Answer to Question 1
The advantages of a functional structure result from the division of labor and specialization. People grouped together according to similarities in their positions can easily communicate and share information with each other. Grouping by function improves an organization's ability to motivate employees. When employees are grouped together by function, supervisors are in a good position to monitor individual performance, reward high performance, and discourage social loafing.
A functional structure also has disadvantages. As an organization grows and its activities become more diverse and complex, a functional structure may no longer allow it to coordinate its activities effectively. When the range of products or services that a company produces widens, its various functions may have trouble. For example, coordination problems may arise. As organizations attract customers with different needs, it may find it hard to service these different needs by using a single set of functions. Furthermore, as companies grow, they often expand their operations nationally. Servicing the needs of different regional customers with a single set of manufacturing, sales, or purchasing functions becomes very difficult.
Answer to Question 2
TRUE
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