Departmentation - Management Principles

Welingkar’s Distance Learning Division
CHAPTER-09
DEPARTMENTATION
We Learn – A Continuous Learning Forum

Introduction
 Departmentation is a part of the organization
process. It involves the grouping of common
activities on the basis of a function of the
organization under a single person’s control.

Does water flowing in a
distant mountain think
about its distance from
the ocean?
The distance between my
current position and my
desired goals is very big.
But I shall
reach my goals.

Meaning
 Departmentation means the process by which
similar activities of the business are grouped
into units for the purpose of facilitation
smooth administration at all levels.

Definition
 Departmentation refers to the classification of
activities on operations of an undertaking into
functionalized categories. It is created in
product wise, process-wise or area wise. It
ensures proper direction to and control on
them.

Process of Departmentation
Identification of Fixing the scope of
Work authority and
responsibility of the
departmental heads
Analysis of details
Of each work
Entrusting the function
Description of the to a separate person
function of the who has specialized
organization. in the respective field.

Need and Importance of Departmentation
 It increases the operating efficiency of the employees.
 It makes the executive to be alert and efficient in his
duties.
 It increases the prestige and skill of the departmental
heads.
 It makes the departmental heads efficient.
 Further expansion of the organization is possible.
 It gives advantages like facilitating budget preparation,
effective control of expenditure, attaining specialization,
better coordination etc.

Areas of Forecasting
control
Coordination
Securing
attention
Recognition of
local conditions
Economy
Specification
DEPARTMENTATION

Basis of Grouping Diverse Activities
Maximum Use Proper attention
Coordination Seperation
Interest Policy matter
Competition

Basis pattern types of Departmentation
 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

Deparmentation by Function
Advantages:
 It is scientific and time tested method.
 It follows the principles of specialization and division of
labour
 Ensures performance control
 Preserves the importance of each of activities.
 Due weightage and prestige are given to managers and
respected
 Facilitates coordination activity within departments
 Economical, simple and easy to understand
 Helps utilization of manpower and other natural resources

Departmentation by Function
Disadvantages:
 It makes management control work more difficult
 Increases work load and responsibility of
managers
 Does not offer scope for training for overall
development of managers
 Managers may be experts but may not
understand the problems of other departments.

Departmentation by Product or Service
Advantages:
 Maximum utilization of personnel efficiency of
workers.
 Gaining economy in manufacturing and marketing of
products
 Better services to customers
 Profitability of each product is known.
 Proper attention is given
 New line of product can be introduced without
difficulty

Departmentation by Product or Service
Disadvantages:
 Danger of duplication of work
 Increases number of personnel that leads to
heavy cost
 Additional cost for maintaining a sales force for
each product
 Control becomes more difficult
 Machines and equipment may not be used fully.
 Only for large scale diversified groups

Departmentation by region or area
Advantages:
 Effective span of control.
 Reduces the cost of operation and gains saving in time.
 Intimate knowledge about the taste and preference of
customers Win the confidence of customers and reduce
the competition
 Profitability of each area can be known.
 Gives opportunities to managers to improve their skills
 More suitable for large scale business unit
 Control process very easy to manager

Departmentation by region or area
Disadvantages:
 Increases number of personnel and heavy cost
of operation
 Control of head office is less effective one
 Involves duplication of work
 Small business can’t manage the high cost.

Departmentation by Customers
Advantages:
 It fulfills the expectations and needs of
customers
 It develops specialization among the
organizational staff.
 Out of fashion products can be dispensed
with
 Each section of customers gets better
services.

Departmentation by Customers
Disadvantages:
 Duplication of activities.
 Achievement of coordination is very difficult
 Wastage of available of resources and
facilities.
 Production activities can’t be done under this
method due to heavy cost

Departmentation by Process
Advantages:
 Costlier machines can be used effectively.
 Economy of operation
 No duplication of activities
 Principle of specialization and division of labour is
followed
 It helps top management to have effective
performance control
 This is more suitable for a product manufacturing
passes through more processes.

Departmentation by Process
Disadvantages:
 Heavy cost of operation
 More specialist are essential to each process
 Lack of overall development of managerial
talents

Departmentation by Time
 The business activities are grouped together
on the basis of the time of the performance.

Departmentation by Numbers
 Similar type of duties performed by small
groups and each group is controlled by a
supervisor or an executive. The principles of
span of management span of control or span
of supervision is used under this type. E.g.
Squads, battalions, companies, brigades and
regiments in Army

Departmentation by Marketing Channels
 This type of departmentation is adopted on
the basis of the channel of distribution chosen
by the particular business unit. This method
of departmentation has grown in importance
as business has become increasingly market
oriented

Departmentation - Management Principles

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