In a manufacturing concern, division of work into key functions will include production, purchase, marketing, accounts and personnel. These departments may be further divided into sections.

Which type of structure is highlighted here?

Functional structure

The correct answer is option 2- Functional structure.

Grouping of jobs of similar nature under functional and organising these major functions as separate departments creates a functional structure. All departments report to a coordinating head. For example, in a manufacturing concern division of work into key functions will include production, purchase, marketing, accounts and personnel. These departments may be further divided into sections. Thus, a functional structure is an organizational design that groups similar or related jobs together. It is most suitable when the size of the organisation is large, has a diversified activities and operations require a high degree of specialisation. The functional structure leads to occupational specialisation since emphasis is placed on specific functions. This promotes efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve performance. It promotes control and coordination within a department because of similarity in the tasks being performed. It helps in increasing managerial and operational efficiency and this results in increased profit and leads to the minimal duplication of effort which results in economies of scale and this lowers cost.