The document discusses departmentation, which is the process of dividing organizational activities into units or departments based on functions, products, regions, or customers. The key points are: 1) Departmentation aims to efficiently manage large undertakings by assigning work to those best suited and facilitating activities. 2) Common ways to departmentalize include by function, product, region, and customer, with advantages like specialization and control but disadvantages like lack of coordination. 3) Factors for effective departmentation include specialization, coordination, control, economy, and human considerations.

1. Departmentation
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2. Objective :
to manage a large undertaking
to assign the work only to those who are best
suited
to facilitate the carrying out of the activities
efficiently for achieving overall results.

3. Meaning :
Process of dividing activities into units & subunits
Division of work into smaller units and their re-grouping
into bigger units as per the similarity of features.
Grouping common activities of a organization on the
basis of a function under a single person control.
Process of integrating similar activities of business into
units for facilitate smooth administration at all levels.

4. Definition:
Departmentation is the classification of activities and
organizations into units and sub-units on the basis of
operations and functions, so that each unit (called
Department) will work smoothly and separately for each
other .
◦ Each department is headed by a person called departmental
manager.

5. Example:
Organizational Structure of Unilever
◦ Product Groups-
◦ Food & Drinks
◦ Detergents
◦ Frozen Products
◦ Chemicals
◦ Personal Products
◦ Agribusiness
◦ Edible Fats & Dairy Products
◦ Geographic Regions-
◦ Europe
◦ East Asia
◦ North America
◦ Latin America
◦ Central Asia
◦ Functional Areas
◦ Finance
◦ Commercial
◦ R&D
◦ HR
Unilever the Anglo-Dutch MNC has top
management team consisting of the
Chairperson & two Vice Chairpersons.

6. Why Departmentation:
Effective control on expenditure
Budget preparation
Better coordination
Work analysis
Attaining specialization
Fixations of responsibilities
Freedom or autonomy

7. Other needs and importance:
Increases the operating efficiency of the employees
Makes the executive to be alert and efficient in his duties
Increases the prestige and skills of the departmental heads
Makes the departmental heads efficient
Easy to further expansion of the organization

8. Major problems:
De-emphasis of overall company’s objectives
Reduces coordination b/w functions
Responsibility for profits is at the top only
Slow adaptation to change in environment
Limits development of general managers
Overspecializes & narrow viewpoint of key personnel

9. There are certain danger points in the
process of departmentation,
the work of co-ordination becomes difficult;
the greater the number of departments and particularly levels, the more complicated becomes
the task of co -ordination. The managerial efficiency and the overall output would be lesser
because of poorer coordination
 the work of communication, control, supervision and planning appears more difficult and
enhances the cost of managing an enterprise
 there is remote possibility of direct contract between top management and operative
personnel because of the layering of executives
This causes a loss of morale on the part of subordinates. In short, levels are expensive in terms
of money and effort and undermine operating efficiency of the business.

10. Factors for departmentation:
Specification
Coordination
Control
Economy
Recognition of local conditions
Human considerations
Security attention

11. Factors description
for departmentation,
1.Specialization-
Departmentation should reflect the specialization in performing work
2.Coordination-
Best results achieved when activities are performed in coordination
3.Control-
Process of analyzing whether intended results are being achieved.

12. Factors description
for departmentation,
4.Economy-
Balance should be maintained b/w cost of creating a department &
its contributions
5.Local conditions-
More important for organizations operated in different geographical
areas
6.Human considerations-
Human factor plays an important role

13. Process of departmentation: (HOW)
Identification of work
Analysis of details of each work
Description of the function of the organization
Entrusting the function to a separate person who has
specialized in the respective field
Fixing the scope of authority and responsibility of the
departmental heads

14. Basic types and patterns :
Departmentation by Function
Departmentation by Product or Service
Departmentation by Region or Area
Departmentation by Customers
Departmentation by Process
Departmentation by Time
Departmentation by Numbers
Departmentation by Marketing Channels

15. Functional Departmentation:-
Grouping of departments is
done on the basis of functions
such as production, finance,
marketing sales purchase &
personnel
Further sub division of
functions may be formed like
marketing can be divided into
advertisement sales & after
sales
CEO
PRODUCTION FINANCE MARKETING
ADVERTISEMENT SALES
MARKET
RESEARCH
PERSONAL

16. Functions divided into 2 parts:-
1.BASIC FUNCTIONS- PRODUCTION,
MARKETING FINANCE & PERSONNEL
Advantages:
Advantage of specialization
Easy control over functions
Pinpointing training needs of manager
Very simple process of grouping
activities
2.SECONDARY FUNCTIONS- FURTHER PARTS OF BASIC
FUNCTIONS LIKE PRODUCTION- PRODUCTION PLANNING
, R&D, QUALITY CONTROL & MARKETING HANDLING
Disadvantages:
Lack of responsibility for the end of result
It leads to increase conflicts &
coordination problem among
departments
Overspecialization or lack of general
management

17. Product / Service Departmentation:-
•Grouping of activities &
departments formed are given name
on the basis of products
manufactured in an organization
•Applied where there is a large range
of products are manufactured
•Applied where there are several
product lines & functional
departments fails
CEO
HEAD TV
DIVISION
HEAD AC
&
REFIGRATION
HEAD
COMPUTER

18. Advantages:
 Ensures better
consumer services.
 Unprofitable products
may be easily
determined
 Assist in development of
all around managerial
talent
 Makes control effective
Disadvantages:
 Expensive as duplication
of service functions occurs
in various product
divisions
 Customers & dealers have
to deal with different
persons for complaints &
information of different
products

19. Region / Area Departmentation:-
Geographical regions are adopted
for main division as well as for
subdivision purposes
Territorial departmentation are
adopted when organizations
activities are physically dispersed
in different locations
Useful where business is on
international & national level
CEO
HEAD NORTH
ZONE
HEAD EAST
ZONE
HEAD WEST
ZONE
HEAD SOUTH
ZONE

20. Advantages:
 Cater to meet the needs
of local people more
satisfactorily
 It facilitates the effective
control
 Assists in development
of all- round managerial
skills
Disadvantages:
 Communication problem b/w
head office & regional office
due to lack of communication
at some places
 Coordination b/w various
divisions may become
difficult
 It leads to duplication of
activities which may cost
higher

21. Customer Departmentation:-
When departments are made
to cater different kind of
customers
Widely followed in subdividing
activities of the marketing
department
Helps in supplying good in
accordance with the peculiar
needs of customer
HEAD
MARKETING
HEAD
WHOLSALE
HEAD
RETAIL
HEAD
EXPORT

22. Advantages:
 It focused on customers
who are ultimate
suppliers of money
 Better service to
customer having
different needs & tastes
 Development in general
managerial skills
Disadvantages:
 Sales being the exclusive field
of its applications ,
coordination may appear
difficult b/w sales function &
other enterprise functions
 Specialized sales staff may
become idle with the
downward movement of
sales to any specified group
of customers

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