3. Functional organisation

 The line structure based on functions is one of the most common forms of organisational structure. The organisation is arranged according to the main functions, such as purchase, production, sales or finance. All people who do the same job belong to the same department.

For example, all production staff are bundled together in a production department, all sales staff in a sales department. Each department is an area of expertise and this makes operations more efficient. One person is in charge of each department and all report to the managing director. The main disadvantage of this structure is that the personnel may focus exclusively on the issues of their own department and as a consequence may ignore the more important organisational objectives.