Final answer:
Functional structures in businesses group employees based on mission-critical activities, common in single product or narrow-focused organizations. Companies often excel by focusing on their core competencies. These structures contrast team-based approaches and are selected based on operational and strategic goals.
Step-by-step explanation:
Functional structures are a type of organizational design that focuses on grouping employees based on their mission-critical activities or processes. This model is highly prevalent in organizations that offer a single product or service or have a narrow focus. Companies that concentrate on a limited set of products or areas, often referred to as their core competencies, tend to be more successful than those that spread their efforts across a wide range of offerings.
Businesses today are faced with rapidly changing workplaces due to shifts in technology, economics, globalization, and other factors. Responding to these changes effectively often necessitates the creation of structured organizations that can delegate work efficiently. While the team-based approach to organizational structure is increasingly popular, bringing together diverse skills and expertise, it is not always more productive than functional structures. Hence, organizations choose structures that best suit their operational needs and strategic goals.