DepartmentalizationBy

Chandarkant GoyalHitesh Goyal

Mba -1 B

Meaning

• Departmentalization is defined as the process of grouping individual jobs into departments.

• It involves grouping of activities and employees into departments so as to achieve the organisational objectives.

• The grouping into departments of work activities that are SIMILAR and LOGICALLY connected

Importance

specialization Expansion Autonomy Fixation of responsibility Appraisal Management development Administrative control

Types of departmentalization

1.Functional departmentalizationA form of departmentalization in which individuals engaged in one functional activity,such as marketing or finance, are grouped into one unit.

Under functional departmentalization each major function is organised as a separate department.

For example: production, sales, financing and personnel are basic functions in a manufacturing enterprise . on the other hand in a retail store buying , selling and finance are the major function.

functional departmentalization

president

product-ion

marketing finance

Advantagesmakes supervision easierefficient use of resourcesOccupational specializationOptimum utilisation of manpowerIncreases managerial efficiencyFacilitates delegation of authorityEliminates duplication of effortsLower costPromotes control and coordination within a department

Disadvantages

difficult to get quick decisionharder to determine accountabilityToo much emphasis on specializationMay lead to conflictsCoordination problemDelay in decision making

Suitability

It is most suitable when the size of the organization is small,has a diversified activities and operations require a high degree of specialization and offers a limited line of products.

Lets discussIn an electrical goods manufacturing company,there are four main activitiesmarketingproductionfinancepersonnel

the general manager is planning to structure the organisation.

Which organisational departmentaion would MAIT future managers would suggest him???why?

Answer

I would suggest functional departmentatlization

Reasons are :each functional area of business is controlled by expertmakes supervison easier

2.Territorial /geographical departmentationTerritorial Organization is especially attractive to large scale firms or rather enterprises whose activities are physically or geographically dispersed.

All the activities of given area of operation are grouped into zone ,division ,branches

This structure is suitable for large scale organization or whose activities are physically or geographically spread.

This structure is most often used in sales & in production

Territorial /geographical departmentation

Eastern ZoneKolkata

Central ZoneKolhapur

Northern zoneDelhi

Southern zone Chennai

Western zoneMumbai

Head OfficeMumbai

jalandhar

chandigarh

New delhi

ajmer

branch branch

branch

branch

Advantages

Place emphasis on local market & problemTake advantage of economic of local operationsPlace responsibility at lower levelBetter face to face communication with local interestImprove coordination in a regionServe local needs better

Disadvantages

Require more person with general manager abilities .Increases problem of top management controlRequire good caliber managersIncrease problems of control

3. Departmentation by customerCustomer based departmentation is basically market –oriented in which department are created around the market served or around marketing channel

CUSTOMERS ARE THE KEY TO THE WAY ACTIVITIES ARE GROUPED

wholesale Retail Hire purchaseexport

Marketing Manager

• Advantage• It fulfils the expectation & needs of customer• Better service to customer • Fully focus on customer

• Disadvantages• Their may be duplication of activities• Co-ordination is difficult • Conflict

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Choosing a basis for departmentation

1.Specialisation:The activity of an organization should be grouped in such a way that it leads to the specialization of work. It helps to improve efficiency and economy of operations.

2.Coordination: Coordination in the performance of different activities is necessary so that they contribute maximum towards the organizational goals.

3.Control:The departmentation should ensure that effective control helps to achieve organizational goals efficiently & economically.

4.Attention:The various activities should be given adequate attention so that each necessary activity is performed & there is no unnecessary duplication of activities.

Thank you