Functional Structure of Business Organisation

Selection of organisational structure and its proper management is tough job for the management. It is well known that every organisation should be flexible, innovative, and creative in the global economy in order to achieve the efficiency in operation and to gain the competitive advantages over the market.

Also they need to maintain a certain degree of stability in their structures so that day to day tasks can be completed efficiently.

Managers need to collect and analyse information which structure can contribute for the strategy planning. 

These informations contribute to the formation and use of effective structures and controls, which yield improved decision making.

In order to implement and manage strategies that have been formulated, every company needs some form of organizational structure. Organisations determine their organional shape in order to involve the whole organisation into the way of their business goals. Among the various structures that the organisation adopt to determine the responsibilities and approaches to deal with problems, functional structure is also one of them. Functional structure is most common and widely used structure as it is easy to implement and cost effective in nature.

What is the functional structure of an organisation ?

It is a type of structure which combines the tasks and activities by business function, such as production/operations, marketing, finance/accounting, research and development, and management information systems. 

In addition to simplicity and cost effectiveness, it also focuses on specialization of labour, encourages efficiency and facilitates the rapid decision making.

It helps the organisation in achieving its business objectives as it creates a proper match between strategy and structure. The functional structure strictly demands the perfect combination of strategy though the perfect combination is crucial for the business organisation.

The most important issue while deciding the structure of organisation is that the organisation's structure must fit with the organisation's strategy.

Thus, it is the responsibility of the organisation's managers to recognise the lacks or inefficiencies of the structure and change it to one that is more consistent with organisation's strategy.

The functional structure enables the company to overcome the growth-related constraints and ensure the effective communication and coordination.

The functional structure would enable the firm to more accurately monitor the performance of individual businesses, simplifying control problems, facilitate comparisons between divisions, improving the allocation of resources and seek ways to improve performance.

When the firm is less diversified, strategic controls are used to manage divisions. Strategic control refers to the operational understanding by corporate officers of the strategies being implemented within the firm's separate business units.

Differences in functional specialization and orientation may affect communications and coordination. Thus, the chief executive officer must integrate functional decision-making and coordinate actions of the overall business across functions. 

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