In a functional organization structure, tasks are linked together on the basis of common functions. Thus, all production activities or all financial activities are grouped together in a
single function, which undertakes all the tasks required of that function. The chart below explains this.
Advantages
1. By grouping people together on the basis of technical and specialist expertise, the organization can facilitate both their utilization and their coordination in the service of the whole enterprise.
2. It provides better opportunities for growth and career development.
Disadvantages
1) The growth of sectional interest – this may conflict with the needs of the organization as a whole.
2) It is difficult to adopt this form of organization to meet issues such as product diversification or geographical dispersion.
3) Functional structures are best suited to a relatively stable environment