As with product and customer departmentalization, location departmentalization can come with a higher overhead, as functional experts need to be hired for each location. Second, it makes possible also the economies of the maximum use of labor saving machinery and mass production. The activities are grouped on the basis of process. It is also appropriate for large scale enterprise which are geographically spread out in many locations like insurance company, bank, transport company, chain store or a product which is distributed throughout the nation. Employees may be organized according to product and geography, for example, and have two bosses. This structure groups employees into functional areas based on their expertise.
The most common way of process departmentalization is the division of the firm into business functions, such as purchasing, manufacturing, sales, accounting, etc. Departmentalization by Process This method of departmentalization is applicable to those organizations where production activities need some distinct process. While cross-functional teams can help mitigate these issues, members can be spread thin across multiple cross-functional projects, which can lead to late, low-quality or dropped tasks. Activities can be grouped according to the work being done, to pursue economies of scale by placing. Organizations create teams by grouping employees in a way that generates a variety of expertise and addresses a specific operational component of the organization.
Which mean two or more people working together as a group to complete a specific task, by divided the group to work in different departmentalization, to help achieve the organization objectives and goals. Tall Organisation is not suitable for routine and standardised jobs. Functional departmentalization means grouping activities around basic functions like manufacturing, sales, and finance Dessler, p. Sales would fall under the role of a server assisting customers and helping them select an enjoyable meal while operations in a restaurant centers on the preparation of food. Provide an example of functional departmentalization at your University and using the definitions in your textbook explain why it is suitable example. Formal organization does not mean that there is anything inflexible. Or divisions may end up inadvertently duplicating activities that other divisions are already managing.
For example, instead of one marketing professional working on multiple product lines, the company hires a separate worker to focus on each product. It creates a department for each product and that department controls all activities related to the product including development, production, marketing, sales, and distribution. It is the process by which an organization expands horizontally. Departmentalization Departmentalization refers to the process of grouping activities into departments. In this case, areas in the company are created by grouping specialists in a particular activity.
The main disadvantage of a geographical organizational structure is that it can be easy for decision making to become decentralized; geographic divisions can sometimes be hundreds, if not thousands, of miles away from corporate headquarters, allowing them to have a high degree of autonomy. All activities of specified territory are assigned to a particular department or regional managers. A functional rethinking and radical redesign of business process to achieve dramatic improvements in costs, quality, service, and speed. To illustrate, Under the fundamental unit of marketing, the scope of the work may be so broad that it is believed advantageous to divide the work into advertising, sales promoting, and selling. Finally, appropriate responsibilities are assigned.
The activities of each process are assigned to a departmental head who is responsible for all the functions of concerned department. Efficiencies from putting together similar specialist and people with common skills, knowledge, and orientations. These departments are typically based on the work functions performed the product or service offered, the target customer or client, the geographic territory covered, or the process used to turn inputs into outputs. Departmentalization involves the dividing of an organization into different departments, which perform tasks according to the departments' specializations in the organization. For another example of Functional departmentalization at Victoria University is Academic Support and Development because this department can students with University assessment tasks such as writing skills, reference skills, online language translator and providing expert support the student academic success and retention across the university. Types of Departmentalization: 1 Functional: Groups of employees based on work performed e. The final form of departmentalization is called process departmentalization The grouping of activities by process , which groups activities on the basis of work or customer flow — like that found in insurance companies.
It is appropriate for large-scale multi-product enterprises. Modular Organizations A business that has areas or departments that can be easily separated from the company without jeopardizing the company are considered to have a modular organizational structure. Functional departmentalization is a method that has been and still is successful in most organizations. On the other hand, the sense of independence may result in a drift-off from the achievement of the overall objectives of the organization. The degree of decision-making authority is centralization and usually were made by the top management of the highest vertically structures hierarchy. Customer departmentalization When a company has different customer bases, customer departmentalization allows better customer servicing.
What are the different types of departmentalization? Jobs may be grouped according to the type of customer served by the organization. If an organization's customers are geographically dispersed, it can group jobs based on geography. Geographic structuring involves grouping activities based on geography, such as a Latin American division. Moreover, sending managers to work in each region provides excellent training for upper level management positions where a broad perspective is required for success. As long as an enterprise belonged in an industry whose market, sources of raw materials, and production processes remained relatively unchanged, few entrepreneurial decisions have to be reached.
In a customer-based division of departments, workers learn the specific requirements for each customer and become expert in meeting those needs. These services are each administered by different departments. About the Author Ilene Tatroe has worked in the technology industry since 1996, with more than 10 years as a product manager for human capital management and workforce optimization applications. The most important thing is to understand your reality and see which structures fit the most. In addition, we have a group of supervisors within each department.
When taking a closer look at the three ways of departmentalization by purpose—product, customer, and location—we note that there are some specific advantages related to it. The advantage of the matrix structure is that it can provide both flexibility and more balanced decision making because two chains of command exist instead of just one. It organizes by function to be performed. While similar to the product structure, the different business segments at the bottom are each split into a specific customer group—for example, outpatient, urgent care, and emergency care patients. For example, a manufacturing company may create a production department, sales and marketing department, an accounting department, and a human resources department. This would result in the kitchen staff, already defined by function, being further divided into segments.