Departmentalization in Management: Definition, Types & Advantages
Organizing an organization through departmentalization is common. In this lesson, you'll learn what departmentalization is, some types of departmentalization and its advantages. A short quiz follows the lesson.
We also recommend watching Henri Fayol's Management Principles: Managing Departmental Task Organization and Management By Exception: Definition and Limitations
Departmentalization involves the dividing of an organization into different departments, which perform tasks according to the departments' specializations in the organization. Departmentalization as a means of structuring an organization can be found in both public and private organizations.
Types of Departmentalization
An organization can structure itself into departments in the following ways:
Functional Departmentalization. An organization can be organized into departments based upon the respective functions each performs for the organization. For example, a manufacturing company may create a production department, sales and marketing department, an accounting department, and a human resources department. Functional departmentalization may be advantageous as it can increase efficiency and expertise because all related activities are performed in one place by one group of people that specialize in that activity.
Geographic Departmentalization. Organizing departments along geographic lines is often a good idea for large multinational firms with offices around the world. All activities related to the organization's activities in each region are handled by a department in that region. One advantage of this method is that it ensures the development of expertise specific to the political, social, and cultural needs of the region. Moreover, sending managers to work in each region provides excellent training for upper level management positions where a broad perspective is required for success.
Product Departmentalization. An organization can also divide itself by its product lines. It creates a department for each product and that department controls all activities related to the product including development, production, marketing, sales, and distribution. This structure provides the organization the advantage of developing personnel with a high level of expertise and specialization for each of its products.
Customer/Market Departmentalization. Each type of customer usually has different needs and organizations often departmentalize along differing customer types such as consumers, businesses, and governments. For example, think about an aerospace engineering firm and the different needs of their consumer, business and government clients. This structure may be advantageous because it allows its personnel to specialize in developing products and serving the needs of particular markets and classes of customers.
Departmentalization is a method of dividing an organization into different departments, which performs certain tasks in accordance with the department's specialization. Organizations can departmentalize along functional, geographic, product and customer/market lines. Each method of departmentalization has its own distinct advantages based upon its personnel developing specializations related to the manner in which the organization is departmentalized.
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