Departmentalization (or simply departmentation) refers to the grouping of This helps the organisation to assign the work only to those who are best suited. Departmentation can provide a necessary degree of specialisation of executive activity for efficient performance. It can simplify the tasks of management within a . In the words of Allen, “Departmentation is a means of dividing a large and monolithic functional organisation into smaller, flexible, administrative units.”.

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For example, a large cloth store organixation be divided into wholesale, retail, and export divisions. First the organisation is divided on the basis of functions. Departmentalization of activities results in the increase in efficiency of the management and ultimately the enterprise.

Each product division is semi-autonomous and contains different functions.

Notes on Departmentation: Meaning, Importance and Basis | Organisation

They focus on a narrow set of activities and repeatedly performing the same task increases their ability to perform more speedily and efficiently. An organisation where the basis of departmentation is to sell goods according to customer needs justifies its existence. Departmentation can provide a necessary jn of specialisation of executive activity for efficient performance. It economizes operations and makes possible the adoption of logical and comprehensible structure.

The marketing department is further divided on the basis of product lines i. Territorial departmentation offers certain facilities in operation. The organisation chart of departmentation by process or equipment in the manufacturing department of a textile industry has been shown in Fig.

Meaning and Types With Diagram. Every product manager wants to maximise profits of his product, for which he delegates authority to people of his department and depxrtmentation authority-responsibility relationships amongst them. If workers are not able to carry out the activities efficiently, managers can train them to do so.


Each product division can be taken as a viable profit centre for accountability purposes. Departmentation by Function 2.

Activities are divided into smaller segments, standards of performance can be framed, factors affecting performance can be identified and control can be more objective in nature. The performance of individual products can be easily accessed to distinguish between profitable and unprofitable products. This is the most popular basis of departmentation. There are certain activities which are very crucial.

These are pointed out below: It also provides a basis on which the top managers can co-ordinate and control the activities of the departmental units.


This helps in eliminating the unprofitable products and promoting the profitable ones thereby increasing organisational efficiency. Here, the market is broken up into sales territories and a responsible executive is put in charge of each territory.

It is helpful in fixing responsibilities and accountability. A department is a distinct section of the business establishment concerned with a particular group of business activities of like nature. The focus is completely on one product and all functional activities related to that product rather prganisation one functional activity related to all products.

Firstly, the managers focus their attention on some specific problems which provide them effective on-the-job training.

So, product departmentation provides an excellent training facility for the top managers. He orgsnisation co-ordinate the efforts of people working under him. Meaning of Depagtmentation 2. A department created for satisfying customer requirements becomes specialized in that area resulting in cost efficiency.


During boom conditions, the demand increases and, therefore, extra load has to be borne by machines. This form of departmentation is suitable for small organisations where limited number of products with limited processes are produced.

To entrust the grouped activities to departmental heads and. Such type of departmentation is useful where the work is repetitive, manpower is an important factor, group efforts are more significant than individual efforts, and group performance can be measured.

Excessive involvement of employees in their respective departments makes it difficult for top managers to co-ordinate the functions of different departments. Personal skill and specialised knowledge of the production managers can be fully utilised. Quick Notes on Departmentation. For example, the activities in the production department may be classified into quality control, processing of materials, and repairs and maintenance.

Departmentation: Need, Significance and Process

ortanisation As this is a suitable form of departmentation for stable organisations, organisations operating in the dynamic environment do not accept functional activities as the basis of departmentation.

Functional, Place, Product and Multidivisional Design. It is useful for organisations which are engaged in the manufacture of products which involves several processes.

Leave a Reply Click here to cancel reply. All the primary and auxiliary activities are managed by one manager.

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