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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The marketing department is further divided on the repartmentation of product lines i. This type of departmentation provide the benefits of both functional and product structures.

When every department looks after one major function, the enterprise is developed and efficiency of operations is increased. This departmentation is most widely used basis for organising activities and is present in every organisation at some level Fig.

A central body should act as a coordinating body. Dividing the business house into various departments makes the co-ordination of various activities very difficult.

Departmentation: Need, Significance and Process

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, fepartmentation etc. Service functions are duplicated both at the top and at the operating levels of management. This can affect efficiency of the process. Flow of work from one level to another and for every department, i. It is used at the lowest level of organisation.

With increase in operations of a company, it adds more products to its line of products which require various functional activities production, marketing etc. It is an established fact that there is a limitation on the number of personnel an enterprise or a supervisor can directly control.


Departmentation facilitates control by departmental manager over the activities of his department only. Development is possible due to two factors. The product or customer differentiation, both can be the basis of geographic or territorial departmentation.

Departments are created for each shift though the objectives and nature of work carried in all the departments is the same.

The aim is to facilitate the carrying out of the activities efficiently for achieving overall results. Departmentation by Function 2. Personnel department has sub-departments to take care of appointments, training, placement and promotion of employees. Demand for the same product for same set of consumers differs during different times.

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

Leave a Reply Cancel reply Your email address will not be published. A regional division achieves a better co-ordination and supervision of activities in a particular area. Organisation involves dividing and grouping of activities to krganisation done in an enterprise.

6 Different Basis of Departmentation in an Organisation

Departmentation enables an enterprise to avail of the benefits of specialisation. Ij department managers cannot easily frame policies for their departments because of changing consumer behaviour.

This is possible through shift duties. It increases the efficiency of the enterprise since various activities are grouped into workable units. While some of the functional activities are decentralised, others are centralised. Product managers are accountable for results of their product departments.

In short, levels are expensive in terms of money and effort and undermine operating efficiency of the business. 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. Product departmentation is grouping of jobs and resources around the products or product lines that a company sells.


Departmentation provides help in both these areas. But once the various activities have been identified, it is necessary to group them together on some logical basis so that a team can organisatlon organised.

Notes on Departmentation: Meaning, Importance and Basis | Organisation

It is useful for organisations which are engaged in the manufacture of products which involves several processes. The departmental heads ensure efficient functioning of their departments within the broad principles of organisation scalar chain, unity of command, unity of direction etc.

Each product manager is in charge of his product line though general managers of various functional areas provide them the necessary support. Here we detail out the need organisatio significance of departments, process involved and dangers of departmentation and factors influencing assigning of activities.

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.

Departmentalisation : Meaning, Need and Types

Need, Significance and Process. The responsibility for results cannot be fixed on any one functional head. Business Jargons Business Departmentalization. Departments are created on the basis of number of people who form the department. Due attention to the human factors will make departmentation more effective and more efficient.

It is easy for managers to supervise the departmental activities as they have to supervise a narrow set of functional skills. Marketing department, for instance, can be further branched out on vepartmentation basis of territorial or geographical departmentation. The feeling of autonomy provides job satisfaction and motivation which lead to higher efficiency of operations.