Definition, Meaning and Bases of Departmentation such as Functional, Territorial, Process, Product, Customer, Time, their merits & demerits are explained in this. The question arises: On what basis should we carve up the members of the organization Here are six common bases for departmentation. Departmentation: Meaning and Bases | Organisation Process. Article shared by: After reading this article you will learn about Departmentation: 1. Meaning of.

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In such a company, we generally see departments like a two-wheeler department, three-wheeler department, four-wheeler department, heavy motors department, etc. This is the most common basis of departmentation, under this the departmentation takes place departmentztion the basis of the basic functions of the enterprise.

First the organisation is divided on the basis of functions. Workers are grouped based on the process or activity used by the worker. The goal of an organisation is to earn profits by customer satisfaction.

6 Different Basis of Departmentation in an Organisation

Newer Posts Older Posts Home. So production, distribution, marketing and finance departments come to picture. Here, all activities, which are directly or indirectly connected with production are grouped together to make a production department. Meaning – What it Includes? This refers to the flow of product from person to person as it is being constructed. Here, every individual department is responsible for producing and selling the type of product bsaes to them. Production, marketing, finance and personnel are widely accepted and depatmentation functions of a manufacturing organisation and, therefore, it is a simple basis of departmentation.

Departmentation helps in sharing resources according to departmental needs. Each geographic unit has resources to cater to the needs of consumers of that area.


An organization can divide itself into departments any way it wants using any criteria it wants — there is no law about it. Process departmentation is found in chemical industries and composite textile mills. If there are no departments, dpeartmentation will bawes difficult to keep track of who is doing what and who is accountable to whom. The product or customer differentiation, both can be the basis of geographic or territorial departmentation.

For example, shifts in a factory or hospital or hotel. In functional departmentalization, departments are segregated i. For example, lawyers in a corporation consult each other to take advantage of specialized skills and to develop a common approach to things. Groups formed in order to achieve economies of scale. Functional departmentation is not suitable in such cases. In combined departmentalization, a company or an organization uses a mixture or combination or union of two or more different bases of departmentalization.

He can co-ordinate the efforts of people working under him. There are also sequential interdependencies between the business functions of design engineeringmanufacturing, and marketing.

They can directly communicate with the consumers and frame policies to satisfy their needs. If workers are not able to carry out the activities efficiently, managers can train them to do so. Product departmentation, along with various functional areas appear on the organisation chart as follows: It helps in coordinating the activities of different products. They may not specialise in all the functional activities.

Since decisions are made by departmental heads for their respective departments, it may delay decision-making for the organisation as a whole. No Comment Yet Please Comment. But the conflicts between different departments and division may increase. Military forces also use this method. Here, inside an automobile company, all activities, which are directly or indirectly related to car manufacturing are grouped together and assigned to four-wheeler or car department.


So at the next level up, we merge all of these under “Vice-President: Here departmentation is done on the basis of geographical area of operation of the enterprise.

Creating an Effective Organization Structure: The major functional departments further have derivative departments. The departmental managers, therefore, must have specialised skills to determine the consumer needs. For example, activities carried by a manufacturing organisation are production, finance, personnel and sales.

This is comparatively a costly basis of departmentation than functional departmentation because every department appoints people to look after specialised activities, like accounting, finance, marketing, personnel etc.

A department created for satisfying customer requirements becomes specialized in that area resulting in cost efficiency. This type of departmentation may not provide opportunity for the all-round development of managerial departmentatiob.

Product departmentation is grouping of jobs and resources around the products or product lines that a company sells. Sales people understand consumer behaviour and provide them the desired services.

What are the various bases of departmentation in an office ?

Within the office the departmentation may takes place on functional basis like typing department and filing department.

Similar activities of a business are grouped into major departments or divisions under an executive who reports to the chief executive. The big advantage of matrix organizations is that they are great for sharing of information and enabling people to coordinate their efforts with larger organizational goals and strategies.

Allows economies of scale: With increase in operations of a company, it adds more products to its line of products which require various functional activities production, marketing etc.

Under this basis of departmentation, the business is divided into a number of departments on the basis of customers.