Departmentalization in Management: Definition, Types & Advantages

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  • 0:01 What Is Departmentalization?
  • 0:22 Functional Departmentalization
  • 1:07 Geographic Departmentalization
  • 1:48 Product Departmentalization
  • 2:15 Customer/Market…
  • 2:53 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Organizing an organization through departmentalization is common. In this lesson, you'll learn what departmentalization is, some types of departmentalization, and its advantages. A short quiz follows the lesson.

What Is Departmentalization?

Departmentalization involves dividing an organization into different departments, which perform tasks according to the departments' specializations in the organization. Departmentalization as a means of structuring an organization can be found in both public and private organizations. An organization can structure itself into departments in the following ways.

Functional Departmentalization

In functional departmentalization, an organization is organized into departments based upon the respective functions each performs for the organization. For example, a manufacturing company may create a production department, sales and marketing department, an accounting department, and a human resources department. Functional departmentalization may be advantageous because it can increase efficiency and expertise since all related activities are performed in one place by one group of people that specialize in that activity.

Geographic Departmentalization

In geographic departmentalization, an organization is organized along geographic lines. This is often a good idea for large multinational firms with offices around the world. All activities related to the organization's activities in each region are handled by a department in that region. One advantage of this method is that it ensures the development of expertise specific to the political, social, and cultural needs of the region. Moreover, sending managers to work in each region provides excellent training for upper level management positions where a broad perspective is required for success.

Product Departmentalization

In product departmentalization, an organization is divided by product lines. It creates a department for each product and that department controls all activities related to the product including development, production, marketing, sales, and distribution. This structure provides the organization the advantage of developing personnel with a high level of expertise and specialization for each of its products.

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