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Departmentalization refers to the process of grouping activities into departments.
Division of labour creates specialists who need coordination. This coordination is facilitated by grouping specialists together in departments.
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Common Types of Departmentalization
Functional departmentalization - Grouping activities by functions performed.
Product departmentalization - Grouping activities by product line.
Customer departmentalization - Grouping activities on the basis of common customers or types of customers.
Process departmentalization - Grouping activities on the basis of product or service or customer flow.
Owing to the complexity of tasks and the competitive environment in which organisations operate, they often use a combination of the above-mentioned methods in departmentalization.
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Recent Trends in Departmentalization
The customer departmentalization has become increasingly emphasized.
Rigid departmentalization is being complemented by the use of teams that cross over traditional departmental lines.
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