Principles Of ManagementModule II

By

Ajesh Mukundan pajeshmp@gmail.com

+91 9947426820

CONTENTS

• Introduction• Departmentation by Time• Departmentation by Enterprise Function• Departmentation by Territory and Geography• Customer Departmentation• Process or Equipment Departmentation• Depertmentation of Products

Departmentation

• Classification of an organization on the basis of activities to facilitate planning and control

• Helps in expanding organizations• Departmentiation varies depending on given situations

Departmentation by Time

• Oldest forms of departmentation

• Used at lower levels of organization

• Also known as “shifts”

• Ex: hospitals, securities, fire department, steel companies, call centers (time zone)

ADVANTAGES

• Increased service• Increased utilisation of

expensive equipment• Process requiring no

interruption/continous cycle can be used

• Studying students can work at night!!!

DISADVANTAGES

• Lack of supervision during night shift

• Fatigue factor• Communication and co-

ordination problems• Overtime salary can

increase cost of production

• Call centers – poor rate of career progression

Departmentation by Enterprise Function

• Grouping by functions of the enterprise - functional departmentation

• Basic functions– production, sales/marketing and finance• Different organization, different departments• Ex: manufacturing enterprise - Wholesaler• Most common method of departmentation• Present at almost all companies at some levele or the

other

ADVANTAGES

• Logical reflection of functions

• Maintains power and prestige of major function

• Follows principle of occupational specialization

• Simplifies training• Provides for tight control

at the top

DISADVANTAGES

• Deemphasis of overall company objectives

• Overspecializes and narrows viewpoints

• Reduces coordination between functions

• Responsibility for profits is at the top only

• Slow adaptations to changes in environment

• Limits development of general managers

Departmentation by Territory/Geography

• Attractive to large scale firms

• Ex: automoble assembling, wholesaling, oil refining

• Usually government agencies adopt this method

• Mostly observed in sales and production departments

ADVANTAGES

• Responsibility at lower levels

• Local employment and lower rates

• Emphasis on local markets

• Less traveling for sales person

• Reduce transportation cost and delivery time

• Good training for general managers

DISADVANTAGES

• More people with general manager abilities

• Problem of control by top level managers

• Duplication of services• Managers of territory

would want their own services –increases cost

Customer Departmentation

• Grouping activity based on customers

• Managed by a head

• Business owners and managers have defined customer departmentation and educational institutions to serve different group of people

ADVANTAGES

• Encourages concentration on customer needs

• Good for banking sector, ex: community retail banking, corporate banking, real estate and loans etc

• Develops expertise in customer area

DISADVANTAGES

• Difficult to coordinate operations under constant pressure

• Requires managers and staff expert in customer problems

Process or Equipment Departmentation

• Department based on process or type of equipment

• People and material “brought together”

• Ex: electronic data processing departments

ADVANTAGES

• Economic advantage• Uses specialized

technology• Special skills required

DISADVANTAGES

• Coordination of department is difficult

• Profit responsibility is at the top

• Unsuitable for developing managers

Departmentation by Product

• Grouping on the basis of product

• Was formed due to growth of firm, production managers, sales and service managers engineering executives etc.

• Job became complex – product division became necessary

ADVANTAGES

• Places attentioon on product line

• Facilitates use of specialized capital, skills, facilities and knowledge

• Allows better timing and customer service

• improves coordination• Good training ground for

budding managers

DISADVANTAGES

• Requires more persons with managerial skills

• Presents problem on top level management

• Product duplication problems