Which term describes the grouping of positions by primary functions such as marketing, finance, and production?

• A. Geographic Departmentalization
• B. Functional Departmentalization
• C. Line Organization
• D. Line-and-Staff Organization

Answer: (B)

Grouping positions by major functional activities (such as marketing, finance, and production) is functional departmentation. This setup organizes the company around specialized tasks, letting people develop deep expertise within each function, standardizing processes, and streamlining supervision and resource use within departments. It makes coordinating work inside a single function straightforward and helps with accountability for function-wide results. However, it can create silos and hinder cross-functional collaboration, making it harder to respond quickly to changes that require multiple functions to work together.

This approach isn’t about geographic location, which would group by where activities occur. It’s not a line organization, which emphasizes a direct chain of command from top to bottom rather than grouping by function. It’s also not line-and-staff, which mixes line authority with staff advisory roles; the key idea here is the functional grouping itself.