There are opportunities to improve performance in their area of specialisation. Thus there may be wholesale department, retail department and consumer departmental in an organization. More effective performance can lead to greater profitability. Increases problems of the top management control. Automation will come nautrally to this scheme. Isolation By segregating functions such as marketing, human resources, production and finance, employees in one department have little idea of what people in other departments do. There may be chances of heavy centralization in decision-making.
When an organisation opens departments on the basis of products, it is called product departmentation. Although there are theoretical differences between matrix and projects structure, most of the people discuss the two together. Functional Departmentalization In functional departmentalization, an organization is organized into departments based upon the respective functions each performs for the organization. In fact,the activities may be classified or grouped on such basis. Stringentguidelines were put in the sale clause, wherein no benefit was toaccrue to the bidder from the de-merged land and its sale or anyform of revenue and shareholding in the resultan … t company. Responsibility for profits is at the top only. Departmentation by Customers Departmentation by customers places greater emphasis on the customers and distinguishes one type from the other.
Matrix structure is used by pharmaceuticals, electronics, aerospace, service industries, professional areas accounting and the non-profit sectors like hospitals and research. Merits of Departmentation by Process The following are the important merits of this type of departmentation: 1. Decentralization example is more extensive is degree and the powers are diffused to the least most level of administration. Organisation Chart Showing Process Departmentation : Merits of Process Departmentation : The merits of process departmentation are as follows: i Specialisation: As work is divided into different processes, the process manager and his team specialise in that process by constantly carrying out activities related to that process only. Lower scope for promotional avenues.
Like a mass production chain each doing only certain job all the time until they are really experts in what they do. A Combined Approach Matrix departmentation combines the organizational structures of product and functional departmentation by using parallel management structures. Control: Managers cannot control organisational activities if they have to be collectively supervised. Sharing of resources: If there are no departments, organisational resources; physical, financial and human, will be commonly shared by different work units. Co-ordination: People working in one department are closely knitted and work collectively towards achievement of departmental goals. For example, the division could be industrial buyers, whole-sellers, government, and public undertakings, agriculturists, etc. The merits and limitations of each one of the above have their own merits and limitations On the whole the merits and limitations of divisional structure have been shower in Table 10.
This is also considered suitable where the branches produce the same goods or perform similar services at various locations. A simple representation of product wise departmentation is given as follows: Product wise departmentation is also known as multifunctional product departmentation, because each product department handles all the functions concerning it. It facilitates co-ordination both within the function and at the inter-departmental level. Overall organisational goals: The employees become so focused on departmental goals that they lose sight of the overall organisational goals. Departmentation enables them to expand their area of operation into new product lines and geographical divisions. After choosing the company's ambitions, managers departmentalize -- that is, they create departments by grouping work positions together, choosing whatever arrangement will best achieve success.
A chain may split its operation along the lines of both product and chain of command by having a food department and a beverage department, with food reporting to the chef while beverage reports to the licensee. In political sciences, centralization alludes to the developmental pattern of the sensory system to be parceled into a focal sensory system what's more, fringe sensory system. Each of the last two sell this brand along with several others. Here departmentation is done on the basis of geographical area of operation of the enterprise. There is a lower potential for manager development.
However, there are a few basic methods for dividing responsibilities within an organization. Certain economies of localized operation can be availed. It follows the principle of specialisation. Departmentation by Number: In case of departmentation by number, activities are grouped on the basis of their performance by certain number of persons. This group is chosen from different functions to work together across various departments to interdependently create new products or services. Diagram Credits © Moon Rodriguez. Functional Departmentation: It refers to grouping the activities of an enterprise on the basis of functions such as production, sales, purchase, finance, personnel, etc.
It is a logical reflection of functions. A departmental head or manager is appointed to supervise and control the activities of the concerned department. Some disadvantages of this type are: 1. The company-wide picture can also be lost. All activities related to the organization's activities in each region are handled by a department in that region.
Authority and responsibilities can be clearly defined and fixed. Functional Departmentation Functional departmentation organizes employees based on function or skill set. Some of the advantages of this structure are 1. There is no agreement about the number of subordinates to be managed by one manager, whether it should be narrow tall structure or wide flat structure and what constitutes narrow and wide span. Each group of customers needs different tactics and strategies to handle them better. Scope for growth and diversification: In the absence of departmentation, managers can supervise a limited number of activities, depending upon their skills and abilities. Process departmentalization In process departmentalization, departments are separated based on their role in a production process.