Departmentation By Functions.Every manufacturing unit, except a small onehas to perform certain basic functions such asProduction, Marketing, Finance and Personnel.Each of these are grouped into separatedepartments such as Production Department,Marketing Department, Finance Departmentand Personnel Department. This is known asDepartmentation By Functions.
Managing Director/General ManagerBoard Of Directors.Personnel Department. Finance Department. Production Department. Marketing Department.
Merits Of Departmentation By Function.1. Functional Departmentation is a Logical andTime-Tested Method.2. The available Manpower in the departments isutilized fully.3. It is suitable and convenient for creating majordepartments.4. It facilitates intra-departmental coordination. Italso promotes and provides the benefits ofoccupational specialization.5. It facilitates performance appraisal and controlof departments.
Demerits Of FunctionalDepartmentation.1. In functional departmentation, the decisionmaking process is delayed due to specialization.2. It is not conducive to overall organizationalstrength and survival.3. Functional Departmentation may not be suitablewhen the area covered by business activities israther wide.4. Conflicts between departments are possible ifproper mechanism for cooperation andcoordination is not instituted.
Departmentation By Process.Another way of horizontal grouping of activities isto organize them according to the process ofproduction performed. Thus, a textile mill may havea separate department for Spinning, Weaving,Dyeing, Bleaching and Printing, as these are themost important processes in manufacturing of cloth. Incase of administrative offices departments such as Filing,Accounts, Correspondence and so on are formed. Theywill operate under overall supervision and control of thegeneral manager.
Board Of Directors.Managing Director.Finance Manager. General Manager. Sales Manager.Processing. Spinning. Weaving. Dyeing. Bleaching. Printing.
Merits of Departmentation ByProcess.1. It ensures specialization.2. It is possible to appoint experts at each stage.3. It can use costly equipments.4. It provides economical repairs and maintenancebecause similar machines are put together.5. It is suitable to concerns manufacturing productsrequiring a number of processes.
Demerits of Departmentation byprocess1. It is difficult to compare performance of differentprocess-based departments because their nature ofwork differs.2. It face the problem of coordinating processesbetween different departments.3. It may create conflicts among managers of differentprocesses.4. It is unsuitable where manufacturing activity doesnot involve distinct processes.5. It provides little scope for managerialdevelopments.
Departmentation By Product.Under the departmentation by product, the organization isdivided into as many departments as the number ofproducts in the product line of the company. All functionsand activities related to particular products are broughtunder one departmental umbrella. The in-charge of thedepartment is called Product Manager who is given theoperating authority by the top level management. Thus,an automobile company will have one department forpassenger cars, another for jeeps and a third one fortrucks. Departmentation by Products is quite convenientin case of large multi-product enterprise.
Board Of Directors.Managing Director/General Manager.Finance. Production. Marketing.Manager.(Jeeps)Manager.(Trucks)Manager.(Buses)Manager.(Three-Wheelers)
Merits Of Departmentation ByProduct.1. It motivates departmental managers to take moreinitiative for raising efficiency and productivity of theirdepartments.2. As the comparison of different departments ispossible, the management can make investment inthe profit making departments and can close loss-making departments.3. It also provides training and developmentopportunities to managerial staff. In addition, itfacilitates growth and diversification of products atthe departmental level.
Demerits Of Departmentation ByProduct.1. This type of departmentation is costly as servicefunction are duplicated.2. It is not convenient for small and medium-sizedconcerns due to cost factor.3. The top management finds it difficult to haveeffective control on the departments.
Departmentation By GeographicalLocation/ Area.Along with the increase in the company’s volume ofbusiness it may find it necessary to establish regionalfactories and branch offices to meet the increasingdemand for its products/services. These factories/officesare then given the status of separate departments ordivisions. This type of departmentation is on the basis ofterritory/region/area and has been found more suitable orservice organizations such as insurance companies, banks, andso on. In India, the Indian railways is have different divisionssuch as Central Railway, Western Railway, and so on. SimilarlyLIC has its zonal and divisional offices.
Merits Of Departmentation ByGeographic Location.1. It motivates regional heads to achieve highperformance.2. It can adapt to local conditions.3. It provides training to middle level executives.4. It facilitates expansion of business to variousregions.
Demerits Of Departmentation ByGeographical Location.1. It cannot avoid duplication of activitiese.g., service functions performed by regionalunits can be performed centrally by the headoffice.2. It is likely that each regional unit may give higherimportance to its unit and neglect the overallinterest of the organization.3. It may lead to conflicts between regionalmanagers.4. It may be difficult to control different branchesfrom the head office.
Departmentation By Customer.In the departmentation by customer, thedepartments are establishes as per the customer that itserves. Enterprises offering specialized services preferdepartmentation by customers. Manufacturers ofproducts such as tyres, compressors, spare-parts, etc.,who sell their products to different categories ofcustomers, have found it convenient to set up customer-wise departmentation for marketing their products. Thistype of departmentation is possible in case of bigautomobile company supplying cars to differentcategories of customers.
Board Of Directors.Managing Director.General Manager.Finance. Production. Marketing. Personnel.Foreign Buyers. Dealers/Retailers. Manufacturers. Defense Department. Public Undertakings.
Merits Of Departmentation ByCustomer.1. It ensures full attention to customers.2. It provides benefits of division of work.3. It is possible to know the likes and dislikes of thecustomer.4. It helps the organization to earn higher goodwillthrough better service.
Demerits Of Departmentation ByCustomer.1. It may result in under utilization of resources.2. It may create duplication of facilities.3. It may face heavy overheads.4. It may give special treatment to certain class ofcustomers.
Departmentation By Time.Public service institutions like hospitals, policestations and fire brigade work round the clock.Supervisor.Day Shift. Evening Shift. Night Shift.