There is no single best form of departmentation, it will depend on the given situation and the manager's belief.
Departmentation by Functions groups activities according to the functions of an enterprise.
Basic designations may not appear on org charts, this is because no generally accepted terminology exists.
Departmentation by Functions allows for a logical reflection of functions and maintains power and prestige of major functions.
It follows principles of occupational specialization and simplifies training.
Departmentation by Functions furnishes means of tight control at the top.
Disadvantages of departmentation by Functions include de-emphasizing overall company objectives and overspecialization and narrowness of view points of key personnel.
Responsibility for profit is at the top only, which can slow adaptation to change in the environment.

Test your knowledge of departmentation methods in organizations with this quiz. Explore the advantages and disadvantages of departmentation by functions and learn about its impact on organizational structure.