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  • 1. 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
  • 2. 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
    Er.Sartaj Singh Bajwa
  • 3. 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
    Er.Sartaj Singh Bajwa
  • 4. 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
    Er.Sartaj Singh Bajwa
  • 5. Basis Of Departmentation
    • Functional Departmentation
    • Product wise Departmentation
    • Territorial or Geographical Departmentation
    • Process wise Departmentation
    • Customer wise Departmentation
    • Time wise Departmentation
    Er.Sartaj Singh Bajwa
  • 6. 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
    Er.Sartaj Singh Bajwa
  • 7. 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
    Er.Sartaj Singh Bajwa
    • 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
    Er.Sartaj Singh Bajwa
  • 9. 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
    Er.Sartaj Singh Bajwa
  • 10. 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
    Er.Sartaj Singh Bajwa
  • 11. 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
    Er.Sartaj Singh Bajwa