There are numerous ways to departmentalize a business, but the most common one is by function. This blog post will discuss the advantages of departmentalization by function and clarify why it is a crucial organizational strategy, so what is it, and why does it matter?
What is product departmentalization?
As part of an organizational strategy, employees are divided into teams to work on all facets of a specific project or product line. Each product line has its own department or team, and each department’s members have a particular area of product development and distribution that they are skilled in. This implies that a group of people work together to develop a product or service from conception to completion.
This divisional structure may be helpful for businesses managing multiple projects at once because it can shorten product development cycles. They may provide centralized services like business development, global research, finance, public relations, and human resources to support their product divisions or teams.
What is functional departmentalization?
An organizational structure known as functional departmentalization divides teams based on the professionals’ areas of expertise. This means that a company may have a team of marketing experts, a team of software designers, and a team of data scientists working on a new product. To complete tasks pertaining to their areas of focus and expertise, these various groups cooperate within their teams.
These professionals may be grouped together by organizational leaders due to their shared knowledge and capacity to combine their skills to meet the project’s objectives. Companies might use this structure once their sales have increased and their demand for production has increased.
Functional vs. product departmentalization
Although functional and product departmentalization are both helpful organizational structures, there are a few key distinctions between the two, including:
Composition
The professionals who comprise the various teams, groups, or departments, as well as their composition, represent the key differences between these two organizational structures. Product departments are made up of experts with a variety of responsibilities who collaborate to carry out an idea or develop novel products. Business owners typically create product departments to accommodate the needs of several product lines in order to guarantee that each good or service has a team of experts committed to its completion.
Functional departments, in contrast, are made up of personnel who share the same interests, skills, and methods of operation. Teams are formed using functional models to reflect the various phases of the production and distribution process, including R&D, design, marketing, accounting, sales, and finance. All department heads and team leaders report to their supervisors, who may also be the company CEOs. The department heads and team leaders combine their respective functions and processes to help with the overall execution of a project or initiative.
Organizational use
The types of businesses and companies that use each divisional approach are a key distinction between them. Product departmentalization, as opposed to functional departmentalization, may be preferred by companies that produce a wide variety of products because it enables them to produce items in various departments quickly. Product departmentalization may also be the best divisional structure for a company that manufactures goods that call for technical expertise or specialization.
As an alternative, organizations and businesses with a smaller production scale might favor functional departmentalization. For well-established organizations like colleges or hospitals, where patients, clients, and students seek specialized care or instruction, this is typically the divisional structure. Compared to larger corporations that employ product departmentalization, these organizations may place less emphasis on the output of a particular product or range of products.
Advantages
There are many advantages to creating functional departments, such as:
Product departmentalization also has several advantages, including:
Disadvantages
Some disadvantages of a functional organizational structure include:
Alternatively, there might also be drawbacks to putting product departmentalization into practice, like:
Organization Structure – Types of Departmentalization
FAQ
What is product & Functional departmentalization?
When a business employs functional departmentalization, specialists in certain fields—like marketing—coordinate their efforts within a single department. Specialists in one product line collaborate with other specialists in the same product line when a company uses product departmentalization.
What is an example of product departmentalization?
An organization that employs product departmentalization is LA Gear. Its organizational model is based on the variety of product lines it offers, such as women’s footwear. Customer departmentalization is the process of organizing activities based on types of customers or common customers.
What is the difference between product and function?
Answer. Product is something that is created naturally and in a factory or other industrial setting, whereas production function links the physical output of a production process to the physical inputs or factors of production.
What is the difference between product and customer departmentalization?
Employees are differentiated through product departmentalization based on the goods or services the company provides. Employees are distinguished by customers and their needs through the use of customer departmentalization. Employees are categorized by a product or service line.
