Diagram of Typical Functional Structure:
Advantages
- Economies or scale in administration costs activities
- Good for small-sized firms
- Easy to identify talents
- Foster high centralization of decision-making
- Promotes high task and activity specialization
- Supports a low-cost leadership strategy
- Supports vertical integration in a business
- Best for undiversified firms
Disadvantages:
- Coordination difficulties arise when firm diversifies
- Difficult for each function to accommodates needs of other functions
- Divergent goals and objectives based on each function
- Inflexible with broad-based global or multi-domestic strategies
- Need extensive modification to support differentiation strategies
- Poor fit for highly diversified firm
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