A functional structure is a type of organizational structure that groups employees based on their specific skills and knowledge. In a functional structure, decision-making and operations run through functional departments with precise areas of specialization. This structure is based on the function of each position within the business and the knowledge and skills of the team members that perform each role.

Advantages of using a functional structure for a business include:

• Skill growth: Within functional departments, knowledge is easily passed along by experienced managers to their team members, resulting in an enhanced skill set for all members involved.
• Specialization: It allows employees to develop their individual skills rapidly as they consistently complete the same tasks and functions in their individual departments.
• Efficiency: It provides a clear hierarchy and minimizes confusion among employees who may be unsure who they are to report to.

Disadvantages of using a functional structure for a business include:

• Communication barriers: Departments may become isolated and communication between them may be limited.
• Lack of flexibility: The structure may not be adaptable to changes in the business environment.
• Lack of collaboration: Departments may become too focused on their own goals and not on the overall goals of the business.

Functional structures are commonly used in larger companies, especially those that produce just a few types of goods or services. However, smaller companies may not need this structure or may find it too constraining.