It will be noticed that below the Managing Director are four managers in charge of separate functions,
namely, finance, marketing, production and personnel. In the marketing set-up, described in greater
detail in this chart, under the marketing manager, separate managers are delegated functions such
as marketing research, product planning, sales, advertising and sales promotion. In this way, similar
activities are grouped together into major departments and place under an executive who report to
the higher executive. The chart shows a more detailed functional basis. This type of departmentation
or structure is quite suitable for small and medium sized business where the chief executive can
easily co-ordinate his functional specialists.
The advantages of this type of structure are
1. benefits of occupational specialisation;
2. easier inter-departmental co-ordination; and
3. logical and simple, easy-to-understand structure;
The disadvantages of the Functional Departmentation
1. excessive centralisation;
2. unsuitability where geographical centralisation is required.
3. unsuitability where emphasis on product lines is called for; and
4. Lower potency for developing managers for promotion.
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