Select the incorrect statement in the context of Functional Structure:

The correct answer is Option (3) → Coordination is easy for a multi-product company.

• Option (1) Formation of functional structure is based on functions. — A correct statement (Incorrect). A functional structure groups jobs of a similar nature into departments, such as production, marketing and finance.

• Option (2) The responsibility is difficult to fix on a department. — A correct statement (Incorrect). A product passes through many departments, so if it fails, no single department can be held responsible for the result.

• Option (3) Coordination is easy for a multi-product company. — An incorrect statement (Correct). In a functional structure each department handles all the products. In a company with many products, bringing the work of every department together for each product is difficult. This is why a multi-product company prefers the divisional structure, where all functions for one product sit in one division.

• Option (4) It helps in functional specialisation. — A correct statement (Incorrect). Each department does one kind of work, so its staff become specialists in it.