Bases Of Departmentation.

Departmentation By Functions.

Every manufacturing unit, except a small one

has to perform certain basic functions such as

Production, Marketing, Finance and Personnel.

Each of these are grouped into separate

departments such as Production Department,

Marketing Department, Finance Department

and Personnel Department. This is known as

Departmentation By Functions.

Managing Director/General Manager

Board Of Directors.

Personnel Department. Finance Department. Production Department. Marketing Department.

Merits Of Departmentation By Function.

1. Functional Departmentation is a Logical and Time-Tested Method.

2. The available Manpower in the departments is utilized fully.

3. It is suitable and convenient for creating major departments.

4. It facilitates intra-departmental coordination. It also promotes and provides the benefits of occupational specialization.

5. It facilitates performance appraisal and control of departments.

Demerits Of Functional Departmentation.

1. In functional departmentation, the decision making process is delayed due to specialization.

2. It is not conducive to overall organizational strength and survival.

3. Functional Departmentation may not be suitable when the area covered by business activities is rather wide.

4. Conflicts between departments are possible if proper mechanism for cooperation and coordination is not instituted.

Departmentation By Process.

Another way of horizontal grouping of activities is to organize them according to the process of production performed. Thus, a textile mill may have a separate department for Spinning, Weaving, Dyeing, Bleaching and Printing, as these are the most important processes in manufacturing of cloth. In case of administrative offices departments such as Filing, Accounts, Correspondence and so on are formed. They will operate under overall supervision and control of the general manager.

Board Of Directors.

Managing Director.

Finance Manager. General Manager. Sales Manager.

Processing. Spinning. Weaving. Dyeing. Bleaching. Printing.

Merits of Departmentation By Process.

1. It ensures specialization.2. It is possible to appoint experts at each stage.3. It can use costly equipments.4. It provides economical repairs and maintenance

because similar machines are put together.5. It is suitable to concerns manufacturing products

requiring a number of processes.

Demerits of Departmentation by process

1. It is difficult to compare performance of different process-based departments because their nature of work differs.

2. It face the problem of coordinating processes between different departments.

3. It may create conflicts among managers of different processes.

4. It is unsuitable where manufacturing activity does not involve distinct processes.

5. It provides little scope for managerial developments.

Departmentation By Product.

Under the departmentation by product, the organization is divided into as many departments as the number of products in the product line of the company. All functions and activities related to particular products are brought under one departmental umbrella. The in-charge of the department is called Product Manager who is given the operating authority by the top level management. Thus, an automobile company will have one department for passenger cars, another for jeeps and a third one for trucks. Departmentation by Products is quite convenient in case of large multi-product enterprise.

Board Of Directors.

Managing Director/General Manager.

Finance. Production. Marketing.

Manager.(Jeeps)

Manager.(Trucks)

Manager.(Buses)

Manager.(Three-Wheelers)

Merits Of Departmentation By Product.

1. It motivates departmental managers to take more initiative for raising efficiency and productivity of their departments.

2. As the comparison of different departments is possible, the management can make investment in the profit making departments and can close loss-making departments.

3. It also provides training and development opportunities to managerial staff. In addition, it facilitates growth and diversification of products at the departmental level.

Demerits Of Departmentation By Product.

1. This type of departmentation is costly as service function are duplicated.

2. It is not convenient for small and medium-sized concerns due to cost factor.

3. The top management finds it difficult to have effective control on the departments.

Departmentation By Geographical Location/ Area.

Along with the increase in the company’s volume of business it may find it necessary to establish regional factories and branch offices to meet the increasing demand for its products/services. These factories/offices are then given the status of separate departments or divisions. This type of departmentation is on the basis of territory/region/area and has been found more suitable or service organizations such as insurance companies, banks, and so on. In India, the Indian railways is have different divisions such as Central Railway, Western Railway, and so on. Similarly LIC has its zonal and divisional offices.

Board Of directors.

Managing Director/General Manager.

Overseas Division.

Western Zone.

Northern Zone.Eastern Zone.

Southern Zone.

Merits Of Departmentation By Geographic Location.

1. It motivates regional heads to achieve high performance.

2. It can adapt to local conditions.3. It provides training to middle level executives.4. It facilitates expansion of business to various

regions.

Demerits Of Departmentation By Geographical Location.

1. It cannot avoid duplication of activities e.g., service functions performed by regional units can be performed centrally by the head office.

2. It is likely that each regional unit may give higher importance to its unit and neglect the overall interest of the organization.

3. It may lead to conflicts between regional managers.

4. It may be difficult to control different branches from the head office.

Departmentation By Customer.

In the departmentation by customer, the departments are establishes as per the customer that it serves. Enterprises offering specialized services prefer departmentation by customers. Manufacturers of products such as tyres, compressors, spare-parts, etc., who sell their products to different categories of customers, have found it convenient to set up customer-wise departmentation for marketing their products. This type of departmentation is possible in case of big automobile company supplying cars to different categories of customers.

Board Of Directors.

Managing Director.

General Manager.

Finance. Production. Marketing. Personnel.

Foreign Buyers. Dealers/Retailers. Manufacturers. Defense Department. Public Undertakings.

Merits Of Departmentation By Customer.

1. It ensures full attention to customers.2. It provides benefits of division of work.3. It is possible to know the likes and dislikes of the

customer.4. It helps the organization to earn higher goodwill

through better service.

Demerits Of Departmentation By Customer.

1. It may result in under utilization of resources.2. It may create duplication of facilities.3. It may face heavy overheads.4. It may give special treatment to certain class of

customers.

Departmentation By Time.

Public service institutions like hospitals, police stations and fire brigade work round the clock.

Supervisor.

Day Shift. Evening Shift. Night Shift.