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1.
Functional Departmentation: -
This is the simplest form of departmentation
when grouping of departments is done on the
basis of functions such as production finance
marketing sales purchase and personnel etc, it
is known as functional departmentation. Further
sub divisions of the functions may be formed
like marketing can be divided in to
advertisement sales and after sales service. So
we can classify functions into two parts.
Basic functions i.e. Production
Marketing Finance and Personnel
Secondary Functions: - These are further
parts of basic functions according to the
organizational needs or operations like
Production: - Product planning, R&D, Quality
control and material handling
Functional departmentation is useful
where there is production of single product or
similar kind of product, for example TV Computer
monitor or TFT.
Advantages:
·
Advantage of specialization
·
Easy control over functions
·
Pinpointing training needs of manager
·
It is very simple process of grouping
activities.
Disadvantages:
·
Lack of responsibility for the end result
·
Overspecialization or lack of general management
·
It leads to increase conflicts and coordination
problems among departments.
2.
Products: -
When grouping of activities and departments
formed are given name on the basis of products
manufactured in an organization, it is called
products departmentation. It is applied where
there is a large range of products are
manufactured.
When there are several product lines and each
product line consists of a variety of items,
functional classification fails to give balanced
emphasis on each product. Apart form this use;
product or services may be made the basis of
major divisions by a departmental store, a
banking concern and an insurance company. Again,
manufacturing an marketing departments may
subdivide their activities on the basis of
products.
Advantages
·
It ensures better customer service
·
Unprofitable products may be easily determined
·
It assists in development of all around
managerial talent
·
Makes control effective
·
It is flexible and new product line can be added
easily.
Disadvantages
·
It is expensive as duplication of service
functions occurs in various product divisions
·
Customers and dealers have to deal with
different persons for complaint and information
of different products.
3.
Territories: -
Like the products basis, geographical regions are
adopted for main division as well as for
subdivision purposes. When activities of an
organization are physically dispersed in
different locations territorial departmentation
is adopted. Units that are located at different
areas are made so many self-contained divisions
of the organization. Marketing activities are
very often subdivided on the basis of
geographical areas. This form of departmentation
can be useful where business is on national or
international level. For eg. Indian railways,
insurance company use territorial
departmentation.
Advantages
·
Help to cater to the needs of local people more satisfactorily.
·
It facilitates effective control
·
Assists in development of all-round managerial skills
Disadvantages
·
Communication problem between head office and regional office due
to lack of means of communication at some
location
·
Coordination between various divisions may become difficult.
·
Distance between policy framers and executors
·
It leads to duplication of activities which may cost higher.
4.
Customers: -
When departments are formed to cater different
kind of customers it is known as customer
departmentation
this basis of classification is widely followed in subdividing
activities of the marketing department. When the
products are offered to market through various
channels and outlets, it has the special merit
of supplying goods in accordance with the
peculiar needs of customers. Customers may be
classified according to buying capacity or
nature like whole sale, retail and export or
government or general public. Most departmental
stores may attempt t reach customers preferring
low price or higher price
Advantages
·
It focused on customers who are ultimate
suppliers of money
·
Better service to customer having different
needs and tastes
·
Development in general managerial skills
Disadvantages
·
Sales being the exclusive field of its application, co-ordination
may appear difficult between sales function and
other enterprise functions.
·
Specialized sales staff may become idle with the downward movement
of sales to any specified group of customers.
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