SEMINAR ON

DEPARTMENTALIZATIO
N

DONE BY
SHYAM GANESH T
What is Departmentalization?

• It is the process of a logical grouping of similar nature of functions into

manageable units called departments on the basis of their nature and area
specialization for the purpose of overall coordination of organizational
resources.
• Departmentalization facilitates maintenance coordination, communication,
and control among all the mechanisms of the organization. It creates separate
units with independent responsibilities to the department managers who in
turn improve their working efficiency and effectiveness.
Objectives of departmentalization

•Coordination – it becomes easier to coordinate their efforts and achieve common

goals by grouping jobs together.
•Reduced Communication Costs – reduces the amount of time spent in
communication.
•Improved Efficiency and Effectiveness – by placing employees who share
common goals, departmentalization helps increase efficiency and effectiveness. In
addition, organizational leaders may group these experts because of their shared
knowledge and ability to combine their talents to achieve project goals.
•Clear Responsibilities – ensures that every person has clear responsibilities to be
completed within a set timeframe.
•Division of Labor – allows for labor specialization, leading to increased efficiency and
improved production.
•Improved Workflow – helps reduce bottlenecks and improve workflow.
•Improved Worker Morale – departmentalization has been linked with happier workers who
feel more valued by their organization.
•Scalability – as a business grows, adding new departments and employees becomes easier
without disrupting the entire organization.
Types of Departmentalization

DEPARTMENTALIZATION BY FUNCTION

DEPARTMENTALIZATION BY PRODUCT

DEPARTMENTALIZATION BY CUSTOMER

DEPARTMENTALIZATION BY
GEOGRAPHY
Departmentalization By Function

• Departmentalization by function or functional departmentalization is when the departments

are created on the basis of the nature of functions to be performed like sales, account,
production, finance, marketing, and personnel, etc.
• Here the similar nature of activities is grouped in one unit and other similar activities into
another unit.
• A departmental head or a manager is appointed in each department to supervise and control
the activities of the respective department.
• The main feature of functional departmentation is that, in a case, when the workload of a
particular department becomes more, a department may again be classified into sub-
departments
Departmentalization By Product

• The department which is created on the basis of the nature of a product or product line is
called departmentalization by product.
• Here, a separate department is created for a single product or product line and all functions
like production, finance, marketing, personnel, etc. are brought together under the concerned
department
• Each department is independent and responsible to improve and expand its business
performance
• The main objective of creating departments by product/service is to focus on a single product,
increase the marketability of a related product, increase in sales of that product, and
ultimately increase the profit of the firm
In the above picture, Publication, Noodles, Electronic,
and Beverage are the product lines. And Noodle is the
product, and on the basis of the Noodles department,
other functional departments are created like production,
finance, marketing, personnel, as we discussed above
Departmentalization By Customer

• When the departments are created on the basis of customer’s nature and customer’s groups
that departmentalization method is known as departmentalization by customer
• The customer’s groups may be on the basis of wholesale buyers, retail buyers, industrial
buyers, etc
• The main objective of customer departmentalization is to better serve the particular customer
group and get maximum profit through high customer satisfaction
• For example, banking organizations create departments on the basis of customer service like
deposits, cash withdrawal, letters of credit, loans, etc
In the above picture, consumer product buyers are the
focused department, and on the basis of them, the
functional departments are created like production,
finance, marketing, and personnel
Departmentalization by Geography

• Departmentalization by territory is when the creation of the departments of the organization is

on the basis of territory or geographical or regional areas
• The regional areas may be western, eastern, central, etc
• Territory departmentalization applied to provide a better quality of services all over the nation
throughout the territories
• Departmentalization by territory method of departmentalization is appropriate for those
organizations that involve in business activities in different geographical locations, like the
insurance company, bank, transport company, chain store, or a product that is distributed
throughout the nation