DEPARTMENTATION BY FUNCTION - October 7, 2009
The grouping to activities according to the common function of management is known as functional departmentation. The basic organizational functions are finance, accounting, purchasing, production and marketing.
In functional departmentation, a number of similar tasks are grouped into major functional departmentation. So all production activities or all functional activities are grouped into a single function. Functions may vary depending upon the organization. A manufacturing company employs the terms such as production, purchase, sales, and marketing. An insurance company can have functions such as home insurance, auto insurance, health insurance, sales, accounting and information systems. An advertising agency can have functions such as art department, creative department, print department, print advertising, radio advertising, sales and information systems. Hospitals do not have production departments but they have functional units such as admitting, emergency, care and surgery.
Functional departmentation is the most widely used organization structure because of its simple logic. Functional departmentation is suitable for organizations dealing with a single product.