Functional departmentalization

 The company representing a functional organization structure is Givvrex for frozen food
manufacturing
 Functional departmentation organizes employees based on function or skill set.
Salespeople and marketers work together in the marketing department, employees
involved in making the company's products work in the manufacturing department and
employees involved in designing new products work in the research and development
department. Specific departments vary from company to company but are always
designed so employees work with others who share similar skills or functions. Functional
departmentation represents a very natural and logical way of grouping different activities
of the enterprise;
 Such grouping ensures specialization. By concentrating on similar activities, specialized
knowledge and skill are acquired which can be utilized for the efficient running of the
departments. This leads to economy in operations and efficiency in the use of manpower
and other resources;
 It facilitates coordination within the function. It is easier for a manager in charge of a
particular function to synchronise activities and unify efforts of the personnel engaged in
that particular function than to coordinate activities pertaining to different functions;
 Direct and adequate attention to the basic activities guarantees the availability and
effective utilization of outstanding abilities
 There is a tendency towards too much centralization, which causes delay in decision
making and flow of information. Decisions on problems covering two or more functions
can be made only at the higher levels in the organization. Further, the process of
communication of the decision to the lowest level and its subsequent implementation
takes a lot of time
 Functional departmentation tends to make the functional executives so much obsessed
with their respective functional areas that they lose sight of the business as a whole and
its objectives. Thus, a need arises for emphasizing the mission of the enterprise to all
functional executives, which consumes a good amount of time. It makes coordination
between different functional areas difficult
  A company that is functionally organized does not offer a good training ground for
developing managers who are all-rounder. A manager supervising a particular function
more often remains confined to being an expert in handling problems of that particular
function alone.
 Accordingly Popular communication is vertical with long hierarchy of reporting levels
,deep specialization ,communication is mostly written with many paper work and
documentation ,tight and strict rules ,horizontal communication and horizontal
coordination is maintained at the lowest levels generating a problem of rigidity and
inflexibility in dealing with environmental uncertainty ,this would take us to the vertical
tall structure of the organization that is an efficiency organization searching for cost
advantages

Product departmentalization (divisional)

 Elaraby Group structure is an example as the firm is divided by products into Kitchen
products division(Fridges /washing machines/ ovens/microwaves /stoves) ,entertainment
product divions (TVs), and ACs division
 This type of departmentation is made by the large-scale business unit. A single business
unit may manufacture and sell different types of products. Then, each type of product or
service is allocated to a separate department. Functionalized units for each product are
created within the general structure of the organisation. Manufacturing, sales, finance and
personnel functions are arranged separately for each type of product. Each department is
responsible for manufacturing a product and selling it to customers. Grouping of all
activities are planned in advance within each product section. The co-ordination function
is performed by the top management.
 Product departmentation helps in the maximum utilization of personal efficiency of
workers in the area of manufacturing and marketing of product. Better services may be
provided to the customer. The profitability of each product is known to the management.
So, it is easy to fix the responsibility on the departmental heads Proper attention may be
devoted to the manufacture of a product.
 All the functions pertaining to the manufacture of a particular product are performed by
managers. Then, there is the possibility of an effective co-ordination and control. A new
line of product can be introduced without any difficulty.
 There is a danger of duplication of work. It increases the number of personnel which in
turn increases the cost of operation. It requires additional cost for maintaining a sales
force for each type of product. In proportion to the increase in the number of employees,
the problem of control at the executive levels becomes more difficult.
 There is a tendency towards decentralization, which causes speed in decision making and
flow of information. Decisions on problems covering two or more functions can be made
at the lower and moderate levels in the organization. Further, the process of
communication of the decision to the lowest level and its subsequent implementation
takes a little of time
 Such grouping ensures low specialization. By concentrating on different activities,
creativity and innovation are acquired .This leads to flexibility in operations
 Product departmentation tends to make the divisional executives so much obsessed with
their respective product areas that they never lose sight of the business as a whole and its
objectives.
 Accordingly Popular communication is horizontal with short hierarchy of reporting
levels ,low specialization ,communication is mostly verbal with low paper work and
documentation , few rules ,vertical communication is maintained at the lowest levels
generating flexibility in dealing with environmental uncertainty ,this would take us to the
flat tall structure of the organization that is an learning organization searching for
innovation
Geographic departmentalization (divisional)

 Philip Morris structure is an example as the firm is divided by areas into

Cairo/Alexandria /Upper Egypt zone 1 /Upper Egypt Zone Two
 This method of departmentation may be suitable for a business unit which is wholly
dispersed. The business activities are grouped in area-wise and each area is in charge of a
single person. The local persons are appointed as salesmen in each area. It will help the
business unit to increase the sales. The reason is that the local person is familiar with the
culture and preferences of the customers

 This type of departmentation is made by the large-scale business unit. A single business
unit may manufacture and sell different types of products. Then, each type of product or
service is allocated to a separate department. Functionalized units for each product are
created within the general structure of the organisation. Manufacturing, sales, finance and
personnel functions are arranged separately for each area. Grouping of all activities are
planned in advance within each area section. The co-ordination function is performed by
the top management.
 Geographical departmentation helps in the maximum utilization of personal efficiency of
workers in a specific area. Better services may be provided to the customer. The
profitability of each area is known to the management. So, it is easy to fix the
responsibility on the departmental heads
 All the functions pertaining to the particular area is performed by managers. Then, there
is the possibility of an effective co-ordination and control. There is a danger of
duplication of work. It increases the number of personnel which in turn increases the cost
of operation. It requires additional cost for maintaining a sales force for each area . In
proportion to the increase in the number of employees, the problem of control at the
executive levels becomes more difficult.
 There is a tendency towards decentralization, which causes speed in decision making and
flow of information. Decisions on problems covering two or more functions can be made
at the lower and moderate levels in the organization. Further, the process of
communication of the decision to the lowest level and its subsequent implementation
takes a little of time
  Such grouping ensures low specialization. By concentrating on different activities,
creativity and innovation are acquired .This leads to flexibility in operations
 Product departmentation tends to make the divisional executives so much obsessed with
their respective product areas that they never lose sight of the business as a whole and its
objectives.
 Accordingly Popular communication is horizontal with short hierarchy of reporting
levels ,low specialization ,communication is mostly verbal with low paper work and
documentation , few rules ,vertical ommunication is maintained at the lowest levels
generating flexibility in dealing with environmental uncertainty ,this would take us to the
flat tall structure of the organization that is an learning organization searching for
innovation

Matrix Departmentalization

 Mantrac is an example for matrix departmentalization

 A matrix organizational structure is a company structure in which the reporting
relationships are set up as a grid, or matrix, rather than in the traditional hierarchy. In
other words, employees have dual reporting relationships - generally to both a functional
manager and a product manager.
 In a matrix organization, instead of choosing between lining up staff along functional,
geographic or product lines, management has both. Staffers report to a functional
manager who can help with skills and help prioritize and review work, and to a product
line manager who sets direction on product offerings by the company.

 Supervision is dual, encompassing technical and administrative managers, and

incorporates several reporting systems and interweaves communication lines for
transmitting decisions. Many argue that this form of departmentalization achieves a more
balanced form of organization structure and expedites complex and specialized decision-
making challenges.
 The matrix arrangement requires extensive horizontal; communication and it should meet
internal company needs and not simply be grafted onto the existing organization in the
hope of demonstrating progressive management thinking. Matrix departmentalization
may slow down decision-making and thus all managers must understand the rules of the
game.

 Disadvantages of Matrix departmentalization include conflict in organization authority

exists, causing uncertainty in reporting relationships. Dual and multiple reporting can
create “a formless state of confusion where people do not recognize a boss to whom they
feel responsible. A matrix organization encourages jockeying for power Excessive
overhead: In initial phases, a matrix organization has high overhead costs. It appears that
costs will double because of double management’ and a dual chain of command. In the
long run, however, extra costs should disappear and be offset by productivity gains.

 Accordingly Popular communication is horizontal with short hierarchy of reporting

levels ,low specialization ,communication is mostly verbal with low paper work and
documentation , few rules ,vertical communication is maintained at the lowest levels
generating flexibility in dealing with environmental uncertainty ,this would take us to the
flat tall structure of the organization that is an learning organization searching for
innovation
 Mechanistic and Organic Structure

Mechanistic and organic structure depends on number of contextual and structural

dimensions

Mantrac is an organic organization

 With respect to structural dimensions keeps a low formalization ,low specialization

,decentralized decision making structure, flat hierarchy of authority
 With respect to contextual dimensions it is a learning organization looking for
innovation with high degree of flexibility ,with adaptive culture and few rules governing
the firm

Givrex is a mechanistic organization

 With respect to structural dimensions keeps a high formalization ,high specialization

,top management centralized decision making structure, vertical and strict hierarchy of
authority
 With respect to contextual dimensions it is an efficiency organization looking for control
over costs and expenses with low degree of flexibility ,with rigid traditional culture and
many rules and procedures governing the firm