2021-2023

Class:- MBA FA-B

Subject:- Fundamentals of Management
Topic :- Functional Organisations
Submitted by :-
Ankit Patidar
Asif Patel
Jayesh Paliwal
Rohini Yadav Submitted to : -
Shreya Agrawal Dr. Ruchita Shandilya Ma’am
CONTENT
 What is organizational structure
 Basic elements of organizational structure
 What is functional organisation
 Structure of functional organisation
 How does Functional Organisation works
 Features of functional organisation
 Advantages of functional organisation
 Disadvantages of functional organisation
 Suitability
 Conclusion
 ORGANIZATIONAL
STRUCTURE

 Outlines how certain activities are directed to achieve the goals of an

organization.
 Determines how information flows between levels within the company.
 Defines each employee’s job and how it fits within the overall system.
 In simple word, It lays out who does what
so the company can meet its objectives.
 SOME TYPES OF
ORGANIZATIONAL STRUCTURE
 Line Organization
 Functional Organization
 Line and Staff Organization
 Matrix Organization
 Committee Organization
 Project Organization
 FUNCTIONAL ORGANIZATION
• Functional organization has been divided to put the specialists in the top position
throughout the enterprise. This is an organization in which we can define as a system
in which functional department are created to deal with the problems of business at
various levels. Functional authority remains confined to functional guidance to different
departments. This helps in maintaining quality and uniformity of performance of different
functions throughout the enterprise.

• The concept of Functional organization was suggested by F.W. Taylor who recommended the
appointment of specialists at important positions. For example, the functional head and Marketing
Director directs the subordinates throughout the organization in his particular area. This means that
subordinates receives orders from several specialists, managers working above them.
 EXAMPLE OF FUNCTIONAL
ORGANIZATION
 A functional organizational structure is perfect for medium and small business houses as
well as or companies that have either one or a few Products line. For example, a small
business entity AB Company deals in the manufacturing of and as nearly one hundred
employees.

 It has adopted a functional organizational structure and has created department for finance,
marketing, sales, research, production, administration, and human resources.

All of them report directly to the head. When the company grows, it will start adding
further heads and top management officers, but at the beginning, it is a perfecT set-up for
functional organizational structure.
HOW DOES FUNCTIONAL ORGANIZATIONAL
WORK?
 In a functional organizational structure, the organization is
divided into smaller groups.
 And division based on specialized function areas, such as
marketing or finance.
 By dividing an organization into a variety of functional
structures, greater control can be exercised over operations
and how work is performed.
 These functional areas operate in their own bubbles and are
disconnected from each other. Generally, the line of authority
from each function will flow to a senior executive or functional
head, such as the VP of marketing, and then to the CEO and the
board. A great example of this is Amazon’s Corporate Structure.

 The functional organization structure is ideal for a business that

deals primarily with operations, such as e-commerce, logistics,
or manufacturing, where specialist employees fill skilled roles.
 FEATURES OF FUNCTIONAL
ORGANIZATION
➢ The entire organizational activities are divided into specific functions such
as operations, finance, marketing and personal relations.
➢ Complex form of administrative organization compared to the other two.
➢ Three authorities exist- Line, staff and function.
➢ Each functional area is put under the charge of functional specialists and he
has got the authority to give all decisions regarding the function whenever
the function is performed throughout the enterprise.
➢ Principle of unity of command does not apply to such organization as it is
present in line organization.
 ADVANTAGES OF FUNCTIONAL
ORGANIZATION
1. Specialization
This type of organisation has the benefit of having specialists in each area. The work is performed by those
who have the specialist knowledge of that work. The workers have the advantage of getting instructions
from specialists. This makes possible the fullest use of energy in the organisation.

2. Increase in Efficiency:

There is a division of labour up to manager level. Planning and execution are also separated. This helps

increase the overall efficiency in the organisation. The workers get guidance from expert supervisors

and this enhances their performance at work.

3. Scope for Growth:

The functional organisation provides wide scope for growth and mass production. The employment of specialists
4. FLEXIBILITY:
Functional organisation allows changes in organisation without disturbing the whole work. The span of
supervision can also be adjusted according to the requirements.

5. Relief to Top Executives:

Top executives are not unnecessarily burdened as happens in line organisation. The line officer is supposed to be
a jack of all trades and is burdened with all types of works. On the contrary a specialist is a master of his line and
he has the expertise and capability of taking his own decisions.

6. Economy of Operations:

The use of specialists helps in controlling the waste of materials, money and time. The consolidation of activities
leads to optimum use of facilities like office accommodation, plant and machinery, etc.

7. Better Supervision:

Every superior is an expert in his own area and he will be successful in making proper planning and execution.
The superiors, being well acquainted with the work, will be able to improve the level of supervision.
 DISADVANTAGES OF
FUNCTIONAL
ORGANISATION:
1. Conflict in Authority:

The principle of ‘unity of command’ is violated in functional organisation. A subordinate is answerable to many
bosses. Every superior considers his work important and wants the workers to give top priority to his
assignment. The workers feel confused and are unable to decide about the priorities of their work.

2. Lack of Coordination:

The appointment of several specialists creates problems of coordination, especially when the advice of more
than one is needed for taking decisions. Specialists try to give more importance to their work as compared to
other areas. This creates conflicts among specialists and co-ordination becomes a problem.

3. Difficulty in Fixing Responsibility:

Since there is no unity of command, it becomes difficult to fix responsibility for slackness in work. So many
persons are involved in completing a work and everybody tries to blame others for low performance.
4. Delay in Taking Decisions:

The involvement of more than one person in decision-making process slows the process down. The speed or action
tends to be hampered by the division of authority. Much time is taken in consulting different specialists prior to
decision-making.

5. Poor Discipline:

The division of authority creates problem of discipline. The workers have to obey many bosses, their loyalty
becomes divided. Discipline tends to break down not only among workers but also among lower level
supervisors.

6. Expensive:
Multiplicity of experts increases overhead expenses of the organisation. A number of specialists are appointed for
manning various lines of work. These persons being specialists demand much higher emoluments. Small units
cannot afford to have functional organisation.
SUITABILITY OF FUNCTIONAL ORGSNIZATION

Size of organization is large.

Activities are Diversified.
Operations requires high degree of
specialization.
 CONCLUSION
The functional organizational structure helps organizations run their
businesses, especially those involved with ongoing operations. Here,
employees feel secure, perform well, and tend to be highly skilled.
Project managers typically do not have any role in a functional
organization. If they do exist, they will have a very limited role and no
authority. In a functional organization, employees’ roles are static, and
they report to the functional manager.
THANK
YOU!