departmentation.pptx s1 bba notes important

Fundamentals of management

1. disadvantages 1. There is duplication of physical facilities and functions. Each product division maintains its own specialized facilities and personnel due to which operating costs may be high. 2. Advantages of centralization of certain activities like financing, accounting, industrial relations, etc. are not available. 3. There may be underutilization of plant capacity when the demand for a particular product is not adequate. 4. It creates the problem of effective control over product divisions by the top management. 5. More persons with general management ability are required. 6. Each product manager asserts his autonomy disregarding the interests of the organisation .

2. Territorial departmentation Territorial departmentation is very useful to a large-scale enterprise whose activities are geographically spread over a wide area. Banks, insurance companies, transport companies, distribution agencies are examples of such enterprises. Under territorial or geographical departmentation, activities are divided into zones, divisions and branches. It is obviously not possible for one functional manager to manage efficiently such widely separated activities .

3. advantages 1. It helps in achieving the benefits of local operations. The local managers are more conversant with local customs, preferences, fashions, styles, etc. They can adapt and respond to the local demand situation with speed and accuracy. The enterprise can gain intimate knowledge of conditions in the local markets. 2. It results in savings in freight, rents and labour costs. There are savings in time and money. Therefore, economies of localized operations are available. 3. Every regional manager can specialize in the peculiar problems of his region. 4. There is better coordination of activities in a locality through the setting up of regional divisions. It provides for effective span of control. 5. It facilitates the expansion of business to various regions. 6. It provides opportunity to train managers as they look after the complete operations of a unit. Each regional manager can be given adequate autonomy.

4. disadvantages 1. Due to geographical distance there is problem of communication. 2. Geographical departmentation requires more managers with general managerial abilities who may not always be available. 3. There may be friction between regional managers. 4. All activities of a firm may not be amenable to territorial specialisation . 5. Coordination and control of different branches from the head office become less effective

5. Customer departmentation Under this basis of departmentation, activities are grouped according to the type of customers. For instance, a large cloth store may be divided into wholesale, retail and export divisions. This type of departmentation is useful for banks, departmental stores, etc. which sell a product or service to a number of distinct and clearly defined customer groups. Each department specializes in serving a particular class of customers. For example, a large readymade garment store may have a separate department each for women, children and men. A bank may have separate loan departments for large-scale and small-scale businessmen.

6. advantages 1 . Special attention can be given to the particular tastes and preferences of each class of customers. Customers' satisfaction enhances the goodwill and sales of the enterprise and loyalty of customers. 2. The benefits of specialization can be derived. 3. The enterprise gains intimate knowledge of the needs of each category of customers.

7. disadvantages 1. As such departmentation is applied only to sales function, there may be difficulties in coordinating the activities of different functions. There is constant pressure from customer departments for special treatment. 2. There may be under-utilization of facilities and manpower, particularly during periods of low demand. 3. Managers of customers departments may put pressures for special facilities and benefits. 4. It may lead to duplication of activities and heavy overheads.

8. Process or equipment departmentation Under this process activities are grouped on the basis of production processes or equipment involved. This is generally used in a manufacturing enterprise and at lower levels of organization. For example, a textile mill may be organized into ginning spinning, weaving and dyeing departments. Similarly, a printing press may consist of composing, proof reading, printing and binding departments. Such departmentation may also be used in engineering and oil industries. The main object is to achieve efficiency and economy of operations.

9. advantages 1. There is clear-cut technical division of work. 2. This ensures specialization and facilitates training of junior executives. 3. It is possible to appoint persons with special education and experience for e ach process. 4. Location of similar type of machines in one place results in economies in costs of repairs and maintenance

10. disadvantages There may be difficulty in coordinating different process departments. Conflicts among managers of different processes may arise. It cannot be used where manufacturing activity does not involve distinct processes. It is suitable only for special and composite type of plants .

11. Time departmentation Under this basis, activities are grouped on the basis of the time of their performance. For example, a factory operating twenty-four hours may have three departments, one each for morning, day and night shifts. The idea is to obtain the advantages of people specialised to work in a particular shift. In case of departmentation by simple numbers, activities are grouped on the basis of their performance by a certain number of persons. For example, in the army soldiers are grouped into squads, battalions, companies, brigades and regiments on the basis of the numbers prescribed for each unit. This basis of departmentation is used at the lower levels of hierarchy

12. Combined or composite departmentation Departmentation is not an end in itself but a means for achieving organizational objectives. Each basis of departmentation has his own merits and demerits. Therefore the relative advantages and limitations of various types of departmentation should be analyzed in the light of the needs and circumstances of the particular enterprise That basis of departmentation is the best which facilitates the achievement of organizational objectives most economically and efficiently. In practice, no single pattern is ideal to suit all situations. Therefore, no single basis is followed for grouping activities. Rather, most of the big enterprises follow a composite or combination of several bases. Generally, functional departmentation is used at the top level. Activities of the sales department may be grouped on product or territorial basis which may further be sub-divided on customer basis. Similarly, activities in the production department may be grouped on the basis of process or equipment employed.