What is an advantage of product/service grouping?

• A. The business can react quickly to external factors affecting each group's market
• B. It eliminates duplication of resources
• C. Resources are centralized
• D. It guarantees proportional profits across groups

Answer: (A)

Grouping by product or service gives each product division control over its own market-facing decisions, including marketing, production, and budgeting. This structure makes it possible to tailor actions to the specific conditions facing that product, rather than waiting for a company-wide plan to address everything. The strongest advantage is the speed with which a division can respond to external factors affecting its market—things like shifts in customer preferences, competitor moves, price changes, or regulatory updates. Because the division tracks its own performance, it can adjust pricing, promotions, and features quickly to protect or grow its position.

Other options don’t capture this benefit. Grouping by product doesn’t inherently eliminate resource duplication; in fact, it can lead to each division building its own resources. Resources aren’t typically centralized in a product-based structure, since decisions and control are pushed down to the product level. And profits across groups aren’t guaranteed to be proportional; different product lines will experience different market conditions and costs, so performance will vary.