What is meant by functional structure of an organisation? Explain any two of its advantages and three limitations.
or
Explain the concept of functional structure’. Also, explain any four disadvantages of functional structure.
or
Explain the concept of functional structure’ of on organisation. Also, explain any four disadvantages of functional structure.
An organisation structure in which departments are created on the basis of different functions performed in the organisation is called a functional structure. All departments in such organisations, report to a coordinating head. e.g. a manufacturing concern is divided into four departments as production, sales, purchase and finance.These departments may further be divided into sections, by grouping similar or related jobs.
Advantages of Functional Structure:
(i) It leads to occupational specialisation, since emphasis is placed on specific functions and repeated performance leading to efficient functioning.
{ii) It promotes control and coordination within a department because of similarity in the tasks performed.
{iii) It leads to increased efficiency and profits.
{iv) It leads to minimal duplication of efforts, which results in economies of scale, and this lowers the cost.
{v) It makes training of employees easier as the focus is only on a limited range of skills.
{vi) It ensures that all functions get due attention.
Disadvantages of Functional Structure:
(i) Work is assigned as per the specialisation. Due to this, specialists working in different departments may not be able to see the perspective of the organisation as a whole.
{ii) It becomes difficult to hold a particular department responsible for any problem.
{iii) When organisation grows, structure of departments becomes complicated and creates problem in coordination.
{iv) Conflict often arises when the interests of two or more departments are not compatible.
(v) There is lack of flexibility as people may develop a narrow perspective and may not appreciate any other point of view.