4. Meaning and
Definition
• Meaningof Departmentation
– Theprocessbywhichsimilaractivitiesofthe
businessare grouped into units for the purpose of
facilitatingthe smoothadministration at all levels
• Definitionof Departmentation
– Refersto classificationofactivitieson operations of
anundertaking into functionalized categories
5. Process of
Departmentation
• Identification of work
• Analysisofdetails ofeach work
• Description ofthe functionofthe organization
• Entrusting the functionto aseparate person
whohasspecializedin the respective field
• Fixingthe scopeofauthority andresponsibility
ofthe departmental heads
6. Need and importance
of Departmentation
• Departmentation increasesthe operating
efficiencyofthe employees
• There isafixation ofresponsibilitiesto various
executivesofthe organizationwhichmakes
them to be alert andefficientin his duties
• Certain powers, likeselfdecisionmaking, given
to the department headsincreasetheir prestige
and skills
7. Need and importance
of Departmentation
• Theworkingsofallthe departments are evaluated
bythe top management
• There isapossibility ofexpansionofthe
organizationbecauseofthe fixingofthe
responsibilities to the executivesandthere is
function wise Departmentation
• Besides,Departmentation givesother advantages
likefacilitation budget preparation, attaining
specialization etc
8. Factors in
Departmentation
• Specification
– Specificationmaybe functionalsuchassales,
finance, production, personnel
• Control
– There shouldbe aproper control under
departmentation andsimplificationofthe control
process
• Co-ordination
– Thewholebusinessactivitiesare grouped
department wisewhichrequires co-ordination
9. Factors in
Departmentation
• Securing attention
– Evenaunusuallyimportant activityofthe business
shouldbe givena recognition
• Recognition oflocal condition
– Thedepartmentation shouldtake into consideration
the localcondition ofthe place concerned
• Economy
– It shouldbe borne inmindthat expensesare
incurred inthe creation ofseparate departments
10. Basis of Grouping
Diverse Activities
• Maximumuse
– Theterm maximummeansthat agivenactivitywill
be attached to the major department whichmakes
most useof it
• Interest
– Asuperior isrequested to lookafter anewactivityif
heisalsowillingandableto serve
• Competition
– Theprevailingcompetition amongthe departments
isadesirableone
11. Basis of Grouping
Diverse Activities
• Policy matter
– Aparticular activityisassignedto adepartment which
evincesmore interest in the unit
• Separation
– The maximumdivisionofactivities involveshighcost of
operation to the management
• Proper attention
– Proper attention shouldbe givento certain activities to
keep them from dyingunder adverse circumstances
• Co-ordination
– There is a need of coordination of various activities
where the organization’s activities are grouped into
several departments
12. Patterns of
Departmentation
• There are certain methods ofdividingthe duties
andresponsibilitieswithin anorganizational
structure whichare as follows
• Departmentation by Function, by Product, by
Regions, by customers, by Process, by Time,
byNumbers, byMarketing channels
13. Departmentation by
Function
• Thisisthe most commonlyfollowedbasisof
departmentation
• Here, activitiesare grouped on the basisof
functions whichare to be performed
14. Advantages of
Departmentation by
Function
• It isatime tested andscientific method
• It ensures proper performance control
• It avoidsthe interruption ofsubsidiarygroup in
the primary activities
• It iseconomical, simpleandeasyto understand
15. Disadvantages of
Departmentation by
Function
• It makesthe managementcontrol work more
difficult
• It increasesthe work loadandresponsibilityof
departmental managers
• It doesn’t offer anyscopefor training for the
overall development of managers
16. Departmentation by
Product
• Thistype ofdepartmentation ismadebythe
large-scalebusiness unit
• Eachdepartment isresponsiblefor
manufacturing aproduct andsellingit to a
customer
17. Advantages of
Departmentation by
Product
• Product departmentation helpsin maximum
utilization ofpersonal efficiency ofthe workers in
the areaofmanufacturingandmarketing ofa
product
• Better servicesmaybe providedto the customer
• Proper attention maybe devoted to the
manufactureofa product
• Anewline ofproducts canbe introduced without
anydifficulty
18. Disadvantages of
Departmentation by
Product
• There isadangerofduplication ofwork
• It increasesthe number ofpersonnel whichin
turn increasesthe cost of operation
• Machinesandequipments in eachproduct
department maynot be used fully
19. Departmentation by
Region
• Thistype ofdepartmentation isusefulfor
whollydispersed business unit
• Here the businessactivitiesare grouped in area-
wiseandeacharea isin chargedbyasingle
person
20. Advantages of
Departmentation by
Region
• It makespossibleaneffectivespanofcontrol
• It reduces the cost of operation and gains saving in
time
• It providesopportunities to managersto improve
their skill in various fields
• Control processisvaryeasyto manage
21. Disadvantages of
Departmentation by
Region
• It increasesthe number of personnel
• Control ofheadofficeisless effective
• Duplication ofwork may cause
• Smallbusinessconcern cannot managethe high
operation cost
22. Departmentation by
Customers
• Thistype ofdepartmentation ispreferred when
the variousneeds ofcustomers are different in
nature
• The consumablegoodscanbe subdividedin to
perishableandnon-perishable in nature
23. Advantages of
Departmentation by
Customers
• It fulfilsthe needs andexpectations ofthe
customers
• It developsthe specializationamongthe
organization staff
• Eachsectionofthe customer isableto get
better service from the companyandhelpsthe
companyto win the goodwill, ofits customers
24. Disadvantages of
Departmentation by
Customers
• There maybe duplicationof activities
• The achievement ofcoordination isvary
difficult
• There isawastageofavailableresources and
facilities
26. Advantages of
Departmentation by
Process
• The costlier machinescanbe used effectively
• There maybe economyin operation
• No duplicationof activities
• Helpsthe top managementto haveeffective
performance control
27. Disadvantages of
Departmentation by
Process
• Separate rooms for operations andother
facilitiesshouldbe givento allthe processes
whichresults in heavycost of operation
• Morespecialistsare essentialfor each process
28. Departmentation by
Time
• The businessactivities are grouped together on
the basisofthe time ofthe performance
• Only interested persons are requested to do the
job andone person isresponsible to supervise
them
29. Departmentation by
Number
• Here similar types ofduties are performed by
small groups
• Eachgroup iscontrolled byasupervisoror an
executive
• The principle ofspanofmanagementisused
under thistype of departmentation
30. Departmentation by
Marketing Channels
• Thistype ofdepartmentation isadopted on the
basisofthe channelofdistribution chosenby
the particular business unit
• Thismethod ofdepartmentation hasgrown in
importance asbusinesshasbecomeincreasingly
market oriented
31. Summary
• Departmentation refers to the classificationof
activitieson operation ofanundertaking into
functionalized categories
• Indepartmentation byfunction, activities are
grouped on the basisoffunctionswhichare to be
performed
• Departmentation byproduct ismadebythe large-
scalebusiness unit
• Departmentation byregion isusefulfor wholly
dispersed business unit
32. Summary
• Departmentation bycustomer ispreferred
whenthe variousneeds ofcustomers are
different in nature
• Departmentation byprocessisfollowedwhen
the production activitiesare carried on in many
places
• Indepartmentation bytime, the business
activitiesare grouped together on the basisof
the time ofthe performance
