1. Functional Departmentalization. (it groups jobs by functions performed. It can be used in all kinds of organizations; it depends on the goals each of them wants to achieve.)
The grouping of common or homogeneous activities to form an organization unit is known as functional departmentalization. Functional departmentalization is the most widely used basis for organizing activities and is present almost in every large organization at some level.
Functional departmentalization is most commonly used because it offers certain advantages which include advantages of specialization, ensuring performance of activities necessary for the achievement of organizational objectives, elimination of un -necessary activities, easier control over functions, easier way for pinpointing training need of the managers and maintaining the relative importance of functions in the organization.
Different aspects on this type of departmentalization:
Positive Aspects | Negative Aspects |
o Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations o Coordination within functional area o In-depth specialization | o Poor communication across functional areas o Limited view of organizational goals |
2. Product Departmentalization. (It groups jobs by product line. Each manager is responsible of an area within the organization depending of his/her specialization)
Product departmentalization involves the grouping together of all activities necessary to manufacture a product or product line. Product departmentalization is preferred for product expansion and diversification when manufacturing and marketing characteristics of each product are of primary concern. Product departmentalization offers several advantages places attention to product lines, reduces problems of coordination for different products, provides opportunities for further diversification and expansion of organization and provides product specialization necessary for managers specially when each product is different from other.
Different aspects on this type of departmentalization:
Positive Aspects | Negative Aspects |
o Allows specialization in particular products and services o Managers can become experts in their industry o Closer to customers | o Duplication of functions o Limited view of organizational goals |
Territorial or geographical departmentalization is specially useful to large-sized organizations having activities which are physically or geographically spread such as banking, insurance, transportation etc., Territorial departmentalization provides certain efficiency in operation. Local factors such as customers, culture, styles, preferences etc., always affect organizational functioning.
Positive Aspects | Negative Aspects |
o More effective and efficient handling of specific regional issues that arise o Serve needs of unique geographic markets better | o Duplication of functions o Can feel isolated from other organizational areas |
4. Process Departmentalization. (It groups on the basis of product or customer flow.)
In process departmentalization, processes involved in production or various types of equipments used are taken as basis for departmentalization. When the production activities involve the use of several distinctive processes, these can be used as the base for grouping of activities. Such activities may be textiles, oil production etc., The process are set in such a way that a series of operations is feasible making operations economic. It provides advantages of specialization required at each level of total processes, maintenance of plant can be done in better way, and manpower can be utilized effectively.
Different aspects on this type of departmentalization:
Positive Aspects | Negative Aspects |
o More efficient flow of work activities | o Can only be used with certain types of products |
Customer based departmentalization is basically market – oriented in which departments are created around the markets served or around marketing channels. The basic idea of this departmentalization is to provide services to clearly identified groups of customers. Each group of customers has different purchase behavior, payment schedule, demand pattern etc., Therefore they can be attracted to the organization’s business by satisfying them by providing services, payment schedule demand pattern etc.
Different aspects on this type of departmentalization:
Positive Aspects | Negative Aspects |
o Customers' needs and problems can be met by specialists | o Duplication of functions o Limited view of organizational goals |
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