Final answer:
Functional organizations are structured by grouping people performing similar activities into departments. This structure allows for specialization and efficient coordination within each department.
Step-by-step explanation:
The companies that are structured by grouping people performing similar activities into departments are called functional organizations. In a functional organization, employees are grouped based on their skills, expertise, or functions they perform. This structure allows for specialization and efficient coordination within each department.
For example, a manufacturing company may have departments for production, finance, marketing, and human resources. Each department will have employees with specific skills and responsibilities related to their respective functions.
Functional organizations have advantages like specialization, clear lines of authority, and improved efficiency in performing specialized tasks. However, they may also face challenges of communication and coordination between departments.