Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Which of the following is a disadvantage of functional departmentation?

1. High specialization

2. Poor coordination

3. Efficiency in recruitment

4. Increased market focus

The correct answer is: Poor coordination

Functional departmentation is an organizational structure where the company is divided into departments based on specific functions or tasks, such as marketing, finance, production, and human resources. One of the main disadvantages of this approach is poor coordination. When departments operate mostly in isolation, communication can suffer, leading to a lack of collaboration across various functions. This siloed structure can create difficulties in sharing information, aligning goals, and responding effectively to changes in the market or customer needs. As each department focuses primarily on its own objectives, the organization as a whole may struggle to achieve cohesive strategies and goals, resulting in inefficiencies and missed opportunities. In contrast, high specialization (which is a characteristic of functional departmentation) can lead to expertise within departments but does not facilitate communication with other departments. Efficiency in recruitment is a benefit rather than a disadvantage as departments can hire specialized staff suited to their functions. Increased market focus is also a positive outcome, with departmentation potentially leading to improved product or service delivery. Thus, poor coordination stands out as a significant drawback in functional departmentation, affecting overall organizational effectiveness.