Organizational Design | List and discuss the five common forms of departmentalization

List and discuss the five common forms of departmentalization.

Answer

a.     Functional departmentalization—jobs are grouped by the functions (i.e., marketing, finance, human resources) performed. This approach can be used in all types of organizations, although the functions change to reflect the organization’s objectives and work activities.

b.     Product departmentalization—jobs are grouped by product line. In this approach, each major product area is placed under the authority of a manager who’s a specialist in, and is responsible for, everything having to do with that product line.

c.      Geographical departmentalization—jobs are grouped on the basis of a territory or geography such as southern, midwestern, or northwestern regions for an organization operating only in the United States; or for a global company, maybe U.S., European, Canadian, and Asian-Pacific regions.

d.     Process departmentalization—this method groups jobs on the basis of product or customer flow. In this approach, work activities follow a natural processing flow of product or even customers.

e.     Customer departmentalization—jobs are grouped on the basis of common customers who have common needs or problems that can best be met by having specialists for each.

Source: Management, 11e (Robbins/Coulter)