October 23, 2014

Types of Sales Organization – Functional Sales Organization

Some sales departments use Functional sales organization. This type, derived from the management theory developed by Frederick W. Taylor, is based upon the premise that each individual in an organization, executive and employee, should have as few distinct duties as possible. The principle principle of specialization is utilized to the fullest extent. Duty assignments and delegation of authority are made according to function. No matter where a particular function appear in the organization, it is in the jurisdiction of the same executive.

In the functional sales department, salespeople receive instructions from several executives but on different aspects of their work. Provision for coordinating the functional executives is made only at the top of the structure; executives at lower levels do not have coordinating responsibilities. In contrast to the line and staff organization, all specialists in a functional organization have line authority of a sort or, more properly, they have function authority. Instructions, and even polices, can be put into effect with or without prior approval of the top level coordinating executive.

The outstanding advantage claimed for the functional sales department is improved performance. Specialized activities are assigned to experts, whose guidance should help in increasing the effectiveness of the sales force. The sheer size of the sales force in many large firms makes the highly centralized sales operations of a functional organization impractical. This limitation is traced to the requirement in the functional model for a lone official to coordinate the specialists. Most large firms need more administrative levels when the marketing area is extensive, when the product line is wide, or when large numbers of selling personnel are required. It is possible to use modified versions of the functional model versions providing for a modicum of decentralization and for more administrative levels but in its pure form, at least, functional organization for the sales department is inappropriate.

The practicality of functional organization for sales department is open to question. small and medium sized firms do not find it feasible, or financially possible, to utilize the high degree of division of labor. Functional organization is suitable for large firms with stable operations and with opportunity for considerable division of labor; however, certain characteristics of functional organization cause it to be rejected even by most large firms. Large companies with stable selling operations are the exception rather than the rule.

Hitesh Bhasin

Hitesh Bhasin

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