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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Best example of process departmentalization departmentatjon be seen in a textile mill where we may have a spinning department, weaving department, dyeing department, printing department, etc. With increase in operations of a company, it adds more products to its line of products which require various functional activities production, marketing etc.

Even for large organisations, it is suitable only for top levels. An organization can divide itself departmnetation departments any way it wants using any criteria it wants — there is no law about it.

6 Different Basis of Departmentation in an Organisation

Marketing managers have to balance the time and repartmentation spent in framing policies so that organisation can adapt to the changing customer environment. For example, a large company may operate globally through its different zonal departments established on a country basis.

In such a company, we generally see departments like a two-wheeler department, three-wheeler department, four-wheeler department, heavy motors department, etc.

Each geographic unit has departmentatkon to cater to the needs of consumers of that area. For example, a manufacturer may have different divisions for each of its product lines.

Notes on Departmentation: Meaning, Importance and Basis | Organisation

Departmentalization based on the division of an area of operation into different zones is shown in the following image. What are the duties of office supervisors? Specialisation promotes efficiency, lowers the cost of production and makes the products competitive. Since finished product goes through different processes, each process is assigned to a different department.



Large organisations, where each process requires different technology, operate most suitably under process departmentation. In process departmentalization, departments are separated based on a type of product produced by the company. Departmentation facilitates control by departmental manager over the activities of his department only. Creating an Effective Organization Structure: The production, purchase, personnel and marketing activities are looked after by departmental managers but finance is vested at the headquarters.

This can also result in conflict amongst process managers. After reading this article you will learn about: This method of departmentation results in optimum utilisation of machines as they work continuously which otherwise may remain idle. This basis is suitable for large-sized organisations which have activities dispersed over different geographical areas.

Before adopting this basis of departmentation, therefore, benefits must be weighed against costs. Departments are created for each shift though the objectives and nature of work carried in all the departments is the same. Water-tight compartments are sometimes created amongst departments as people show loyalty towards their departmental managers.

He ensures that activities are performed strictly according to rules and procedures laid down for the department. For a trader, the major activities are buying and selling, a bank performs borrowing and lending functions.

For example, a job requires three steps for its completion. They can be gainfully employed during evening or night shifts. Depending on how many people there are in the organization, the coordinators themselves need to be organized into groups supervised by higher level managers, and so on.

A lending institution, for example, gives loan to meet different customer requirements like housing loan, car loan, commercial loan etc. During boom conditions, the demand increases and, therefore, extra load has to be borne by machines.

Departmentation on the basis of product is made where the business has produced a number of products. Here are six common bases for departmentation: Top managers find it difficult to hold accountability of any one department for failure of the product in the market.

Such an organisation would become an inflexible organisation. In time departmentalization, departments are separated based on the division of their working time or job shifts.


This develops their potential to be promoted to higher managerial positions in the organisation. An organisation selling stationery, for example, also starts selling cosmetics and pharmaceuticals. 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.

What are the various bases of departmentation in an office ?

For an example, departments can be made based on night shift, morning or regular shift, evening shift, etc. Soldiers in army are grouped in numbers to form departments. The problem, of course, is that having two bosses can be confusing, and is a situation that departmehtation easily exploited by subordinates, who can pit their bosses against each other. Division of organisation on the basis of geographic dispersal of activities appears on the organisation chart as follows: Often there are individual concerns, like two people who don’t get along, the force certain departments to be placed under other departments, or not placed under certain departments.

Change in consumer behaviour, their demand for different goods at different times cannot be easily predicted.

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.

As work is divided into different processes, the process manager and his team specialise in that process by constantly carrying out activities related to that process departmenhation.

Departmentation by Process 6. The goal of an organisation is to earn profits by customer satisfaction.

There are problems of co-ordination and supervision of employees who work in shifts.