Welingkar’s Distance Learning Division

CHAPTER-09

DEPARTMENTATION

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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.

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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.

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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.

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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.

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Process of Departmentation

Identification of Fixing the scope ofWork authority and

responsibility of thedepartmental heads

Analysis of detailsOf each work

Entrusting the function Description of the to a separate person function of the who has specialized organization. in the respective field.

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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.

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Areas of Forecasting

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control

Coordination

Securing attention

Recognition of local conditions

Economy Specification

DEPARTMENTATION

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Basis of Grouping Diverse Activities

Maximum Use Proper attention

Coordination Seperation

Interest Policy matter Competition

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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

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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

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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.

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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

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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

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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

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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.

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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.

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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

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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

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Departmentation by Process

Disadvantages: Heavy cost of operation

More specialist are essential to each process

Lack of overall development of managerial talents

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Departmentation by Time

The business activities are grouped together on the basis of the time of the performance.

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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

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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

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