Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What is likely a significant drawback of the functional departmentation approach?

1. Encourages teamwork

2. Improves communication across departments

3. Creates vertical barriers

4. Enhances customer service

The correct answer is: Creates vertical barriers

The functional departmentation approach involves organizing a company's operations based on specialized functions such as marketing, finance, production, and human resources. One significant drawback of this approach is that it creates vertical barriers between departments. These vertical barriers can lead to a lack of communication and collaboration across different functional areas. Employees may become focused solely on their own department's goals and objectives, which can hinder the overall efficiency and effectiveness of the organization. This silo mentality can prevent the sharing of information and resources, ultimately affecting the company’s ability to respond quickly to market changes or customer needs. As a result, while functional departmentation can streamline operations within a single department, it can also limit the organization’s agility and responsiveness, making it a notable concern for companies that strive for cohesive teamwork and integrated service delivery.