Definition, Meaning and Bases of Departmentation such as Functional, Territorial, Process, Product, Customer, Time, their merits & demerits are explained in this. The question arises: On what basis should we carve up the members of the organization Here are six common bases for departmentation. Departmentation: Meaning and Bases | Organisation Process. Article shared by: After reading this article you will learn about Departmentation: 1. Meaning of.

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Since similar activities are grouped departjentation one department headed by departmental managers, it becomes easy for top managers to fix responsibility of respective managers for achieving the desired results. These are team or reciprocal interdependencies. Counting from the bottom up, the first and second groupings are by work process, the third is by business function, and the fourth is by output product. This is illustrated in the figure below, which gives the organization chart of a hypothetical manufacturing organization.

6 Different Basis of Departmentation in an Organisation

Departmentalization based on the types or groups departmentatiom customers to be handled in shown in the following image. The departmental heads ensure efficient functioning of their departments within the broad principles of organisation scalar chain, unity of command, unity of direction etc. What organizations actually do is group people in a way that relates to the task they perform.

Grouping by the basic function in the organization: This approach also encourages specialization, as within a central maintenance department there can be specialists for different kinds of problems.

The marketing department is further divided on the basis of product lines i. What would happen if we did it randomly, without regard for tasks? Priorities are set and resources are allocated according to the need, importance and urgency regarding their use by different departments. Demand for the same product for same set of consumers differs during different times.


Thus, organisation structure is facilitated through departmentation. This can also result in conflict amongst process managers. It has also been viewed as the process of specializing the work of the management according to place, product, patronage and process. Functional departmentation is not suitable in such cases.

This necessitates the introduction of departmentation. For example, a manufacturer may have different divisions for each of its product lines.

Since departments are widely dispersed, top managers find it difficult to control and co-ordinate their activities. Product departmentation departtmentation grouping of jobs and resources around departmrntation products or product lines that a company sells.

Before preserving your articles on this site, please read the following pages: Each department is headed by a person known as departmental manager.

Notes on Departmentation: Meaning, Importance and Basis | Organisation

The bases of departmentation vary from organization to organization as the nature of business differs. The sales people belong to local areas of operation. Departmentation by Customers 5. For example, if each department in a factory has a maintenance person, it may be inefficient because the small departments don’t have quite enough work for a fulltime maintenance person, while the big departments have too much.

This offers the benefits of specialisation; efficiency and speed. In large organisations, one person cannot look after all the managerial functions planning, organising etc.

Within the office the departmentation may takes place on functional basis like typing department and filing department. Coordination becomes difficult when departments focus excessive attention on activities of their departments without linking their performance with other departments. Importance of Departmentation 3.


For a trader, the major activities are buying and selling, a bank performs borrowing and basses functions. Though this reduces boredom on the work process, it requires trained workers who can carry out all the processes. The goal of an organisation is to earn profits by customer satisfaction. Creating an Effective Organization Structure: Clear identification of customers and their needs is the basis of customer departmentation. For example, shifts in a factory or hospital or hotel. So they are the first to be grouped together under “General Foreman: The product or customer differentiation, both can be the basis of geographic or territorial departmentation.


The business has three categories of customers like wholesaler, retailer and consumer. Each geographic unit has resources to cater to the departmeentation of consumers of that area.

Departmentation, thus, helps in expanding an organisation and also promotes efficiency by dividing the work on the departmentaion of specialisation of activities and appointing people in various departments on departmentaton basis of their specialised knowledge. Departmentation by Function 2. The tightest interdependencies are between the turning, milling and drilling operations.

This network of authority- responsibility relationships is the basis of designing a sound organisation structure. This type of classification is adopted by enterprises offering baees services. Here’s how the seven categories above fall into the two supercategories, along with some other information about the two categories:.

Often, it is the underlying technology that determines the departmentation. Excessive involvement of employees in their respective departments makes it difficult for top managers to co-ordinate the functions of different departments.

Production, marketing, finance and personnel are widely accepted and recognised functions of a manufacturing organisation and, therefore, it is a simple basis of departmentation. Here are six common bases for departmentation: This can affect efficiency of the process.

In the absence of departmentation, managers can supervise a limited number of activities, depending upon their skills and abilities. This is the most common basis of departmentation, under this the departmentation takes place on the basis of the basic functions of the enterprise.

The departmental manager can co-ordinate bqses derivative activities. In time departmentalization, departments are separated based on the division of their working time or job shifts.