I. Product Departmentation
One of the most common ways in which businesses grow is by increasing the number of products they make and sell. If the organization is successful, several product lines may attain such high sales that they require a separate division. Large organizations like Kirloskar, Hindustan Lever, Shaw Wallace have coped with the expansion of their product lines by creating separate departments or divisions for the various products. Under product departmentation, a single manager, often referred to as the product manager, is delegated authority over all activities required to produce and market that product. Thus, the forces shifts from the major functions involved to make the products to the products, themselves. As against functions in the functional departmentation, basic products or services become the primarily or major departments in the product departmentation
ii Customer Departmentation
It is common that some organizations sell a wide variety of goods or services that appeal to different groups of customers, each of which has distinguished needs. Each customer group may have to be addressed differently. In such a case, departments are created around customer groups. For instance, commercial banks organize their activities around customer groups to cater to their specific needs. As such, we find separate departments or divisions for agricultural, industrial and merchant banking operations. Similarly, we find Blue Star Company organizing its air-conditioning business around domestic and industrial air - conditioning units.
iii. Territorial Departmentation
The process of creating departments along the geographical lines is termed territorial departmentation. This method is adopted when an organization operates in different geographical areas, each with distinct needs. Territorial Departmentation makes it easier for the organization to cope with variations in laws, local customs and customer needs. Public utilities like transport companies, insurance companies, etc. adopt territorial departmentation. Similarly, a large-scale organization operating both in domestic and international markets may have separate departments for both the markets. Again, different departments or divisions may be created for different regions of the world. Many multinational companies organize their global activities with regional headquarters in different regions of the world.
Kavungya answered the question on
March 26, 2019 at 12:39