2. It leads to duplication of activities which creates confusion and involves costs.
3. Co-ordination among various territorial divisions may become difficult.
4. By Customer
A business house may be divided into a number of departments on the basis of customers it serves
viz., large and small customers, industrial and ultimate buyers; government and other customers etc.
The peculiar advantage of customerwise departmentation is that it ensures full attention to different
types of customers and their different needs, tastes and requirements can be met effectively. However
it may not be possible to group all activities of an enterprise on the basis of cusotmers. In fact, sales
activities may be classified or grouped on such basis. But there may be problems of co-ordination
with others departments. There may not be enough work, at times, in case of certain types of customers.
This may lead to idle capacity.
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