Product and Geographic Departmentalization

Best for a company managers are faced with several decisions/dilemmas.

The following should be considered:

• The products they produce
• Who their customers are
• Where their customers are located

Once the above considerations has been taken, a manager can then look at the advantages and disadvantages to the different types of departmentalization. Two types of departmentalization are product and geography. Product departmentalization is when a company is organized by specific products. Take a look at 3M Corp; they make both consumer and industrial products.

All of 3M Crops products operate under different divisions (Griffin, 2013). For example their Post-it and Scotch Brite brands could be located in the same building, but do not have the same managers or staffing resources. Basically the mangers and staff for both brands are coexisting with no business interaction. This type of departmentalization can also apply to retail stores. Most retail stores are broken into different departments. The advantages of product departmentalization are:

• Allows people to specialize in one area of expertise
• Makes it easier to assess performance
• Makes decision making faster

The disadvantages of product departmentalization are:

Duplication of functions

Coordination across different product departments •Limited view of organizational goals The above advantages and disadvantages taken from (Zararain, 2012) Geographic departmentalization is creating departments in the geographic areas they service.

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Coca-Cola is a company that operates using geographic departmentalization.

They have 6 operating regions: Eurasia & Africa, Europe, Latin America, North America, Pacific and Bottling Investments – in addition to Corporate (Unknown, 2011).

The advantages of product departmentalization are:

• Effective and efficient management.
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• Reduces costs by locating organizational resources closer to customers

The disadvantages of product departmentalization are:

• Duplicates functions
• Functions are dispersed, therefore control cannot be exercised effectively
• Isolates organizational areas from one another.

The above advantages and disadvantages taken from (Zararain, 2012) I feel managers are challenged to try and decide what departmentalization type will best suit their company’s needs. Just because one fits today, that may not be the case in years to come. A manager may need to revisit the different departmentalization types and pick a new one that best fits the company’s structural needs. Note: Only two of the five-departmentalization types have been discussed. For more information on the other types please refer to page 219, chapter 7 in Business.