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Departmentation in Management

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Departmentation in Management

  1. 1. Chapter 9 Departmentation
  2. 2. Objectives • Atthe end ofthe chapter youwill be able to – Haveknowledgeabout Departmentation andits various aspects – Learnabout Departmentation byfunction, advantagesand disadvantages – Understandabout departmentation bycustomers advantagesand disadvantages – Understand Departmentation bytime, process, numbers andbymarketing channels
  3. 3. Introduction • Departmentation isapart oforganization process • The activitiesare grouped on the basisof functions ofthe organization
  4. 4. Meaning and Definition • Meaningof Departmentation – Theprocessbywhichsimilaractivitiesofthe businessare grouped into units for the purpose of facilitatingthe smoothadministration at all levels • Definitionof Departmentation – Refersto classificationofactivitieson operations of anundertaking into functionalized categories
  5. 5. Process of Departmentation • Identification of work • Analysisofdetails ofeach work • Description ofthe functionofthe organization • Entrusting the functionto aseparate person whohasspecializedin the respective field • Fixingthe scopeofauthority andresponsibility ofthe departmental heads
  6. 6. Need and importance of Departmentation • Departmentation increasesthe operating efficiencyofthe employees • There isafixation ofresponsibilitiesto various executivesofthe organizationwhichmakes them to be alert andefficientin his duties • Certain powers, likeselfdecisionmaking, given to the department headsincreasetheir prestige and skills
  7. 7. Need and importance of Departmentation • Theworkingsofallthe departments are evaluated bythe top management • There isapossibility ofexpansionofthe organizationbecauseofthe fixingofthe responsibilities to the executivesandthere is function wise Departmentation • Besides,Departmentation givesother advantages likefacilitation budget preparation, attaining specialization etc
  8. 8. Factors in Departmentation • Specification – Specificationmaybe functionalsuchassales, finance, production, personnel • Control – There shouldbe aproper control under departmentation andsimplificationofthe control process • Co-ordination – Thewholebusinessactivitiesare grouped department wisewhichrequires co-ordination
  9. 9. Factors in Departmentation • Securing attention – Evenaunusuallyimportant activityofthe business shouldbe givena recognition • Recognition oflocal condition – Thedepartmentation shouldtake into consideration the localcondition ofthe place concerned • Economy – It shouldbe borne inmindthat expensesare incurred inthe creation ofseparate departments
  10. 10. Basis of Grouping Diverse Activities • Maximumuse – Theterm maximummeansthat agivenactivitywill be attached to the major department whichmakes most useof it • Interest – Asuperior isrequested to lookafter anewactivityif heisalsowillingandableto serve • Competition – Theprevailingcompetition amongthe departments isadesirableone
  11. 11. Basis of Grouping Diverse Activities • Policy matter – Aparticular activityisassignedto adepartment which evincesmore interest in the unit • Separation – The maximumdivisionofactivities involveshighcost of operation to the management • Proper attention – Proper attention shouldbe givento certain activities to keep them from dyingunder adverse circumstances • Co-ordination – There is a need of coordination of various activities where the organization’s activities are grouped into several departments
  12. 12. Patterns of Departmentation • There are certain methods ofdividingthe duties andresponsibilitieswithin anorganizational structure whichare as follows • Departmentation by Function, by Product, by Regions, by customers, by Process, by Time, byNumbers, byMarketing channels
  13. 13. Departmentation by Function • Thisisthe most commonlyfollowedbasisof departmentation • Here, activitiesare grouped on the basisof functions whichare to be performed
  14. 14. Advantages of Departmentation by Function • It isatime tested andscientific method • It ensures proper performance control • It avoidsthe interruption ofsubsidiarygroup in the primary activities • It iseconomical, simpleandeasyto understand
  15. 15. Disadvantages of Departmentation by Function • It makesthe managementcontrol work more difficult • It increasesthe work loadandresponsibilityof departmental managers • It doesn’t offer anyscopefor training for the overall development of managers
  16. 16. Departmentation by Product • Thistype ofdepartmentation ismadebythe large-scalebusiness unit • Eachdepartment isresponsiblefor manufacturing aproduct andsellingit to a customer
  17. 17. Advantages of Departmentation by Product • Product departmentation helpsin maximum utilization ofpersonal efficiency ofthe workers in the areaofmanufacturingandmarketing ofa product • Better servicesmaybe providedto the customer • Proper attention maybe devoted to the manufactureofa product • Anewline ofproducts canbe introduced without anydifficulty
  18. 18. Disadvantages of Departmentation by Product • There isadangerofduplication ofwork • It increasesthe number ofpersonnel whichin turn increasesthe cost of operation • Machinesandequipments in eachproduct department maynot be used fully
  19. 19. Departmentation by Region • Thistype ofdepartmentation isusefulfor whollydispersed business unit • Here the businessactivitiesare grouped in area- wiseandeacharea isin chargedbyasingle person
  20. 20. Advantages of Departmentation by Region • It makespossibleaneffectivespanofcontrol • It reduces the cost of operation and gains saving in time • It providesopportunities to managersto improve their skill in various fields • Control processisvaryeasyto manage
  21. 21. Disadvantages of Departmentation by Region • It increasesthe number of personnel • Control ofheadofficeisless effective • Duplication ofwork may cause • Smallbusinessconcern cannot managethe high operation cost
  22. 22. Departmentation by Customers • Thistype ofdepartmentation ispreferred when the variousneeds ofcustomers are different in nature • The consumablegoodscanbe subdividedin to perishableandnon-perishable in nature
  23. 23. Advantages of Departmentation by Customers • It fulfilsthe needs andexpectations ofthe customers • It developsthe specializationamongthe organization staff • Eachsectionofthe customer isableto get better service from the companyandhelpsthe companyto win the goodwill, ofits customers
  24. 24. Disadvantages of Departmentation by Customers • There maybe duplicationof activities • The achievement ofcoordination isvary difficult • There isawastageofavailableresources and facilities
  25. 25. Departmentation by Process • This type of departmentation is followed when the production activities are carried on in many places
  26. 26. Advantages of Departmentation by Process • The costlier machinescanbe used effectively • There maybe economyin operation • No duplicationof activities • Helpsthe top managementto haveeffective performance control
  27. 27. Disadvantages of Departmentation by Process • Separate rooms for operations andother facilitiesshouldbe givento allthe processes whichresults in heavycost of operation • Morespecialistsare essentialfor each process
  28. 28. Departmentation by Time • The businessactivities are grouped together on the basisofthe time ofthe performance • Only interested persons are requested to do the job andone person isresponsible to supervise them
  29. 29. Departmentation by Number • Here similar types ofduties are performed by small groups • Eachgroup iscontrolled byasupervisoror an executive • The principle ofspanofmanagementisused under thistype of departmentation
  30. 30. Departmentation by Marketing Channels • Thistype ofdepartmentation isadopted on the basisofthe channelofdistribution chosenby the particular business unit • Thismethod ofdepartmentation hasgrown in importance asbusinesshasbecomeincreasingly market oriented
  31. 31. Summary • Departmentation refers to the classificationof activitieson operation ofanundertaking into functionalized categories • Indepartmentation byfunction, activities are grouped on the basisoffunctionswhichare to be performed • Departmentation byproduct ismadebythe large- scalebusiness unit • Departmentation byregion isusefulfor wholly dispersed business unit
  32. 32. Summary • Departmentation bycustomer ispreferred whenthe variousneeds ofcustomers are different in nature • Departmentation byprocessisfollowedwhen the production activitiesare carried on in many places • Indepartmentation bytime, the business activitiesare grouped together on the basisof the time ofthe performance
  33. 33. End of Chapter 9 Departmentation