Functional Structure
In a functional structure, the tasks are differentiated, on the basis of each, major
function and each manager is responsible for one of these. Thus, there is functional
specialization such as marketing, production, finance, personnel, R & D, etc. In such a
structure, those with authority can tell others what to do in that function. Such
structures have a high degree of centralized decision-making. Organizations with
functional structure can benefit from the economies of scale and also improve the
quality of output because the activities of a given function are centralized. One of
the major questions in such organizations is whether one functional manager has
staff or a functional authority in relation to other functions, e.g., can the head of
marketing tell the head of production what to produce (functional) or can he play
only an advisory role (staff). In such organizations, therefore, the top management
must plan and co-ordinate the activities of the various functions and resolve conflicts
between various functions. In such organizations, since profits are the result of joint
efforts, it is difficult to identify the responsibility for profits to individual managers.
Further, except for the chief executive, others do not have an overall perspective of
the enterprise, and managers tend to have a functional bias.
Credit: Management Control Systems-MGU