Types of departmentalization Essay

First type of departmentalization is functional departmentalization. Functional departmentalization is defined as a method to separate the activities performed into groups by the function they performed. It is a division of work and specialization between employees through different units and each unit is responsible for a specific business function or expertise area. Functional departmentalization have the rights to allows the organization to organize and fill in all the important positions with functional experts and facilitates coordination. However, it also promotes centralization. For example, a manufacturing company may create a production, sales, marketing, human resource and an accounting department. Departmentalization by function is widely used by organizations. This type of departmentalization has several advantages. First, it simplifies training and supervisor of the subordinates and therefore, promotes high quality work efficiency. The second advantage is that each department can be staffed by experts, thus allows work to be carried out by individuals who are qualified and skilled in the certain areas. Thirdly, coordination of activities within departments is easy meaning that each individual in the same department will acquire the same work experiences or training, communication and coordination, thereby reducing problems for management. However, this type of departmentalization also has several disadvantages. First, difficulty in coordinating between departments due to poor communication. Functional departments can cause delays in decision making and company's objectives may not be achieved. The second disadvantage is limited view of organizational goals, it does not promote innovation and creativity in an organization. Thirdly, it maximizes supervision cost and reduces coordination between functions.
Second type of departmentalization is product departmentalization. It is an organization that is divided by product lines and involves organizing departments around goods. Each product line has a department of its own, and each department has specialists in all of the functions needed to produce and sell that product, such as marketing, manufacturing, accounting and human resources. Therefore, it facilitates to measure the managerial as well as operational result and contribution of each product line to whole organization. However, this type of departmentalization has several advantages. Firstly, it is suitable for the organization because it has various lines of products or services which be fully used by human resources. Second, it directs attention toward specific product line and service. Third, it facilitates to monitor and evaluate the performance of each production or service department. Therefore, product managers can be held accountable for the profitability of each product and also it permits maximum use of specialized production facilities. Most importantly, by this method it helps to maintain a good relationship not just between employees but also customers. The disadvantages of product departmentalization is there may be conflict between production and other departments as the responsibilities are inter dependent. Furthermore, there may be under utilization of plant capacity if the demand of the product is not sufficient. The product manager may ignore overall objective of the organization and that could create problem of effective control over production divisions. Lastly, it maximizes administrative cost due to various product lines.