Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 10

In the early 1990s, Chrysler Corporation placed nearly all decisions about the development of a new vehicle in the hands of a single, cross functional product team. In contrast, General Motors used an approach that placed a stronger emphasis on functional specialties. Small teams were established that consisted of experts from the same functional field. Each team was charged with a particular assignment that related to its area of specialization. For example, one team might have had the primary responsibility for the design of the body of the vehicle, whereas another team might have been charged with developing the drive train. The teams worked simultaneously on their specific tasks. Some individuals on these teams also served on additional cross functional teams that were charged with coordinating the development process across the functional areas. Discuss the relative advantages and disadvantages of these two approaches to product development.