Departmentation
                     Departmentatio
n
INTRODUCTION
Departmentation refers to the grouping 
of operating tasks into jobs, the 
combining of jobs into efficient work 
groups and combining of groups into 
divisions called as ‘Departments’.
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HORIZONTAL 
DIFFERENTIATI
ON
Departmentation refers to the horizontal 
differentiation in an organisation. It is a 
method of arranging activities and 
employees to facilitate the 
accomplishment of overall objectives.
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CHIEF MEANS OF 
DEPARTMENTATI
ON
1. Function
2. Product
3. Customer
4. Area
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Departmentation 
by Function
This is most common form of 
departmentation. This is based on 
specialised functions such as production, 
finance, sales and marketing, personnel 
and research and development.
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Advantage of a 
functional 
structure
Another major advantage of a functional 
structure is that it makes supervisions 
easier, since each manager must be 
expert in only a narrow range of skills. 
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Disadvantage of 
a functional 
structure
Some of the disadvantages are that, it 
becomes more difficult to get quick decisions 
or action on a problem because functional 
managers have to report to central 
headquarters and may have to wait a long 
time before a request for help is acted.
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Departmentation 
by Product
This method places all the resources and 
authority under one manager to get a 
product or service produced and 
marketed. Here, units are formed based 
on type of product. 
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Departmentation 
by Customers
This organisational form is used when 
great emphasis is placed on effectively 
serving different customer types. 
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Departmentation 
by Area
The divisions may be based on 
geographical basis. It is specially useful 
for large scale enterprises which are 
geographically spread out. 
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Departmentation 
by Time
The organisation which are working 
around the clock are generally 
departmentalized on the basis of time 
shifts. Example, hospitals and telecom. 
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