Organizational Design | What is meant by departmentalization?

What is meant by departmentalization? 
In an essay, list and discuss the five common forms of departmentalization, their advantages and disadvantages.

Robbins / Coulter, MANAGEMENT, 12th edition, Pearson, 2014

www.pearson.co.uk

This is a guidance answer ... your actual answer during the exam should be longer than this answer ...

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)

Organizational Design | List and explain the six key elements in designing an organization’s structure

List and explain the six key elements in designing an organization’s structure.

Answer

a.     Work specialization—this concept describes the degree to which tasks in an organization are divided into separate jobs. The essence of work specialization is that an entire job is not done by one individual, but instead is broken down into steps, with each step completed by a different person.

b.     Departmentalization—the basis by which jobs are grouped together is called departmentalization. The five common forms of departmentalization include functional, product, geographical, process, and customer departmentalization.

c.      Chain of command—this is the continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies who reports to whom. It helps employees answer questions such as “Who do I go to if I have a problem?” or “To whom am I responsible?”

d.     Span of control—this concept is important because, to a large degree, it determines the number of levels and managers an organization has. All things being equal, the wider or larger the span of control, the more efficient the organization.

e.     Centralization and decentralization—centralization describes the degree to which decision making is concentrated at a single point in the organization. If top managers make the organization’s key decisions with little or no input from below, then the organization is centralized. In contrast, the more that lower-level employees provide input or actually make decisions, the more decentralization there is.

f.      Formalization—this refers to the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures. If a job is highly formalized, then the person doing that job has a minimum amount of discretion over what is to be done, when it’s to be done, and how he or she could do it.

Source: Management, 11e (Robbins/Coulter)