Departmentation

 

Departmentation is a process of breaking an enterprise into smaller groups and levels. There are a number of ways to break the enterprise. A widely accepted practice is by functions of the enterprise, viz., Marketing, Production, Finance, Personnel, Materials, etc. The second method is based on geographic area distribution. This method is resorted to when the distances are long, the activities are many and the decision making is decentralized. Many organizations have divisions, branches and territories through which the business operations are conducted. The third method to departmentalize is by way of the product or the services the organization is providing.