Here is a compilation of term papers on ‘Departmentation’ for class 11 and 12. Find paragraphs, long and short term papers on ‘Departmentation’ especially written for school and college students.

Term Paper on Departmentation

Term Paper Contents:

  1. Term Paper on the Meaning of Departmentation
  2. Term Paper on the Need and Importance of Departmentation
  3. Term Paper on the Methods of Departmentation
  4. Term Paper on the Factors to be Considered for Departmentation

Term Paper # 1. Meaning of Departmentation:

Departmentation means the grouping of homogeneous activities into one organisational unit on the basis of special and continuous nature of activities. It is a process where tasks are grouped into jobs, jobs into effective work groups and work groups into identifiable segments or departments. It involves horizontalisation of activities in an enterprise. It leads to grouping of both activities and personnel.


According to Louis A. Allen departmentation is “grouping of activities and employees into departments”. It is a means of dividing the large monolithic functional organisation into smaller, flexible administrative units. It also refers to the organisational device of classifying the activities or operations of an undertaking into functionalized categories.

The objectives of departmentation are:

(i) Specialize activities

(ii) Simplify managerial tasks and maintain control by grouping employees within well-defined areas.


Departmentation tries to achieve systematic distribution of work among individuals. It makes direction and control effective by confining the managerial focus to well-knit and functionally conceived units. Allocation of duties, selection of specialised staff, fixation of responsibility will have decisive character on the organisation. It facilitates co-ordination.

The process of departmentation involves the following steps:

(a) Identification of tasks or duties.

(b) Analysis of details of each task.


(c) Description of functions.

(d) Creation of departments and entrusting performance to separate specialist heads and providing them with suitable staff.

(e) Delineation of scope of authority and responsibility of departmental heads.

Term Paper # 2. Need and Importance of Departmentation:

The basic need for departmentation arises due to:


(a) Specialisation of work and

(b) Limitation on the number of subordinates.

So in the absence of departments normal and effective functioning of organisation and effective control becomes impossible. New departments may be created and existing ones may be reorganised. In both the situations monitoring performance is important.

So the importance of departmentation may be gauged from the following points:


(1) Increases Efficiency:

Increase in efficiency can be achieved by well-defined jobs and limitation of authority.

(2) Fixation of Accountability:

Departmentation helps in fixing responsibility and consequently accountability for the results. The manager of the department is entrusted with defined duties and responsibilities and he is accountable for the results. This helps the department to know the role it has to play and makes the manager more effective.


(3) Development of Managers:

Departmentation facilitates the development of managers in the following ways:

(a) It provides an opportunity to departmental managers to take initiative in effective completion of the job to the complete satisfaction/needs of the organisation and to make independent decisions relating to the department.

(b) The managers are to focus their attention on some specific problems which provides them effective on-the-job training.


(c) Managerial need for further training can be identified easily based on the requirements of the organisation and requirements of the individual.

(4) Performance Appraisal:

Departmentation helps in specifying the area of activities and also standards in respect of which performance of man­agers can be measured more effectively. This facilitates managerial effectively. The facilitates managerial performance appraisal more objectively.

(5) Better Control:

Departmentation results in grouping of activities and personnel into small manageable units. This facilitates administrative control. Further it helps in financial control of various units in the organisation.

(6) Autonomy:


The departmental managers are free to take decisions relating to their departments independently but within the framework of the organisational policies. So the departments enjoy the states of semi-autonomous status. The managers also enjoy satisfaction of being important in the organisation.

(7) Advantage of Specialization:

The chief aim of departmentation is to get the advantages of specialisation. Departments are created to look after one major function and specialises on it. This facilitates in increasing the operational efficiency of the organisation.

Other Bases of Departmentation:

(1) Departmentation by Time:

Here activities are organised on the basis of time of their operation. Normally, only production function is grouped on this basis. Other functions are common for all activities.


(2) Project Departmentation:

In this type activities are grouped on the basis of projects or programmes whose success is vital to the organisation. A project team consisting of specialists from different departments is created under the charge of a project manager. He is accountable for the performance of the project to the chief Executive.

(3) Matrix Departmentation:

This type of departmentation is a mix of project and functional departmentation.


Departmentation is not as end in itself. It is a means for achieving organisational objectives. So far we have discussed the various basis of departmentation with their merits and demerits. No single basis may be suitable for all industrial units.


The basis which suits the requirements of a particular unit and facilitates the achievement of organisational objectives is considered as the best, most economical and efficient. As no one single basis is best suited to all types of situations organisations follow more than one basis simultaneously for grouping of activities. So a combination of different bases is followed.

Term Paper # 3. Methods of Departmentation:

Departmentation leads grouping of both functional and personnel who are assigned to carry out allocated functions. The departments are created on the basis of some common factors with the object of achieving organisational objectives. The nature of these factors very and there is several bases for departmentation.

The most commonly used bases are:

1. Numbers,

2. Functions,

3. Product,


4. Territory,

5. Process,

6. Customers etc.

1. Departmentation by Numbers:

Departments are created by assigning numbers to them as 1, 2, 3 like that. Further departments are created on the basis of number of persons forming the department. This is generally followed in the army. In army soldiers are divided into squads, battalions, companies, brigade and regiments on the basis of number prescribed for each unit. In manufacturing units this is followed at the lower level of hierarchy. Nowadays this method is not used as it is not feasible to achieve the organisational objectives by dividing the entire manpower into certain groups.

2. Departmentation by Function:


In this classification of organisation each basic or major function is organised as a separate department. Basic functions refer to those functions the performance of which is vital and essential for the very survival of the organisation. In a manufacturing enterprise different basic function like production, sales, finance, marketing personnel etc.; are organised as separate departments.

In case of necessity major functions can be further divided into minor or sub-functions. They are called secondary functions. In a trading organisation buying, selling, finance and personnel may be the major departments. The process of functional differentiation may take place through successive levels in the hierarchy. This may continue as long as through basis for further differentiation exists.

The advantages of functional departmentation are:

(a) It is most logical, time proven and natural form of departmentation. It is widely used basis for departmentation and exists almost in every organisation.

(b) It facilitates occupational specialisation which makes maximum utilisation of manpower and other material resources.

(c) It provides unity of direction to closely related activities.

(d) It facilitates delegation of authority and reduces the burden of top executives.

(e) It facilitates co-ordination at intradepartmental and inter­departmental levels.

(f) It lays emphasis on each and every modern activity.

(g) It enables the top executive to exercise effective control over a limited number of functions.

The disadvantages associated with functional departmentation are:

(a) There is too much emphasis on specialisation. Each employee specialises only in a small part of the job and he cannot develop a balanced attitude towards the job as a whole.

(b) The entire job is divided into various functions known as departments. The responsibility of each department towards the end result is joint and it is very difficult to set up specific accountability and profit centres.

(c) The problem of co-ordination is very difficult. The sales department may not honour its commitment regarding the supply of goods due to problem in the production department.

(d) The outlook of departmental managers is limited. They may not look beyond their departments and lack of understanding may lead to conflicts and pose problem for co-ordination.

(e) Functional departments may grow in size to justify their costs. Managers may try to build their functional empires.


This basis is more suitable for large organisations.

3. Departmentation by Product:

In this type products or product lines form the basis of departmentation. All functions relating to a product or product line are brought together under one department or unit, which is normally called a division. Each division looks after various functions like production, finance, sales, personnel etc. This is generally employed by organisations where product line is relatively complex and diverse.

The advantage of this departmentation are:

(a) It reduces co-ordination problems.

(b) It facilitates product expansion and diversification.

(c) It places attention to each product line.

(d) It permits fuller utilisation of specialised production facilities, personal skills and specialised knowledge of product managers can be fully utilised.

(e) It promotes healthy competition between divisions.

(f) The product managers can be held accountable for profitability of their respective departments.

(g) It prepares the lower level managers for top management positions and functions as an excellent training ground for each product.

(h) It is more flexible and adaptable to changes.

The disadvantages are:

(a) There is duplication of departments and functions. This results in increasing operating costs.

(b) Lack of advantage of centralisation of different activities.

(c) The top management faces the problem of control and coordination as each product is technically different.


This type of departmentation is useful when there is product expansion and diversification. This generally employed when product line is relatively complex and diverse requiring specialised knowledge. Example: automobiles and electronic industries.

4. Departmentation by Territory:

Other name departmentation by Geographic location. It is useful to a large scale enterprise whose activities are spread over a wide area. In this set up the areas are divided into zones, divisions and branches. This provides easy adaptation and infects dynamism into their operations.

The advantages of this departmentation are:

(a) It helps in achieving the benefits of local operations. The local managers are more conservant with local situations. So their adaptability is quicker.

(b) It saves time and money due to economies of localised operations.

(c) If facilitates better co-ordination in a locality by setting up regional offices.

It provides effective span of control.

(d) It facilitates a better utilisation of available opportunities with an effective span of control.

(e) The departments based on territories may function as autonomous units.

The disadvantages of this departmentation are:

(a) The problem of communication gets complicated because of many layers in the organisational set up.

(b) There is problem of co-ordination and control as there are chances for both to become less effective due to distance between policy framers and policy executors.

(c) The operational cost becomes high as there is duplication of physical facilities.

(d) The integration of activities of regional offices may pose problems.

(e) They cannot adopt uniform policies in all regions as their functioning is tuned to meet the local needs.


This is more suitable to organisations on the service sector like Banks, insurance companies, transport companies and distribution agencies.

5. Departmentation by Process or Equipment:

This type of departmentation is used by such manufacturing units where production activities involve the use of several distinctive processes or equipment. This form of departmentation is also used when costly equipment is installed in an organisation. The chief object of this type of departmentation is to achieve efficiency and economy of operations.

This type of departmentation is adopted especially at the operational level of a manufacturing undertaking. Activities concerned with different processes of production are separately grouped together into well marked out departments.


In a textile unit the departmentation may be attempted on the basis of spinning, weaving, dyeing, bleaching, marking, packing etc.;

In printing departmentation may consist of composing, proof reading, printing and binding. In manufacturing units process-wise departmentation can be attempted like costing, welding, grinding, polishing, painting, finishing and assembly etc.

The advantages of this type of departmentation are:

(a) The arrangement of process is made in such a way so as to make the operations economical and to increase the operating efficiency of the department.

(b) It provides advantages of specialisation required at each level of total processes. It facilitates the training of junior executives.

(c) The responsibility for completion of each stage is fixed on the head of the process department.

(d) It provides for effective utilisation of specialised equipment and special skills.

Disadvantages of this type of departmentation are:

(a) Chronological sequence is the essence of process departmentation. Imbalanced functioning of the process and lack of understanding between process heads may pose problems of co-ordination.

(b) The volume of activity must be available throughout the year to engage the departments to fullest possible extent.

(c) Profitability of the unit can be ensured based on balanced functioning of entire organisation. In efficient functioning or one process may adversely affect the operations of other process.

Suitable for manufacturing units with round the year functioning.

6. Departmentation by Customers:

In this form the activities are grouped on the basis of type of customers. This is basically market oriented in which customers are created around the markets served or around marketing channels. This may be’ attempted by enterprises engaged in providing specialised services to different classes of customers. Under this customers are the guide for grouping the activities.

The management groups the activities on this basis to cater to the requirements of clearly defined customer groups. This type of departmentation is suitable where groups of customers are well defined. Each department specialises in serving a particular group of customers. The needs of each group are given special attention.


A big automobile servicing unit may organize its departments in the following way:

Heavy vehicle servicing division, car servicing division. Two wheeler servicing division. Educational institutions follow this by providing day courses, evening courses and correspondence courses to meet the requirements of different students. A needy made organisation may have separate departments for men, women and children.

The advantages of this type of departmentation are:

(a) Customer oriented attention by specialised staff promotes and develops the customer fold by concentrating on customer satisfaction.

(b) Enjoys the benefit of specialisation.

Disadvantages of this departmentation are:

(a) Achieving co-ordination is difficult between departments organised on this basis and those on other bases.

(b) There are possibilities for under utilisation of facilities and man power.

(c) The importance given to employees of customer departments may generate conflict among employees.

(d) It may lead to duplication of activities and heavy work load.

Term Paper # 4. Factors to be Considered for Departmentation:

Management is to be very careful in choosing departmentation. In deciding the pattern of departmentation the relative merits and demerits are to be considered to facilitate effective and efficient achievement of organisa­tional objectives.

The following factors are to be considered while choosing a suitable basis of departmentation:

(a) Specialisation:

This brings about economies to the organisation. The departmentation is to result in grouping of activities in such a way which leads to specialisation. This leads to developing personnel as experts. Over specialisation is to be avoided.

(b) Co-Ordination:

This is to be considered as an important factor. Departmentation should result in achieving maximum results and each activity is to contribute in the positive way to others. The basis of department should ensure that closely to connected operations are put together under a single executive.

(c) Control:

The departmentation should therefore be arranged in such a way that should make the control over departmental activities easy. Control focuses on to see that the performance is in the desired direction or not. It measures the effectiveness of grouping of activities. So the activities of an organisation are to be arranged in such a way to ensure proper control over them.

(d) Economy:

The manager is to maintain a balance between cost of creating a department and its contribution to the organisation. Normally the contribution of the departments must be greater than its costs. Creation of a new department requires additional personnel, space and equipments. Further it creates new interactions in the organisation which results in consumption of more time of managers which is more precious for them. The pattern and number of departments in an organisation should be decided to achieve maximum possible economy.

(e) Local Conditions:

Adequate consideration is to be given to local conditions while creating a new department. The regional requirements may vary and the departments are to meet the local requirements and at the same time the organisation should go in for maximum use of available physical and human resources.

(f) Human Consideration:

The performance of departments depends on performance of the human factor. In considering this points to be considered are availability of personnel, their aspirations and value systems, informal work groups and attitudes of people towards various forms of organisational structure. This is the major source of either satisfaction of dissatisfaction of human factor. Always the focus should be a satisfaction of the workforce as it contributes more to the organisation.

(g) Appreciation of key Areas:

All activities contribute to the success of organisational objectives of all the activities some are considered to be important and they should be given more attention in creating new depart­ments.

(h) Minimum Conflicts:

The area of operation of each department is to be well defined to avoid any conflict and confrontation between departments.

So the above listed factors are to be considered while creating new departments in an organisation big or small. Any pattern of departmentation which satisfies the above factors to the maximum is to be considered as the correct choice of departmentation.