Select a company and identify the departmentation pattern (or patterns) it uses. Draw an organization chart for the firm. Why do you think the company selected the type of departmentation it did? Would you recommend it?
Departmentation by enterprise function means grouping of activities according to the functions of an enterprise, such as production , selling and financing
Departmentation is a means of dividing a large organization into smaller , flexible units
Advantages Increase the efficiency of the organization as various activities are grouped together Furnishes means of tight control at the top. Simplifies training. It provides for fixation of standards of performance and ensures effective control Creates opportunities for the departmental heads to take initiative
Disadvantages Reduces coordination between functions as the organization is divided into various parts Responsibilities for profits is at top only. Slow adaptation to change in environment. It increases the levels of management which is expensive and thus increases the gap between the top management and the workers Departmentation creates difficulties of communication among the various departments of the organization
Factors affecting Departmentation To get the benefits of specialization Control should be effective so as to ensure clear authority and responsibility Coordination should be taken into consideration Key activities need to be separated Expenses involved in creating separate departments
Basis Of Departmentation Functional Departmentation Product wise Departmentation Territorial or Geographical Departmentation Process wise Departmentation Customer wise Departmentation Time wise Departmentation
Grouping of common or homogeneous activities to form an organization unit is known as functional departmentation
Further functions in an organization are divided in two categories basic and secondary functions
Basic functions are those which are necessary for the smooth running of the business like production ,marketing , finance
When span of management is too large then further departments are created within the main departments they take care of secondary functions
In this case like the basic function is marketing but it may further be divided into advertisement , sales , market research
Product wise Departmentation Product departmentation involves the grouping together of all the activities necessary to manufacture a product or product line Eg In an automobile organization the departmentation could be car division , truck division , bus division
DEPARTMENTATION BY TERRITORY OR GEOGRAPHY Departmentation by territory or geography means “ Grouping of activities by area or territory is common in enterprises operating over wide geographic areas”. Organizations which are involved in banking , insurance , transportation Eg India could be divided into north , south , east , west , central zones Further North zone can be divided into Chandigarh , new Delhi , Jalandhar , Ajmer divisions
Process Departmentation In this processes involved in production or various type of equipments used are taken as basis of departmentation The basic aim to do process departmentation is to achieve economic benefit Eg process departmentation in case of textile organization can be by dividing the production into spinning , dyeing , weaving , finishing departments
Customer wise Departmentation Grouping of activities around marketing channels involves making an organization structure reflect the ways an organization reaches the ultimate customer Advantage of this type is that it focuses on customer who are the ultimate suppliers of money to the organization Eg in pharmaceutical companies different customers could be doctors , hospitals , government , retail stores Further it could be wholesale , retail , export
In some organizations where work is performed through day and night , the work is divided into shifts
Thus when an organization may operates on three shifts, three different departments may exist
Wal-Mart Stores.TypePublicTradedasNYSE: WMTDow Jones Industrial Average Component Industry Retailing Founded1962Founder(s)Sam Walton Headquarters Bentonville, Arkansas, United States36°21′51″N 094°12′59″W Number of locations8,970 (2011)Area servedWorldwideKey people Mike Duke (CEO)H. Lee Scott (Chairman of the Executive Committee of the Board)S. Robson Walton (Chairman)
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Yes, we recommend departmentation for the following reasons :-
It increases the operating efficiency of the employees.
It makes the executive alert & responsible in his duties.
It increases the prestige & skill of the departmental heads.
It help in better co-ordination among the managerial