Functional structure
A functional structure groups work by specialised functions such as operations, sales, finance and human resources. It can develop expertise and economies of scale, but may create hand-offs, silos and conflicting departmental targets. Performance systems should recognise interdependencies and whole-process outcomes, not only local function measures. The structure’s suitability depends on scale, product diversity and the coordination required by the strategy.
Worked example
Purchasing targets low input price while production needs reliability. Joint quality and total-cost measures can reduce conflict across the functional boundary.
Common mistake
An efficient function does not automatically create an efficient customer process when coordination is weak.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | APM | Supporting | September 2026–June 2027 |
| ACCA | BT | Direct | September 2026–June 2027 |
| ACCA | SBL | Direct | September 2026–June 2027 |
| FIA | FBT | Direct | September 2026–June 2027 |