owner of Bob's Appliances, has decided that if he is to stay in

business, he m

ust widen his product range and compete directly with the chains.

Lange decides to build 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, Lange is not sure of the best way to organize the employees.

Currently, he uses a functional structure; employees are divided into sales, purchasing and

accounting, and repair. Bob is wondering whether selling and servicing

consumer

electronics is so different from selling and servicing appliances that he should move to a

product structure (see the figure) and create separate sets of functions for eac

h of his two

lines of business.

1.

You are a team of local consultants whom Bo

b has called in to advise him as he makes

this crucial choice. Which structure do you recommend? Why?

2.

Contrast the three traditional organizational designs.