Departmentation

 The process of grouping of activities into units for the purpose of administration is called departmentation. It can be defined "as the process by which activities or functions of enterprise are grouped homogeneously into different groups."

The administrative units are called divisions, units or departments. The followings are the basis of departmentation:

(a) When departmentation is done on the bask of functions the departments created are production, marketing, accounting, finance and personnel departments.

(b) When departmentation is done on the basis of geographical area, the departments are known as eastern department, western department, northern and southern department.

(c) Departmentation can be done on the basis of customers.

(d) Departmentation can be done on the basis of product handled.

Departmentation is a process resulting out of choice to group tasks according to some criterion. The resultant process of departmentation includes decisions regarding segregating organizational work, allocation of work to persons, telling all involved who is in charge and provide for the support needed by those. Given the nature of these choices and decisions, departmentation and the criteria or bases used for creating departments can have serious impact on the organization's effectiveness. Nine bases of departmentation are common among managerial choices:

Departmentation by numbers, Departmentation by time of duty,  Departmentation by function,  Departmentation by Process or Equipment, Departmentation by Location or territory, Departmentation by Product,  Departmentation by Customer,  Departmentation by Market or Distribution Channel,  Departmentation by Services.

Departmentation by Customers

Some advantages of this type of structure are:

(i)     Greater specialized customer service.

(ii)    Where marketing channels are considerably different for various types of customers, this type of structure is very useful.

Some disadvantages of this type are:

(iii)   May not be enough work for certain types of customers. Hence, under employment of facilities and manpower specialized in terms of customer groups.

(iv)  Problems of co-ordination might pose difficulties.

(v)   Unequal development of customer groups.