Functional departmentalization
Advantages
 Emphasize job specialisation in each
department
 Easier to control the employees
 Decision making process is more effective
 Authority of making decisions is
centralized
 Problem-solving process can be effective
 Due to job specialization
 Would be better at risk handling
Geographical departmentalization
Advantages
 Expand business operation into different
geographical location
 Increase sales and profit
 Place emphasis on local markets
 Fulfil local demand
 Better face to face communication with
local interests
 Familiar with the local people - able to
identify their needs and wants
Disadvantages
 Cannot produce multi-skilled worker
 Due to job specialisation
 Poor communication across functional
areas
 Employees tend to focus on their own
departmental goals only
 Implementation of routine and
monotonous tasks
 Employees might feel bored. Hence
they might not be motivated to work
Disadvantages
 Requires more people with managerial
skills
 Increase cost of organisation - these
managers are often pay with high
salary
 More costly than other forms if
departmentation
 Ex. administrative expenses are high
 Cause duplication of functions
 Waste time and effort - delay in
achieving organisation goals
Customer departmentalization
Advantages
 Customers’ needs better served
 Know their preference and how they
behave
 Flexible and able to make changes quickly
 Able to adopts different environmental
changes according to the situation
 Develops an expertise in customer’s areas
 Able to meet their needs and wants of
different categories of customers -
create customer satisfaction
Product Departmentalization
Advantages
 Allow specialization in certain product or
services
 Ensures better quality of product
 Helps in evaluating the performance of
each department
 Organization can be control easily
 The product and service can be diversified
 Market and Marketing researches can
be conducted in order to achieve this
Disadvantages
 Cause duplication of functions
 Waste time and effort - delay in
achieving organisation goals
 Lack of coordination between departments
 May lead to optimised department
revenues but decreased company
revenues
 Possibly of wastage of organization’s
resources
 Due to over focus on customer’s
satisfaction
 For example, when consumer changes
their taste or preference very quickly –
Goods produced once preferred by
them would be wasted.
Disadvantages
 Cause duplication of functions
 Waste time and effort - delay in
achieving organisation goals
 Resources may not be fully utilized due to
low demand
 Cause wastages of organization’s
resources
 Departmental managers and supervisors
may ignore overall organizational
objectives
 Tend to focus only on their
departmental activities.
Process Departmentalization

Advantages Disadvantages
 There is proper division of work  Whole process may be affected due to
 Task can be carried out more efficiently problem in one process
 Task would be delay

 Facilitates proper and optimum use of  Conflict may occur

resources  May cause resignation of employees
 Can avoid the wastage of organization’s  Cause stressful working relationship
resources

 Clear authority and responsibility in each  Disunity of command might occur

department  Might face the situation of reporting to
 Staff clearly knows what they are two bosses
supposed to do - able to carry out their
respective task effectively.