Departmentation by Functions in management
On the basis of functions undertaken by an enterprise, departments are created; This is a process of uniting people with similar activities to perform. This is based on specialised functions like production, marketing, finance and personnel.
This type of departmentation is suitable for small and medium business where the chief executive can coordinate the functional specialists. A high degree of centralisation of power with the chief executive is the chief character of this structure. Some of the advantages of this structure are
1. Benefits of occupational specialisation
2. Easier inter-departmental- coordination
3. Simple and understandable structure
Limitations of this structure are:
1. Excess centralisation.
2. Unsuitable when geographical.
3. Unsuitable when emphasis on product line in called for.
4. Lower scope for promotional avenues.