Departmentation

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the journey of excellence
always continues…
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.
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.
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.
Example:
Organizational Structure of Unilever
◦ Product Groups- ◦ Functional Areas
◦ Food & Drinks
◦ Finance
◦ Detergents
◦ Frozen Products ◦ Commercial
◦ Chemicals ◦ R&D
◦ Personal Products ◦ HR
◦ Agribusiness
◦ Edible Fats & Dairy Products
◦ Geographic Regions- Unilever the Anglo-Dutch MNC has top
◦ Europe management team consisting of the
◦ East Asia Chairperson & two Vice Chairpersons.
◦ North America
◦ Latin America
◦ Central Asia
Why Departmentation:
Effective control on expenditure
Budget preparation
Better coordination
Work analysis
Attaining specialization
Fixations of responsibilities
Freedom or autonomy
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
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
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.
Factors for departmentation:
Specification
Coordination
Control
Economy
Recognition of local conditions
Human considerations
Security attention
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.
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
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
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
 Functional Departmentation:-
Grouping of departments is
done on the basis of functions CEO

such as production, finance,

marketing sales purchase & PRODUCTION FINANCE MARKETING PERSONAL
personnel
Further sub division of ADVERTISEMENT SALES
functions may be formed like
marketing can be divided into
advertisement sales & after MARKET
RESEARCH

sales
 Functions divided into 2 parts:-
1.BASIC FUNCTIONS- PRODUCTION, 2.SECONDARY FUNCTIONS- FURTHER PARTS OF BASIC
MARKETING FINANCE & PERSONNEL FUNCTIONS LIKE PRODUCTION- PRODUCTION PLANNING
, R&D, QUALITY CONTROL & MARKETING HANDLING

Advantages: Disadvantages:
Advantage of specialization Lack of responsibility for the end of result
Easy control over functions It leads to increase conflicts &
coordination problem among
Pinpointing training needs of manager departments
Very simple process of grouping Overspecialization or lack of general
activities management
Product / Service Departmentation:-
•Grouping of activities &
departments formed are given name
on the basis of products
manufactured in an organization CEO

•Applied where there is a large range

of products are manufactured HEAD TV
HEAD AC
HEAD
&
DIVISION COMPUTER
•Applied where there are several REFIGRATION

product lines & functional

departments fails
Advantages: Disadvantages:
 Ensures better  Expensive as duplication
consumer services. of service functions occurs
 Unprofitable products in various product
may be easily divisions
determined  Customers & dealers have
 Assist in development of to deal with different
all around managerial persons for complaints &
talent information of different
 Makes control effective products
Region / Area Departmentation:-
Geographical regions are adopted
for main division as well as for
subdivision purposes
Territorial departmentation are CEO

adopted when organizations

activities are physically dispersed HEAD NORTH HEAD EAST HEAD WEST HEAD SOUTH
ZONE ZONE ZONE ZONE
in different locations
Useful where business is on
international & national level
Advantages: Disadvantages:
 Cater to meet the needs  Communication problem b/w
head office & regional office
of local people more
due to lack of communication
satisfactorily at some places
 It facilitates the effective  Coordination b/w various
control divisions may become
 Assists in development difficult
of all- round managerial  It leads to duplication of
skills activities which may cost
higher
Customer Departmentation:-
When departments are made
to cater different kind of
customers
HEAD
Widely followed in subdividing MARKETING
activities of the marketing
department
HEAD HEAD HEAD
Helps in supplying good in WHOLSALE RETAIL EXPORT
accordance with the peculiar
needs of customer
Advantages: Disadvantages:
 It focused on customers  Sales being the exclusive field
who are ultimate of its applications ,
suppliers of money coordination may appear
 Better service to difficult b/w sales function &
customer having other enterprise functions
different needs & tastes  Specialized sales staff may
 Development in general become idle with the
managerial skills downward movement of
sales to any specified group
of customers
ANY QUERRIES…
An unexamined life is not worth living