Disadvantages of Departmentalization by FunctionReduces coordination among functions: Since employees work in respectivedepartment; therefore, coordination amongst various department is reduced.Slow adaptation to changing environment: When people work for longtime in adepartment they become use to with the working and their styles become rigidLimits development of managers: Development of mangers is limited to aparticular function only4.Departmentalization by Geography whereactivities of an organization in a givenarea or territory are grouped and assigned to a manager. Example: Electricity andgas is supplied by regional organizations, such as local electricity SupplyCorporationAdvantages of Departmentalization by GeographyEmphasis on local market: The local markets can gain benefit as service isprovided according to geography. It helps develop that market.Improves coordination: Coordination within the geographical unit is betterbecause all functional departments operate at the geographic region.Face-to-face communication: There is better communication between theservice provider and service receiver.Advantages of Departmentalization by GeographyBUSINESS AND PUBLIC ADMINISTRATION IPage 49
Problems of control: As the functions are dispersed, therefore control cannotbe exercised effectivelyRequires more human capital: from the above it is deduced that more peopleare required.5.Customer Departmentalization:It is grouping of activities so that these reflectprimary interest of the customers in a variety of enterprises. Customerdepartmentalization is usually found in banking sector. e.g., agricultural bankingdepartment will provide loans to farmers. Institutional banking will deal withinstitutional customersAdvantagesEncourages concentration on customer needsThe focus is on customer satisfactionThe staff develops expertise in customer area.DisadvantagesSince everybody works in respective area coordination becomes difficultThere is underutilization of facilities and labour-specialized workers incustomer groups6.Departments by Product:Grouping of activities on the basis of the products or theproduct lines of an organization is known as departmentalization by production orproduct. Sometimes organization may be producing more than one product orservices. For example a firm may be producing soaps, detergents, toothpaste etc. Sofor each product it would have separate department.7.Matrix Organizations:It is the combination of functional and project or productpatterns of departmentalization in the same organization structure. This form oforganization is common in research and engineering organization it has been used inproduct marketing organizations as well.