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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The production, purchase, personnel and marketing activities are looked after by departmental managers but finance is vested departkentation the headquarters.

Activities are divided into smaller segments, standards of performance can be framed, factors affecting performance can be identified deparrtmentation control can be more objective in nature.

Now here is the key idea: So a person is, say, a marketing research analyst, and is presently assigned to the Carnation project, which will take 6 weeks, and will then be assigned to the R.


How to write a circular letter announcing the opening of a new Regional office? With growing size of organisations, departments are created for activities of similar nature. The goal of an organisation is to earn profits by customer satisfaction. Since departments are widely dispersed, top managers find it difficult to control and co-ordinate their activities.

Production, marketing, finance and personnel are widely accepted and recognised functions of a manufacturing organisation and, therefore, it is a simple basis of departmentation. For example, in practice, owing to rising market competition and emerging complexity of tasks most organizations often uses a combination of above-discussed see point no.

For each process, departments are created and headed by people skilled and competent to carry that process. For example, a print shop may have separate letterpress and offset departments — two different processes for getting the same outputs.


Each product division can be taken as a viable profit centre for accountability purposes.

Departmentation (Grouping)

If there are no departments, organisational resources; physical, financial and human, will be commonly shared by different work units. For example, a job requires three steps for its completion.

This can also result in basez amongst process managers. What are the various bases of departmentation in an office? Each group of customers needs different tactics and strategies to handle them better.

Can create significant duplication of effort and knowledge throughout org. This offers the benefits of specialisation; efficiency and speed. Departmentation by Process 6. In such a company, we generally see departments like a two-wheeler department, three-wheeler department, four-wheeler department, heavy motors department, etc.

Under this basis of departmentation, the business is divided into a number of departments on the basis of product handled by the firm. They focus on a narrow set of activities and repeatedly performing the same task increases their ability to perform more speedily and efficiently.

Often there are individual concerns, like two people who don’t get along, the force certain departments departmenattion be placed under other departments, or not placed under certain departments.

Managers are able to promote sales as they are aware of the local conditions of the area where they are operating. This is possible through shift duties. When responsibility is clear, authority can also be delegated to managers. Hence, an appropriate customer departmentalization serves this purpose. Such groups are suitable to organisations serving several segments like a pharmaceutical company supplying to institutional buyers such as hospitals and government and non-institutional buyers as wholesalers and bbases chemists.


The next tightest interdependencies are the sequential interdependencies between fabrication and assembly, since first you make the materials, dpeartmentation you assemble them. Marketing managers have to balance the time and money spent in framing policies so that organisation can adapt to the changing customer environment.

Territorial bases of departmentation is found in those business where the units are located at different places.

Nature, Advantages and Demerits. Before adopting this basis of departmentation, therefore, benefits must be weighed against costs. It is suitable for organisations having wide geographical market such as pharmaceuticals, banking, consumer goods, insurance, railways etc. Departmentalization by using a combination of two or more different bases is shown in the following diagram.

Division of work into departments leads to specialisation as people of one department perform activities related to that department only. A good example of product departmentalization is witnessed in an automobile manufacturing company. To give the attention to heterogeneous groups of buyers in the market, marketing activities are often split into various several parts.

Home Disclaimer Privacy Contact. Combined base departmentation is also called as composite departmentation or mixed departmentation. This necessitates the introduction of departmentation.

6 Different Basis of Departmentation in an Organisation

They develop basees with the consumers and build clientele for the organisation. Now think about it in terms of interdependencies. So at the next level up, we merge all of these under “Vice-President: