Which term describes an organization that is arranged by function, such as accounting or IT?

Which term describes an organization that is arranged by function, such as accounting or IT?

• A. Functional area
• B. Functional structure
• C. Front-back structure
• D. Fringe benefits

Answer: (B)

Organizing by function means grouping people by their specialized area, such as accounting, IT, or marketing. This arrangement is called a functional structure. It supports deep expertise within each function, provides clear lines of authority inside each department, and makes it easier to allocate specialized resources and standardize processes. However, it can slow cross-department coordination and make it harder to respond quickly to changes that cut across functions. The term functional area refers to a department itself rather than the overall organization’s design, so it doesn’t describe the whole structure. The others aren’t standard terms for this concept, and fringe benefits are a compensation topic unrelated to how the company is organized.

Organizing by function means grouping people by their specialized area, such as accounting, IT, or marketing. This arrangement is called a functional structure. It supports deep expertise within each function, provides clear lines of authority inside each department, and makes it easier to allocate specialized resources and standardize processes. However, it can slow cross-department coordination and make it harder to respond quickly to changes that cut across functions.

The term functional area refers to a department itself rather than the overall organization’s design, so it doesn’t describe the whole structure. The others aren’t standard terms for this concept, and fringe benefits are a compensation topic unrelated to how the company is organized.