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CMA Foundation · Fundamentals of Business Economics and Management · Planning, Organizing, Staffing and Leading

A footwear company in Kanpur groups all its employees into separate departments such as Production, Marketing, Finance and HR, with each department handling one type of specialised activity. Which basis of departmentation is being followed?

The company follows departmentation by function. Activities are grouped according to the specialised work performed, such as production, marketing, finance and human resources, rather than by region, product line or customer type. This builds specialisation and avoids duplication of skills within one unit.

  1. ADepartmentation by functionCorrect
  2. BDepartmentation by territory
  3. CDepartmentation by product
  4. DDepartmentation by customer

Explanation

Grouping people according to the specialised activity they perform (production, marketing, finance, HR) is functional departmentation. Territory would group by geographic area, product by line of goods, and customer by type of buyer. None of those bases is described here.

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