Types / Methods/Basis of Departmentalization

Departmentalization is the process of breaking down an enterprise into various departments.
How jobs are grouped together is called departmentalization. A Department is an organization

unit that is headed by a manager who is responsible for its activities. Departmentation and
Division of labour are same things. However technically both are different. Both emphasize on
the use of the specialized knowledge, but depratmentation has higher management level strategic
considerations while the division of labour has a lower level operating considerations.
Types / Methods/Basis of Departmentalization

There are five common forms of departmentalization
(1) Functional Departmentalization
(2) Geographical Departmentalization
(3) Product Departmentalization
(4) Process Departmentalization
(5) Customer Departmentalization
FUNCTIONAL DEPARTMENTALIZATION
It groups jobs according to function. Functional departmentalization defines departments by the
functions each one performs such as accounting or purchasing. Every Organization must perform
certain jobs in order to do its work. For example, Manufacturing, Production, R & D, Purchasing
etc. Same kinds of jobs are grouped together in departments. This kind of departmentalization
includes persons with same knowledge or skills (like Accounting Department having persons of
commerce, Marketing Department having MBA persons). As in department people with same
skill and knowledge are there. Their focus becomes narrow and they cannot appreciate each
other’s work in the same department.
Advantages :-
 Efficiencies from putting together similar specialist and people with common skills,
knowledge, and orientations.
 In-depth specialization.
 Co-ordination within functional area.
Limitations :-
 Poor communication across functional areas.
 Limited view of organizational goals.

GEOGRAPHICAL DEPARTMENTALIZATION
It groups jobs according to geographic region. Geographical departmentalization is an
arrangement of departments according to geographic area or territory. It divides works well for
international business. Geographical Departmentalization is beneficial when Organization are
spread over a wide area. Even each part or areas have different requirement or interests. For
example, marketing a product in Western Europe may have different requirements than
marketing the same product in Southeast Asia. Market area is broken up into sales territories like
Northern, Southern, West, East. The Salesman appointed for each territory report to their
regional or territorial manager. These manager again reports to the sales manager who is head of
the sales department.
Advantages : -
 More effective and efficient handling of specific regional issues that arise.
 Serve needs of unique geographic markets better.
Limitations :-
 Duplication of functions.
 Can feel isolated from other organizational areas.
PRODUCT DEPARTMENTALIZATION
It groups jobs by product line. Companies may have multiple products. Like Maruti is producing
Alto, Zen, Swift. Large companies are often organized according to the product. All common
activities required to produce and market a product are grouped together. Major disadvantages
are duplication of resources. Each product requires most of the same functional areas such as
finance, marketing, production etc. For example, Samsung manufactures Phones, T.V., Tablet
etc. For each product, they have same functional department like marketing, production etc.
Thus, it is duplication of functions. Product Departmentalization has become important for large
complex organization.
Advantages :-
 Allows specialization in particular products and services.
 Managers can become experts in their industry.
 Closer to customers.
Limitations :-
PROCESS DEPARTMENTALIZATION
It groups Jobs On The Basis Of Product Or Customer Flow. Departmentalization is done on the
basis of processing. In manufacturing organizations, the location of manufacturing plant or
department can be at different location due to cost of raw material and even labour charges. Even
departmentalization can be done depending on the types of machines required. The similar types
of machines can be kept at one place e.g. all lathes, all drilling machines, all shapers etc.
Activities are grouped into separate sections, each kept at one place.
Advantages :-
 More efficient flow of work activities.
Limitations :-
 Can only be used with certain types of products.
CUSTOMER DEPARTMENTALIZATION
It groups Jobs On The Basis of specific And Unique Customers Customer divisions are divisions
set up to service particular types of clients or customers.Some companies or organization divides
the different units based on customers or markets. For example, any PC manufacturing company
like HP has different divisions like Consumer PC, Commercial PC, and Workstations etc. Nokia
previously had three divisions like Consumer Phone, Business Phone & Smart Phone. Recently
Nokia had changed their departmentalization from customer to process base. Now there are only
two divisions : Hardware and Software base departmentalization. They will also sell their
software to other mobile company. Another example is an educational institution offers regular
and extension courses to cater to the needs of different students groups.
Advantages :-
 Customers’ needs and problems can be met by specialists
Limitations :-
Customers Departmentalization of a University

Process departmentalization of manufacturing industry
4
Regular Courses Evening courses Open University Distance Education
A.
Advantages of Customer Departmentalization

1.
It fulfills the expectations and needs of customers.2.
It develops specialization among the organizational staff.3.
Each section of customers gets better services.4.
It helps the enterprises to earn the esteem support and goodwill of the majorcustomers.
B.
Disadvantages of Customer Departmentalization

1.
Duplication of activities and achievement of coordination is very difficult.2.
Wastage of available of resources and facilities.3.
Production activities can’t be done under this method due to heavy cost.
4.
It discriminate rich customers from poor customers and encourage unhealthycompetition.

6. Process Departmentalization:
Grouping activities on the basis of product or service or customer flow. Because

each process requires different skills, process departmentalization allows homogenous activities t
o becategorized. It is grouping of activities under around production process. Different processes
areconverted to the different departments in this type of the departmentalization.
Drilling Grinding Welding Assembling Shaping Finishing
A.
Advantages of Process Departmentalization

1.
It is supremely suited for manufacturing firms.2.

It enables the enterprises to reap the benefits of specialization, optimum maintenanceof
equipment and resources.3.
Costlier machines can be used effectively.4.
Economy of operation and no duplication of activities.5.
Principle of specialization and division of labur is followed.

B.
Disadvantages of Process departmentalization

1.
Heavy cost of operation.
Customers
Departmentalizati
on of a University
Process
departmentaliz
ation of
manufacturing
industry

Types / Methods/Basis of Departmentalization

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Types / Methods/Basis of Departmentalization

Uploaded by

Copyright:

Available Formats

Departmentalization is the process of breaking down an enterprise into various departments.

How jobs are grouped together is called departmentalization. A Department is an organization

Types / Methods/Basis of Departmentalization

(1) Functional Departmentalization

(2) Geographical Departmentalization

(3) Product Departmentalization

(4) Process Departmentalization

(5) Customer Departmentalization

 Co-ordination within functional area.

 Poor communication across functional areas.

 Limited view of organizational goals.

 Serve needs of unique geographic markets better.

 Can feel isolated from other organizational areas.

 Allows specialization in particular products and services.

 Managers can become experts in their industry.

 Limited view of organizational goals.

 More efficient flow of work activities.

 Can only be used with certain types of products.

 Customers’ needs and problems can be met by specialists

 Limited view of organizational goals.

Customers Departmentalization of a University

Advantages of Customer Departmentalization

It fulfills the expectations and needs of customers.2.

It develops specialization among the organizational staff.3.

Each section of customers gets better services.4.

Disadvantages of Customer Departmentalization

Duplication of activities and achievement of coordination is very difficult.2.

Wastage of available of resources and facilities.3.

It discriminate rich customers from poor customers and encourage unhealthycompetition.

Grouping activities on the basis of product or service or customer flow. Because

Advantages of Process Departmentalization

It is supremely suited for manufacturing firms.2.

Costlier machines can be used effectively.4.

Economy of operation and no duplication of activities.5.

Principle of specialization and division of labur is followed.

Disadvantages of Process departmentalization

Heavy cost of operation.

You might also like