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Presentation on

Departmentation &
Types of


Departmentation means the process by which

similar activities of business are grouped
into units for the purpose of facilitating
smooth administration at all levels.

It is a process of dividing the large

functional organization into small &
flexible administrative units.
Need & Impor tance of
Depar tmentation

ØIt increases the operating efficiency

of the employees.
ØIt makes the executive alert &
responsible in his duties.
ØIt increases the prestige & skill of
the departmental heads.
ØIt helps in better co-ordination among
the managerial personnel

ØSecuring Attention
ØRecognition of Local
ar t m en ta ti on
Types of D ep
Departmentationby Functions : The activities are
grouped on the basis of functions which are to be
performed. Each department is headed by one responsible
person who is directly responsible to the General
1) It is scientific & time tested method.
2) It follows the principles of specialization &
division of labour.
3) It facilitates co-ordination activity within the
department itself & in the organization as a whole.
1) It makes the mgmt. control work more difficult.
2) It increase the work load & responsibility of
departmental managers.
3) The department heads consider themselves to be
autonomous sections of the organization.
Departmentationby Product : based on the goods and
services a company offers. A single business unit may
manufacture & sell different types of products. Each
department is responsible for manufacturing a product &
selling it to customers.
Advantages :
1) Better services may be provided to customers.
2) Helps in maximum utilization of personal efficiency
of workers.
3) Proper attention may be devoted to the manufacture
of a product.
Disadvantages :
1) It increases the no. of personnel which results
in increase in cost of operation.
2) It requires additional cost for maintaining a
sales force for each type of product.
3) Machines & equipments in each product department
may not be fully used.
Departmentationby Customers : based onthe different
types of
customers the organization serves. It is preferred when the
various needs of the customers are different in nature.

Advantages :
1) It fulfils the needs & expectations of customer.
2) Each section of the customer is able to get better
services from
the company & thus the company wins the goodwill of
the customers.
3) The out of fashion products can be dispensed with as the
business unit has intimate knowledge of customer’s tastes &

Disadvantages :
1) There is wastage of available resources & facilities.
2) The achievement of co-ordination is very difficult.
Departmentationby Process : based on the
work processes necessary to complete production of
goods or services. It is followed when the production
activities are carried out in many places.
Advantages :
1) The costlier machines can be used
2) It helps top mgmt. to have effective
performance control.
3) It is suitable to any business unit which
manufactures a product passing through a number of
Disadvantages :
1) Separate rooms for operation & facilities
should be given to all the processes which results in
high cost of operation.
2) It does not give good training to the staff
members & there is a lack of overall development of
managerial talents.
3) More specialists are essential to each
Departmentationby Time : based on the time of
the performance of business activities. If the work is not
completed within the normal working hours, extra time will
be given to complete it. Only interested persons are
requested to do the job & one person is responsible to
supervise them. Whatever be the work performed after the
normal working hours, a separate department will be in
charge of this type of activity.

Departmentationby Marketing Channels : based on

the channel of distribution chosen by a particular
business unit. Normally the channel of distribution is
selected by the business unit on the basis of nature of
goods & marketability of the product. This method of
departmentation has grown in importance as business has
become increasingly market-oriented.
rg a n iz a ti on
Types of O

Line Organizations
•Oldest and simplest form; direct flow
of authority from CEO to subordinates.
•Chain of command indicates who directs
which activities and who reports to
•Departmental heads are given full
freedom to control their departments.
Functional Organizations

• The work is divided according to specified

• Authority is given to a specialist to give orders
& instructions
in relation to specific functions.
• The decision is taken only after making
consultations with the
functional authority relating to his specialized
Line - and - Staff Organizations
•Combines line departments and staff departments.
•Line departments participate directly in
decisions that affect the core operations of the
•Staff departments lend specialized technical
Committee Organizations

•Authority and responsibility are in the hands of a

group of individuals.
•Often part of a line-and-staff structure.
•Tend to act slowly and conservatively.
•Often make decisions by compromising conflicting
interests rather than choosing best alternative.
Matrix Organizations

•There are several departments under matrix

•Matrix organization is followed where a
large no. of small projects have to be
•Each department is assigned with a
specified task.
•Employees report to a line manager and a
project manager .

Project Organization

• It is suitable for the accomplishment of

small no.
of large projects.
• There is a Grouping of activities for
each project.
• The responsibility is fixed for each
group with
regard to the respective project.

Related Interests