Commercial Department Structure and Interdepartmental Relations

Organization of the Department of Trade

Different forms of organization that have a commercial department:

Types of Commercial Department Structures

Functional Organization

This structure is built on the basis of work carried out within the department. Also called classical, it is a cost-effective form of organization.

Each department head is responsible for the specific functions that occur within the functional organization.

Product-Based (Divisional) Organization

The distribution of material and human resources is based on the products or services the company offers, especially when these require very different facilities and specialist equipment.

Joint Organization

This structure emerges when product-based organization is too expensive for the sales department. The solution is to establish common functions, primarily in sales, to share expenses.

Geographical Organization

This structure is common among companies whose activities cover large geographic areas.

Factors Determining Departmental Organization

• Company Size: Organization varies greatly; in small companies, several functions can be performed by the same person.
• Territorial distribution.
• Staff employed.

Typical Organizational Problems

The most typical problems found in departmental organization include:

1. Excessive centralization of authority.
2. Insufficient delegation of tasks.
3. Insufficient coordination between departments.
4. Lack of communication.
5. Excessive bureaucracy in decision-making (too much paperwork).
6. Assigning tasks to unqualified staff with inadequate supervision.

Relationships with Other Departments

The Commercial Department maintains crucial relationships with other areas of the organization:

A. Relationship with the Production Department

The Commercial Department ensures that products are ready on time for marketing and sales.

• Distribution has shifted from being an extension of production to becoming a core element of the marketing function.
• After-sales service should be located within the Commercial Department.
• Sales forecasting, previously handled by the Production Department, is now managed by the Commercial Department.
• New products emerge from research conducted by the Production Department.

B. Relationship with the Economic and Administrative Department

This department is responsible for leading the annual budget process for the entire firm.

• Sales revenue depends directly on sales volume and price.

C. Relationship with the Human Resources Department

The Human Resources Department is responsible for the selection and training of personnel required by the Commercial Department.