What does a functional organisational structure involve?

A functional organizational structure involves dividing a business into various jobs or functions, such as marketing, finance, human resources, and production. This approach allows each department to focus on its specific area of expertise, leading to greater efficiency and specialization. Each function operates independently while contributing to the organization's overall objectives, facilitating clear lines of communication, authority, and accountability within the company.

In contrast, splitting the business into different locations pertains to a geographical organizational structure, where the focus is on managing operations across various physical locations. Organizing teams based on product lines refers to a product-based structure, where teams are centered around specific products, rather than functions. Creating a project-based team setup typically aligns with a matrix or project organizational structure, where teams are formed to work on specific projects and may be disbanded once those projects are complete. Understanding these distinctions highlights why the division by various jobs and functions is the cornerstone of a functional organizational structure.