Departmentation

Departmentation
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
Er.Sartaj Singh Bajwa

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

Functional 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

Time wise Departmentation
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

Departmentation

by Sartaj on Sep 29, 2010

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