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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When organisation has a number of projects, baases forms task forces which consist of people from different units having different skills to complete those projects.

6 Different Basis of Departmentation in an Organisation

For an example, departments can be made based on night shift, morning or regular shift, evening shift, etc. An educational institution which deaprtmentation academic and non-academic subjects vocational subjectsfull-time or part-time courses, morning or evening shifts is a typical case of customer departmentation. Here’s how the seven categories above fall into the two supercategories, along with some other information about the two categories:.

Departments are created for each shift though the objectives and nature of work carried in all the departments is the same. Before preserving your articles on this site, please read the following pages: Departmentalization based on the division of an area basrs operation into different zones is shown in the following image.

Departmentation (Grouping)

What are the duties of office supervisors? Such an organisation would become an inflexible organisation. First, an entire area of operation e.

Departments are created and activities of similar nature are grouped in one unit. For instance, if product C is a car, the department can be branched out for commercial car, luxury car, special utility vehicle etc.

Organisations which do not frequently change their work units and work force are suitable for creating departments on the basis of functional activities. The departmental manager is accountable for functions performed by his department. Departmentation means division of work into smaller units and their re-grouping into bigger units departments on the basis of similarity of features.


Each product division can be taken as a viable profit centre for accountability purposes. If firms establish their areas of operation near the sources of raw material, they will be able to produce at low cost and take advantage of economies of operation. The production, purchase, personnel and marketing activities are looked after by departmental managers but finance is vested at the headquarters.

Often, it is the departmentaion technology that determines the departmentation. Departmentation is the foundation of organisation structure, that is, organisation structure depends upon departmentation. Production, marketing, finance and personnel are widely accepted and recognised functions of a manufacturing organisation and, therefore, deparmtentation is a simple basis of departmentation. The major functional departments further have derivative departments. In such a company, we generally see departments like a two-wheeler department, three-wheeler department, four-wheeler department, heavy motors department, etc.

Various regional units may become so engrossed in short basess competition among themselves that the overall long term interests of the organisation as a whole may be overlooked. 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 results. Change in consumer behaviour, their demand for different goods at different times cannot be easily predicted.

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. This form of departmentation is suitable for medium and large-sized organisations where goods are produced through a series of operations. The business has three categories of customers like wholesaler, retailer and consumer. Finance department creates departments to look into departmentatipn budgeting fixed assets and current assets, cash management and budgets.

Avoids duplication of efforts: Actually, some of these like 1-Knowledge and 2-Work Process can or impossible to distinguish. Identifying buyers as industrial and non-industrial is not very easy. Here departmentation is done on the basis of geographical area of operation of the enterprise. The machine cannot be stopped in manufacturing steel and workers, therefore, have to work in shifts. The big advantage of matrix organizations is that they are great for sharing of information and enabling people to coordinate their efforts with larger organizational goals and strategies.


Top management is relieved of operating task responsibility and can concentrate on such centralized activities as finance, research etc. Since finished product goes through different processes, each process is assigned to a different department. The focus is on the product line and all functional activities associated with the product line.

People working in one department are closely knitted and work collectively towards achievement of departmental goals.

6 Different Basis of Departmentation in an Organisation

This network of authority- responsibility relationships is the basis of designing a departmentafion organisation structure. The performance of individual products separtmentation be easily accessed to distinguish between profitable and unprofitable products. The costs and revenues of all the products can be compared.

Production department, for example, has sub-departments to manage purchase, production planning and control, manufacturing etc. It is not easy to identify various consumer groups. But the conflicts between different departments and division may increase.

Preserve Articles is home of thousands of articles published and preserved by users like you. The departmental heads ensure efficient functioning of their departments within the broad principles of organisation scalar chain, unity of command, unity of direction etc.

Similarly, funds required for each product line are different. An organisation where the basis of departmentation is to sell goods according to customer needs justifies its existence.

Since each department has auxiliary departments like personnel, accounting etc. 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. There are four kinds of increasingly tight interdependence:

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