Economics

Organization chart by function (basics of management)

In this article you will learn Organization chart by function and different departmentation in an organization.

Organization

An organization is the group of people who do activities for earning profit, The group of people who do work together and they have one specific target or goal and work in a specific boundary.

Office

Office is a part of an organization and it is the center of information in an organization. The common function of an office is following,

  • Sales and marketing
  • Purchasing
  • Finance
  • General Administration
  • HR/Personnel

An organization chart is the way of showing different roles and relationship of the formal structure, this can be show through the organization chart and by its function.

If we talk about the Organization chart and its function then simply an organization is a diagram that show the relationship within an organization and by its function it shows that how an individual is connected with each other in an organization.

  1. The units into the which organization is divided and how they relates with each other.
  2. Communication and reporting channels.
  3. The structure authority, responsibility and delegation.
  4. Problems in these areas such as excessively long lines of communication , lack of co-ordination between units and authority.

The most common form of organization chart is vertical organization chart, which show the flow of authority downwards through the different levels of the organization.

A simple example of organization chart,

Organization chart

Functional departmentation

Functional departmentation in an organization involves in setting up department for people who do the same job or perform similar service.

The primary function in an organization maybe production, sales, general administration and finance.

Organization Chart By Function

Organization chart by function

Geographical departmentation

The geographical organization is structured according to geographic areas, some authority is retained at head office but back to back operations are handled on a territorial basis

Many sales departments are usually territorially.

Geographical Organization Chart

Geographical departmentation

Product/Brand departmentation

Some organization works on large scale so they make their different departments and product or brand department is one of them.

Usually this department is made in multinational companies.

Top 5 multinational companies

  1. Nestle
  2. PepsiCo
  3. Sony
  4. Citigroup
  5. Procter & Gamble

Product Organization Chart

Product/Brand departmentation

Centralization/Decentralization Function

Many organization admin function is done in head office as much as possible, when this is the case, the admin function is centralization.

When admin tasks are carried out at different locations, when this is the case, the admin function is decentralization.

Practice Question

Question no.1

Which of the following is not a function of the purchasing department?

  1. Ensure to purchase needful goods only.
  2. Ensure that supplier give the best price
  3. Paying supplier’s invoices

Answer

3. Because account department will pay supplier’s invoices.

Question no. 2

Which of the following personnel in an organization would not be involved in purchasing of material?

  1. Credit controller
  2. Store manager
  3. Account clerk
  4. Purchasing manager

Answer

  1. The credit controller deals with the credit customers not with the purchasing of material.

I hope you like this article.

More articles on the site,

Books of prime entry (Basics of Accounting)

Basics of Accounting (fundamental of accounting)

Classification of Cost

Transaction and Business documentation

Must read these articles if you are beginners hopefully these will help you a lot in understanding the basic view of accounting.

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Naveen Rajput

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