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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Grouping of activities and, consequently, of personnel, into departments makes it possible to expand an enterprise to any extent.

Departmentation: Need, Significance and Process

He, thus, controls activities of his department to ensure that the product contributes to the organisational goals. Due attention to the human factors will make departmentation more effective and more efficient. This is comparatively a costly basis of departmentation than functional departmentation because every department appoints people to look after specialised activities, like accounting, finance, marketing, personnel etc.

The organisation chart of departmentation by process or equipment in the manufacturing department of a textile industry has been shown in Fig. In such type departmentagion departmentation the activities are grouped on the basis of production processes involved or equipment used.

Accounting Banking Business Business Statistics. It creates opportunities for the departmental heads to take initiative and thus develop managerial facilities. Marketing managers have to balance the time and money spent in framing policies so that organisation can adapt to the changing customer environment.

Departmentation: Need, Significance and Process

They can ogranisation communicate with the consumers and frame policies to satisfy their needs. General Manager of every department looks after functional activities of his geographical area but overall functional managers provide supporting services to the managers of different areas.

Division of work into units and sub-units creates departments.

Departmentation by Process 6. Since each department has auxiliary departments like personnel, accounting etc. 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.


When a broader function is divided into small segments and a particular segment is assigned to each manager, the area to be appraised is clearly known; and the factors affecting the performance can be pointed out more easily.

Departmentation, thus, helps in expanding an organisation and also promotes efficiency by dividing the work on the basis of specialisation of activities and appointing people in various depart,entation on the basis of their specialised knowledge.

This type of classification is adopted by enterprises offering specialized services. Subordinates are trained to carry out functions related to each product.

Departmentalisation : Meaning, Need and Types

Demand for the same product for same set of consumers differs during different departmentayion. This method of departmentation results in optimum utilisation of machines as they work continuously which otherwise may remain idle. Thus, organisation structure is facilitated through departmentation. This type of departmentation is useful for the enterprises which sell a product or service to a number of clearly defined customer groups.

The aim is to facilitate the carrying out of the activities efficiently for achieving overall results. It should aim at full utilisation of resources. Since similar activities are grouped in one department headed by departmental managers, it becomes easy for top managers to fix responsibility of respective managers for achieving the desired vepartmentation.

It is departmebtation of activities on the basis of similarities of functions. In product departmentation, every major product is organised as a separate department.

Though this reduces boredom on the work process, it requires trained workers who can carry out all the processes. Leave a Reply Cancel reply Your email address will not be published.

Service functions are duplicated both at the top and at the operating levels of management. The goals of the business are common and everybody should try to achieve them in their respective fields. Dividing the work naturally means the identification of individual activities which have to be undertaken for the attainment of the organisational objectives. The product or customer differentiation, both can be the basis of geographic or territorial departmentation.


Departments are created on the basis of products and product manager has the authority to carry out functional activities for his department. Meaning and Types With Diagram. This method of departmentation is used in situations where work is done round the clock because: Functional organisation creates departments along activities or functions of the undertaking functions do not refer to managerial functions of planning, organisingstaffing, directing and controlling.

The administrative units so created may be designated as departments, divisions, units, branches, sections, etc. Managers are able to promote sales as they are aware of the local conditions of the area where they are operating. Excessive involvement of employees in their respective departments makes it difficult for top managers to co-ordinate the functions of different departments.

During boom conditions, the demand increases and, therefore, extra load has to be borne by machines. By creating departments where each product department looks after one product or product line only, decision-making, fixing responsibilities and assessment of performance can be done efficiently. The departmental managers, therefore, must have specialised skills to determine the consumer needs. Such groups are suitable to organisations serving several segments like a pharmaceutical company supplying to institutional buyers such as hospitals and government and non-institutional buyers as wholesalers and retail chemists.

Role, Steps for Designing and Its Features. Here, the market is broken up into sales territories and a responsible executive is put in charge of each territory. Thus, customers of different regions with different tastes and preferences for the same product are looked after by geographical departments set up in their territories.