Which term describes an organizational arrangement where people with similar skills form the department or division?

Which term describes an organizational arrangement where people with similar skills form the department or division?

• A. Franchise
• B. Fringe benefits
• C. Functional structure
• D. Functional area

Answer: (C)

Grouping employees by their specialized skills into departments is a functional structure. In this setup, work is organized by function—such as finance, marketing, operations, and human resources—so each department handles its own specialized activities and has a clear line of authority within that function. This arrangement promotes deep expertise, efficient use of resources within each function, and straightforward career paths for specialists. It also makes standardizing processes easier and supports focused supervision of skilled professionals. The other terms don’t describe this internal layout: a franchise is a business expansion model, fringe benefits are extra compensation, and while “functional area” can describe a department’s focus, it isn’t the established name for this organizational arrangement.

Grouping employees by their specialized skills into departments is a functional structure. In this setup, work is organized by function—such as finance, marketing, operations, and human resources—so each department handles its own specialized activities and has a clear line of authority within that function. This arrangement promotes deep expertise, efficient use of resources within each function, and straightforward career paths for specialists. It also makes standardizing processes easier and supports focused supervision of skilled professionals. The other terms don’t describe this internal layout: a franchise is a business expansion model, fringe benefits are extra compensation, and while “functional area” can describe a department’s focus, it isn’t the established name for this organizational arrangement.