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Chapter: Principles of Management : Organizing

Departmentation: Various patterns, Advantages and Disadvantages

DEPARTMENTATION refers to the process of grouping activities into departments. Departmentation is the process of grouping of work activities into departments, divisions, and other homogenous units. Departmentation takes place in various patterns like departmentation by functions, products, customers, geographic location, process, and its combinations.

DEPARTMENTATION BY DIFFERENT STRATEGIES

 

DEPARTMENTATION refers to the process of grouping activities into departments. Departmentation is the process of grouping of work activities into departments, divisions, and other homogenous units.

 

Key Factors in Departmentation

 

It should facilitate control.

 

It should ensure proper coordination.

 

It should take into consideration the benefits of specialization.

 

It should not result in excess cost.

 

It should give due consideration to Human Aspects.

 

 

Departmentation takes place in various patterns like departmentation by functions, products, customers, geographic location, process, and its combinations.

 

A) FUNCTIONAL DEPARTMENTATION


 

Functional departmentation is the process of grouping activities by functions performed. Activities can be grouped according to function (work being done) to pursue economies of scale by placing employees with shared skills and knowledge into departments for example human resources, finance, production, and marketing. Functional departmentation can be used in all types of organizations.

 

 

Advantages:

 

Advantage of specialization

 

Easy control over functions

 

Pinpointing training needs of manager

 

It is very simple process of grouping activities.

 

Disadvantages:

 

            Lack of responsibility for the end result

 

            Overspecialization or lack of general management

 

            It leads to increase conflicts and coordination problems among departments.

 




 

 B) PRODUCT DEPARTMENTATION

 


 

Product departmentation is the process of grouping activities by product line. Tasks can also be grouped according to a specific product or service, thus placing all activities related to the product or the service under one manager. Each major product area in the corporation is under the authority of a senior manager who is specialist in, and is responsible for, everything related to the product line. Dabur India Limited is the India’s largest Ayurvedic medicine manufacturer is an example of company that uses product departmentation. Its structure is based on its varied product lines which include Home care, Health care, Personal care and Foods.

 

Advantages

 

     It ensures better customer service

 

     Unprofitable products may be easily determined

 

     It assists in development of all around managerial talent

 

     Makes control effective

 

     It is flexible and new product line can be added easily.

 

Disadvantages

 

     It is expensive as duplication of service functions occurs in various product divisions

 

     Customers and dealers have to deal with different persons for complaint and information of different products.

 

 

 

C)  CUSTOMER DEPARTMENTATION


 

Customer departmentation is the process of grouping activities on the basis of common customers or types of customers. Jobs may be grouped according to the type of customer served by the organization. The assumption is that customers in each department have a common set of problems and needs that can best be met by specialists. UCO is the one of the largest commercial banks of India is an example of company that uses customer departmentation. Its structure is based on various services which includes Home loans, Business loans, Vehicle loans and Educational loans.

 

Advantages

 

     It focused on customers who are ultimate suppliers of money

 

     Better service to customer having different needs and tastes

 

     Development in general managerial skills

 

Disadvantages

 

     Sales being the exclusive field of its application, co-ordination may appear difficult between sales function and other enterprise functions.

 

     Specialized sales staff may become idle with the downward movement of sales to any specified group of customers.

 

 D)    GEOGRAPHIC DEPARTMENTATION


Geographic departmentation is the process of grouping activities on the basis of territory. If an organization's customers are geographically dispersed, it can group jobs based on geography. For example, the organization structure of Coca-Cola Ltd has reflected the company’s operation in various geographic areas such as Central North American group, Western North American group, Eastern North American group and European group

 

Advantages

 

     Help to cater to the needs of local people more satisfactorily.

 

     It facilitates effective control

 

     Assists in development of all-round managerial skills

 

Disadvantages

Communication problem between head office and regional office due to lack of means of communication at some location

 

Coordination between various divisions may become difficult.

 

Distance between policy framers and executors

 

It leads to duplication of activities which may cost higher.



e) PROCESS DEPARTMENTATION


Geographic departmentation is the process of grouping activities on the basis of product or service or customer flow. Because each process requires different skills, process departmentation allows homogenous activities to be categorized. For example, Bowater Thunder Bay, a Canadian company that harvests trees and processes wood into newsprint and pulp. Bowater has three divisions namely tree cutting, chemical processing, and finishing (which makes newsprint).

 

Departmentation by process: -

 

Advantages

 

     Oriented towards end result.

 

     Professional identification is maintained.

 

     Pinpoints product-profit responsibility.

 

Disadvantage

 

     Conflict in organization authority exists.

 

     Possibility of disunity of command.

 

     Requires managers effective in human relation

 

 

 

 

F) MARTIX DEPARTMENTATION



In actual practice, no single pattern of grouping activities is applied in the organization structure with all its levels. Different bases are used in different segments of the enterprise. Composite or hybrid method forms the common basis for classifying activities rather than one particular method,. One of the mixed forms of organization is referred to as matrix or grid organization’s According to the situations, the patterns of Organizing varies from case to case. The form of structure must reflect the tasks, goals and technology if the originations the type of people employed and the environmental conditions that it faces. It is not unusual to see firms that utilize the function and project organization combination. The same is true for process and project as well as other combinations. For instance, a large hospital could have an accounting department, surgery department, marketing department, and a satellite center project team that make up its organizational structure.

 

Advantages

 

Efficiently manage large, complex tasks

 

Effectively carry out large, complex tasks

 

Disadvantages

 

Requires high levels of coordination

 

Conflict between bosses

 

Requires high levels of management skills

 

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Principles of Management : Organizing : Departmentation: Various patterns, Advantages and Disadvantages |


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