09 Departmentation 130715081123 Phpapp01

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Welingkars Distance Learning Division

CHAPTER-09

DEPARTMENTATION

We Learn A Continuous Learning Forum


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IntroductionDepartmentation is a part of the organizationprocess. It involves the grouping of commonactivities on the basis of a function of theorganization under a single persons control.



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Does water flowing in adistant mountain thinkabout its distance from

the ocean?

The distance between mycurrent position and my

desired goals is very big.

But I shallreach my goals.



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Meaning

Departmentation means the process by whichsimilar activities of the business are groupedinto units for the purpose of facilitationsmooth administration at all levels.



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Definition

Departmentation refers to the classification ofactivities on operations of an undertaking intofunctionalized categories. It is created inproduct wise, process-wise or area wise. Itensures proper direction to and control onthem.



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Process of DepartmentationIdentification of Fixing the scope ofWork authority and

responsibility of the

departmental heads

Analysis of detailsOf each work

Entrusting the functionDescription of the to a separate personfunction of the who has specializedorganization. in the respective field.



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Need and Importance of DepartmentationIt increases the operating efficiency of the employees.It makes the executive to be alert and efficient in his

duties.It increases the prestige and skill of the departmentalheads.It makes the departmental heads efficient.

Further expansion of the organization is possible.It gives advantages like facilitating budget preparation,effective control of expenditure, attaining specialization,better coordination etc.



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Areas of Forecasting


control

Coordination

Securingattention

Recognition oflocal conditions

EconomySpecification

DEPARTMENTATION


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Basis of Grouping Diverse ActivitiesMaximum Use Proper attention

Coordination Seperation

Interest Policy matterCompetition



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Basis pattern types of DepartmentationDepartmentation by FunctionDepartmentation by Product or ServiceDepartmentation by region or areaDepartmentation by CustomersDepartmentation by Process

Departmentation by TimeDepartmentation by NumbersDepartmentation by Marketing Channels



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Deparmentation by FunctionAdvantages:

It is scientific and time tested method.It follows the principles of specialization and division oflabourEnsures performance controlPreserves the importance of each of activities.Due weightage and prestige are given to managers and

respectedFacilitates coordination activity within departmentsEconomical, simple and easy to understandHelps utilization of manpower and other natural resources



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Departmentation by FunctionDisadvantages:

It makes management control work more difficultIncreases work load and responsibility ofmanagersDoes not offer scope for training for overall

development of managersManagers may be experts but may notunderstand the problems of other departments.



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Departmentation by Product or ServiceAdvantages:

Maximum utilization of personnel efficiency of

workers.Gaining economy in manufacturing and marketing ofproductsBetter services to customers

Profitability of each product is known.Proper attention is givenNew line of product can be introduced withoutdifficulty



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Departmentation by Product or ServiceDisadvantages:

Danger of duplication of work

Increases number of personnel that leads toheavy costAdditional cost for maintaining a sales force foreach productControl becomes more difficultMachines and equipment may not be used fully.Only for large scale diversified groups



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Departmentation by region or areaAdvantages:

Effective span of control.

Reduces the cost of operation and gains saving in time.Intimate knowledge about the taste and preference ofcustomers Win the confidence of customers and reducethe competition

Profitability of each area can be known.Gives opportunities to managers to improve their skillsMore suitable for large scale business unitControl process very easy to manager



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Departmentation by region or areaDisadvantages:

Increases number of personnel and heavy costof operationControl of head office is less effective oneInvolves duplication of work

Small business cant manage the high cost.



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Departmentation by CustomersAdvantages:

It fulfills the expectations and needs ofcustomersIt develops specialization among theorganizational staff.

Out of fashion products can be dispensedwithEach section of customers gets better

services. We Learn A Continuous Learning Forum


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Departmentation by CustomersDisadvantages:

Duplication of activities.Achievement of coordination is very difficultWastage of available of resources andfacilities.

Production activities cant be done under thismethod due to heavy cost



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Departmentation by ProcessAdvantages:

Costlier machines can be used effectively.

Economy of operationNo duplication of activitiesPrinciple of specialization and division of labour isfollowedIt helps top management to have effectiveperformance controlThis is more suitable for a product manufacturingpasses through more processes.



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Departmentation by Process

Disadvantages:

Heavy cost of operation

More specialist are essential to each process

Lack of overall development of managerialtalents



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Departmentation by Time

The business activities are grouped togetheron the basis of the time of the performance.



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Departmentation by NumbersSimilar type of duties performed by smallgroups and each group is controlled by asupervisor or an executive. The principles ofspan of management span of control or spanof supervision is used under this type. E.g.

Squads, battalions, companies, brigades andregiments in Army



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Departmentation by Marketing Channels

This type of departmentation is adopted onthe basis of the channel of distribution chosenby the particular business unit. This methodof departmentation has grown in importanceas business has become increasingly market

oriented

W L A C ti L i g F

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