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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This causes a loss of morale on the part of subordinates. First the organisation is divided on the basis of functions. Similarly, a printing press may have composing, ddepartmentation reading, printing and binding departments. An organisation where the basis of departmentation is to sell goods according to customer needs justifies its existence.

Notes on Departmentation: Meaning, Importance and Basis | Organisation

Identifying buyers as industrial and non-industrial is not very easy. In the case of departmentation by numbers, the activities are grouped on the basis of their performance dpartmentation a certain number of persons.

Since each basis is suitable to a particular type of organisation, often a combination of various basis is adopted. They can directly communicate with the consumers and frame policies to satisfy their needs. In such method of departmentation, the activities are grouped according to the type of customers.

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It is helpful in departmenntation responsibilities and accountability.

People working in one department are closely knitted and work collectively towards achievement of departmental goals. But once the various activities have been identified, it is necessary to group them together on some logical basis so that a team can be organised. The aim is to lrganisation the carrying out of the activities efficiently for achieving overall results.

Here, the market is broken up into sales territories and a responsible executive is put in charge of each territory. An organisation selling stationery, for example, also starts selling cosmetics and pharmaceuticals. The more commonly used departmentatiin are—function, product, territory, process, customer, time etc. It is obviously not possible for one functional manager to manage efficiently such widely spread activities. People are placed in different departments according to their specialised skills.

The process of organising consists of dividing and grouping of the works to be done in an enterprise and assigning different duties and responsibilities to different people. Standards departmwntation performance for each and every department can be precisely determined.

Departmentation is the process of grouping various activities into separate units of departments. Production department, for example, has sub-departments to manage purchase, production planning and control, manufacturing etc. Each department looks after the production, sales and financing of one product. 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.


It may be difficult to provide efficient centralized services to various departments located separtmentation different areas. It is used at the lowest level of organisation.

Functional departmentation departtmentation not suitable in such cases. Grouping of activities and personnel into manageable units facilitates administrative control.

After reading this article you will learn about: 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. Thus, performance appraisal becomes more effective.

This type of classification is adopted by enterprises offering specialized services. Similarly, funds required for each product line are different.

The focus is on the product fepartmentation and all functional activities associated with the product line. Each product division is semi-autonomous and contains different functions. Departmentation enables departmental heads to be creative in making decisions with respect to their departmental activities.

It increases the efficiency of the enterprise since various activities are grouped into workable units. It is suitable for organisations where ddpartmentation number of products are produced. Departmentation should be adjusted according to the available resources.

Functional managers do not get training for top management positions. This form of departmentation is suitable for medium and large-sized organisations where goods are produced through a series of operations. Deparmentation department creates departments to look into capital budgeting fixed assets and current assets, cash management and budgets. This article throws light upon the six different basis of departmentation in an organisation.


Nature, Advantages and Demerits. Need, Significance and Process. During boom conditions, the demand increases and, therefore, extra load has to be borne by machines. roganisation

What is Departmentalization? definition, objectives and methods – Business Jargons

With increase in operations of a company, it adds more products to its line of products which require various functional activities production, marketing etc. If different departments work at different speed, co-ordination amongst different processes becomes difficult. Since decisions are made by departmental heads for their respective departments, it may delay decision-making for the organisation as a whole. Leave a Reply Cancel reply Organisatiion email address will not be published.

Clear identification of responsibility and authority increases efficiency of the departmental activities. There are organissation to improve performance in their area of specialisation.

Departmentation enables them to expand their area of operation into new product lines and geographical divisions. Managers cannot control organisational departmentagion if they have to be collectively supervised.

The territory may be known as district, division or region. It helps in coordinating the activities of different products.