Functional structures are best suited to firms competing in undifferentiated markets.

Question

Quizplus · Accepted Answer

Functional structures are designed to efficiently manage routine tasks and specialize in specific functions. In undifferentiated markets, where competition is based solely on price and quality, functional structures can help companies achieve cost efficiencies and consistent quality. However, in highly differentiated markets, such as technology or luxury goods, a more flexible and cross-functional structure may be more effective in responding to changing consumer needs and competitive pressures.

Functional Structures Are Best Suited to Firms Competing in Undifferentiated