functional structurean ORGANIZATION structure where activities are grouped into DEPARTMENTS by function, and formal COORDINATION occurs at the apex. (See Fig. 43). Such structures provide a generally effective means of coordination both within departments and across the organization as a whole, when there is a single product or service. They also provide clear career paths for functional specialists, though there is a possibility that loyalty to departments will displace loyalty to the organization. Functional structures become less appropriate when an organization diversifies - it can be difficult to adapt functions to possibly varying product or service requirements since the centralization of authority in this model tends to encourage uniformity.
This type of structure is often referred to as ‘U-form’ since authority within the organization can be traced up the CHAIN OF COMMAND to a unitary source. See PRODUCT-BASED STRUCTURE, MATRIX STRUCTURE, CRITICAL FUNCTION STRUCTURE.