When a functional structure is used in a dynamic market, the organization may be slow in responding to changing customer demands.

Question

Quizplus · Accepted Answer

A functional structure is based on departments that specialize in specific functions such as marketing, finance, and operations. This structure may be efficient for stable and predictable markets, but in a dynamic market where customer demands and preferences change rapidly, the organization may find it difficult to respond quickly and effectively to these changes. This is because decision-making is often centralized and there may be limited communication and collaboration between departments, which can be a hindrance in responding to emerging opportunities or threats.

When a Functional Structure Is Used in a Dynamic Market