Meaning of functional structure: It refers to the division of the whole enterprise according to the major functions/activities to be performed by it.

Disadvantages of Functional Organisation: The following are the main disadvantages of functional organisation structure:

1. Ignorance of organisational objectives: Each departmental head works according to his sweet will. They always give more importance to their departmental objectives. Hence, overall organisational objectives suffer. For example, to establish its image, the production department may produce quality product ignoring the fact that market trend favours accepting medium quality product.

2. Difficulty in interdepartmental coordination: All departmental heads may work as per their own wish. No doubt this facilitates coordination within the department but it makes interdepartmental coordination difficult.

3. Conflict of interest: Every departmental head wants to become a functional empire. To satisfy their ego every one demands maximum resources for their department. This situation leads to conflicts among the various departmental heads.

4. Hurdle in complete development: This system is a hurdle in the way of the complete development of the employees. Each employee specialises only in a small part of the whole job.