Advantages/Disadvantages of Product Departmentation in management

Advantages of Product Departmentation

This form of departmentation has its own set of advantages:

1. Since each product has a manager, it has been made possible for the manager to concentrate all his efforts and those of the team members, that is, those subordinates working under him on the success of the product. Every thinking and action are necessary so that the product will be successful in the market. And the success is measured not just by the volume of sales made and the revenue to the organization but equally important the degree of satisfaction that the purchasers and consumers have arising from the use of the product. Issues concerning product development, product planning, pricing, promotion and distribution among others are handled by the manager and his team. 
2.  Responsibility for profit making is again placed at a lower level, just as the case in respect of geographic form of departmentation. The product manager must justify this confidence and exercises his initiative by taking good decisions that will ensure the success of the product in the market and as a result brings in money to the organization. To achieve this, beyond bringing out a product that can satisfy the need(s) of the consumers, expenses must be controlled. This is because profit and cost travel in opposite direction. If profit is going to be made, then expenses must be reduced. But if the manager says there should be no profit, then let him unduly increase the expenses. Of course, his job is on the line. 
3. The form of departmentation improves the coordination of functional activities. This is possible because each product manager has been given the charge to make profit. But responsibility can not be given without the commensurate authority. As a result the necessary authority has also be given to the manager to do all he can to ensure success. Within him, he can be able to ensure that there is cooperation and understanding among all the departments. The production department can have excellent cooperation with the engineering department. Also the production department works harmoniously with the marketing/sales department, all of which is important to give the customer satisfaction. 
4. It provides good training ground for the position of the General manager or the Managing Director. This is possible because at the lower level, the product manager is already familiar with the politics of dealing constructively with the functional managers who are specialists. By the time the product manager is appointed 
5.  General manager, he brings his experiences to his new job as a generalist. 
6.  The product and/or service can be diversified. Market and Marketing researches can be conducted in order to achieve this. 

In fact, anything that can be done to ensure continuous profitability and survival of the product needs to be done by the manager, more so, when the commensurate authority has already
been provided. Consequently, anything that will permit reasonable growth and diversity of products and/or services should be undertaken by the manager.

 Disadvantages of departmentation by product

There exist disadvantages too of this form of departmentation:

1. The form of departmentation requires not specialists as product manager but generalists who have the ability to coordinate functional activities. If a specialist, say an engineer is appointed who lacks general managerial ability, possibility does exist that he may take a decision favorable to engineering and/or production. This will not be well for the product because the other departments will start complaining or carry out activities detrimental to the success of the manager as a way of showing discontent. 
2.  It tends to make it impossible to have economical central services such as making bulk purchases by the headquarters for the product managers. This will naturally attract some discounts, such as quantity discount, price discounts etc. But these benefits may not occur at this scale because it has been made that product managers resent the idea of having goods purchased for their use without any contribution being made by them to the decision to buy the items. 
3. It increases the cost of having product managers and other sub- ordinates reporting to them. Levels of positions are created which need finance. The finance for the payment of their salaries, running their offices and so on. These are called overhead cost which the organization has to bear.