Departmentation

Introduction

What is Departmentation?

Process of dividing activities into units & subunits

Not only confined to term departments but it includes divisions, sections & job also

Common Bases For Departmentation

Knowledge & skills-People are grouped by what they know

Work process-Workers are grouped based on the process or activity used by the worker

Business Function-Grouping by the basic function in organization

Time- When work is done, for example: shifts in a factory or hotel or hospital

Contd…

Output-Grouping based on the products or services that the employee works on

Client-Grouping based on the type of clients their work is ultimately sold to

Places-Groups are based on the geographical areas that they serve

Need for Departmentation

Specialization- Departmentation should reflect the specialization in performing work

Coordination- Best results achieved when activities are performed in coordination

Control-Process of analyzing whether intended results are being achieved.

Contd…

Economy-Balance should be maintained b/w cost of creating a department & its contributions

Local conditions-More important for organizations operated in different geographical areas

Human considerations- Human factor plays an important role

Major Benefits of Departmentations

Specialisation Administrative control Fixations of responsibilities Freedom or autonomy Development of managers

Disadvantages

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

Ideal Principles of Departmentation

Principle of attainment of enterprise objectives

Principle of comprehensive department Principle of inter-departmental co-operation Principle of promotion of specialization Principle of cost benefit analysis

Contd…

Principle of top-management control Principle of flexibility Principle of better utilization of resources Principle of human consideration Principle of special attention to key-results

areas Principle of autonomous feeling of

departmental heads

Types of Departmentation

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

Contd...

CEO

PRODUCTION FINANCE MARKETING PERSONAL

ADVERTISEMENT SALES

MARKET RESEARCH

Contd…

Functions divided into 2 parts:- Basic functions- Production Marketing

finance & personnel

Secondary functions-Further parts of basic functions like production- production planning , R&D, quality control & marketing handling

Advantages & Disadvantages of Function

Advantages: Advantage of specialization Easy control over functions Pinpointing training needs of manager Very simple process of grouping activities

Disadvantages: Lack of responsibility for the end of result

Contd…

It leads to increase conflicts & coordination problem among departments

Overspecialization or lack of general management

Types of Departmentation

Products 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

Contd…

CEO

HEAD TV DIVISIONHEAD AC

& REFIGRATIONHEAD COMPUTER

Advantages & disadvantages of Products

Advantages: Ensures better consumer services. Unprofitable products may be easily

determined Assist in development of all around

managerial talent Makes control effective

Contd…

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

Types of Departmentation

Territories 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

Contd…

CEO

HEAD NORTH ZONE HEAD EAST ZONE HEAD WEST ZONE HEAD SOUTH ZONE

Advantages & Disadvantages of Territorial

Advantages: Cater to meet the needs of local people more

satisfactorily It facilitates the effective control Assists in development of all- round

managerial skills

Contd…

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

Types of Departmentation

Customers 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

Contd…

HEAD MARKETING

HEAD WHOLSALE HEAD RETAIL HEAD EXPORT

Advantages & Disadvantages of Customer

Advantages: It focused on customers who are ultimate

suppliers of money Better service to customer having different

needs & tastes Development in general managerial skills

Contd…

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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