Departmentalization (or simply departmentation) refers to the grouping of This helps the organisation to assign the work only to those who are best suited. Departmentation can provide a necessary degree of specialisation of executive activity for efficient performance. It can simplify the tasks of management within a . In the words of Allen, “Departmentation is a means of dividing a large and monolithic functional organisation into smaller, flexible, administrative units.”.

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The feeling of autonomy provides job satisfaction and motivation which lead to higher efficiency of operations.


Denotes the combined base departmentation. To entrust the grouped activities to departmental heads and. This method of departmentation results in optimum utilisation of machines as they work continuously which otherwise may remain idle.

Water-tight compartments are sometimes created amongst departments as people show loyalty towards their departmental managers. Since all decisions related to a product are taken by product manager under the guidance of General Managers of different functional areasdecisions are taken quickly.

Similarly, funds required for departmentatjon product line are different.

The refrigeration division is further divided on the basis of territory and the territory is further divided on the basis of customers i. Departmentation helps in the development of managerial skill. The sales people belong to local areas of operation.


The form of organisation structure depends upon the basis of departmentation. By creating departments where each product department looks after one product or product line only, decision-making, fixing responsibilities and assessment of performance can be done efficiently. Departmentation enables an enterprise to avail of the benefits of specialisation.

Division of work into departments leads to specialisation as people of one department perform activities related to organiastion department only.

As organisations grow complex in terms of size and operations, they add more products to their line of products and expand into new geographical areas for marketing the existing products. Combined base departmentation is also called as composite departmentation or mixed departmentation.

For a trader, the major activities are buying and selling, a bank performs borrowing and lending functions. For example, activities carried by a manufacturing organisation are production, finance, personnel and sales.

An alternative to this is parallel pattern of process depzrtmentation against the serial pattern work moves in a series of steps as described above. A regional division achieves a better co-ordination and supervision of activities in a particular area.

Departmentalisation : Meaning, Need and Types

Nature, Advantages and Demerits. This will ensure that all necessary activities are performed and there is no unnecessary duplication of activities. Territorial departmentation offers certain facilities in operation. If there are no departments, it will be difficult to keep track of who is doing what and who is accountable to whom.


All functions related de;artmentation particular product are bought together under the umbrella of product manager.

organksation There are a few dangers of departmentation which should be taken care of while assigning and grouping of activities: It helps in coordinating the activities of different products. Product departmentation is suitable for product diversification where marketing characteristics of each product are different from others.

Departmentation: Need, Significance and Process

Before adopting this basis of departmentation, therefore, benefits must be weighed against costs. Though this reduces boredom on the work process, organistion requires trained workers who can carry out all the processes. Importance of Departmentation 3. Business Jargons A Business Encyclopedia. The process of organising consists of dividing and grouping of the works to be done in an enterprise and assigning different duties and responsibilities to different people.

Thus, organisation structure is facilitated through departmentaation. Creating an Effective Organization Structure:

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