What is a potential disadvantage of product/service grouping?

Choosing to organize products or services into groups can indeed lead to resource duplication, which is a significant disadvantage. When products or services are grouped, there is a chance that the same resources—such as staff, technology, or financial investments—may be allocated to similar offerings across different groups or divisions. This overlap can result in inefficiencies, where the company might be investing in multiple teams or systems to accomplish similar objectives, ultimately increasing operational costs and complicating resource management.

In contrast, the other options highlight benefits rather than disadvantages. Enhancing a company's flexibility implies a positive outcome by allowing easier adaptation to market changes. Simplifying management structures usually results in clearer lines of authority and responsibilities, making decision-making more straightforward. Faster product development is also advantageous, as it allows a company to bring innovations to market more quickly. These aspects indicate that while grouping products and services can have its merits in terms of structure and operational efficiency, the risk of duplicating resources poses a real challenge that companies need to consider carefully.