Final answer:
The term for organizing a company by product or customer type divisions is divisional structure. It allows for specialization and consolidation of expertise, evident in formal organizations and vertical mergers. Intra-industry trade and the splitting of the value chain are examples of this specialization on a global scale.
Step-by-step explanation:
The organization of a company by divisions that brings together all those involved with a certain type of product or customer refers to a divisional structure. This structure allows a company to focus on specific areas of activity, such as residential, commercial, industrial, and transportation. The divisional structure enables the company to be more responsive to the needs of different sets of customers and product types by consolidating expertise and resources within a particular division. For example, within a manufacturing company like a shoe factory, each division might be responsible for a different product line. In the case of a restaurant, this organizational structure could mean having separate divisions for different food categories or services provided.
Companies may also partake in vertical mergers as a strategic move to protect themselves against the loss of suppliers and to streamline the manufacturing process, which often involves connections with multiple suppliers like those of food, furniture, and kitchen equipment. The divisional structure is representative of formal organizations characterized by a hierarchy of authority, a clear division of labor, explicit rules, and impersonality.
In the context of international trade, businesses may engage in intra-industry trade, which exemplifies how the value chain can be divided and specialized. Production may be spread across geographic locations, allowing firms to specialize and innovate, sometimes involving intra-industry trade of goods within the same industry.