Elements of Organizing

1. Elements of Organizing BAM II Mr. Yates

2. Departmentalization • Functional Departmentalization – • The structure is organized by activities and functions • (example: marketing, HR, Operations…) • Product Departmentalization – • Each major product line is administered through a separate division • (example: Ford Motor Company - Jaguar Division, Lincoln-Mercury…)

3. Functional Departmentalization CEO VP Production VP Marketing VP Finance VP HR VP Research Production Sales Cash Planning Employment Research Labs Quality Control Marketing Cost Accounting Compensation Develop Labs

4. Functional Dept. Advantages • Maximizes functions within units • Efficient use of resources • Simplifies communication • Easier to measure outputs • Simplifies training • Ease of reporting and status • Preserves strategic control at the top

5. Functional Dept. Disadvantages • Coordination between departments becomes difficult • Priorities become that of the department only • Interdepartmental rivalry • Client satisfaction may be low (not my job/department)

6. Product Departmentalization CEO EVP Life Insurance EVP Health Insurance EVP AutoInsurance EVP Casualty Insurance EVP Military Division Under- writing Under- writing Under- writing Under- writing Under- writing Claims Claims Claims Claims Claims Marketing Marketing Marketing Marketing Marketing

7. Advantages of Product Deptart. • Departments become autonomous profit centers • Accommodates growth • Flexibility • Focuses on the client • Develops broad-trained managers • Rapid changes

8. Disadvantages of Product Dept. • Duplication of services and functions • Decreased communication between functions • Coordination problems between specialized product areas

9. 2 More Types! • Territorial Departmentalization – • Also called “geographic” or “regional” • Boundaries are determined by legal, political, cultural, or geographic considerations • Customer Departmentalization – • Broken down by customer types and needs • (Example: Retail Sales, Government Sales, Industrial Sales

10. Advantages of Territorial • Reduced transportation costs • Specialization • Regional resources • Legal, political, cultural environments

11. Customer Departmentalization CEO Gov. Sales Retail Sales Industrial Sales Light Industrial Internal Sales Production Ops/Mgmt Production Ops/Mgmt Production Ops/Mgmt Production Ops/Mgmt Production Ops/Mgmt Finance Accounting Finance Accounting Finance Accounting Finance Accounting Finance Accounting Marketing Marketing Marketing Marketing Marketing

12. Advantages of Customer Dept. • Responsive to customer needs • Performance tied to requirements of key market segments • Focus

13. Disadvantages of Customer Dept. • Establishment of company-wide practices difficult • Special treatment of various buyers • Customer groups develop at uneven paces

14. Mixed Departmentalization General Motors Buick Oldsmobile Cadillac Chevrolet Pontiac GM Canada Truck And Bus Product Divisions Production Ops/Mgmt Distribution Finance Functional Departmentalization Eastern Region Northern Region Southern Region Western Region Territorial Departmentalization