The point of departmentalization is to increase productivity, not decrease it. Management staff need to be empowered to make decisions, up to a certain level, without checking with the next in rank. Also, if you have employee A, Manager 1, and Manager 1's boss, it is very good to make sure that any work that Manager 1's boss wants Manager 1's employee to do, is given to employee A by Manager 1. When you look at splitting up divisions, you need to think about span of control. In most cases, it has been proven that management works best with a smaller span of control.
Span of control is how many people directly report to that manager.
Ideal, at upper levels, is 5-7. That doesn't mean that people can't manage more then that, but we're trying to design an ideal world. Companies need to be split into logical groups. The larger you get, the more you have to break down the groups. You will have some cross over.