Product based division of labour : 

If a worker specializes in the production of a single good or service, it is called product based division of labour. In case of small farmers, a potter, a cobbler or a carpenter in a village we see that there is the use of product based division of labour. It is very common in household enterprises of developing countries like India. 

When the production is made for self consumption or on a small scale there is the use of product based division of labour. For example, most of the farmers in our country make production of food grains mainly for self consumption. All of them make use of product based division of labour. 

Process based division of labour : In big production units like corporations and government enterprises where the production is made on a very large scale, there is the use of process based division of labour. In case of process based division of labour, the production of a commodity is divided into many processes and a worker specializes in one or two processes, that is called process based division of labour. For example, Britannia Bread Company manufactures bread. Raw material for bread is wheat flour. Conversion of wheat flour into bread requires three or four processes. 

The flour has to be converted into dough and dough has to be kept into containers for baking. Containers are kept in ovens for baking. The baked bread is cut into appropriate size and packed. All processes required in manufacturing of bread are underU kcn by different workers and nobody can claim mat he has manufactured the bread. He can say that he has performed one or two processes in the preparation of the bread.