IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 18, Issue 1 .Ver. III (Jan. 2016), PP 01-04 www.iosrjournals.org DOI: 10.9790/487X-18130104 www.iosrjournals.org 1 | Page Functional structure and operational issues: An examination of core challenges and remedies. Kalu Idika Awa I. Introduction In matching structure with strategy, David (2011) state that a change in strategy usually needs a change in the manner an organization is structured. There are two reasons for this. First, it is the structure of the organization that will determine how objectives and policies will be set. For example, ―objectives and policies established under a functional organizational structure are couched in functional terms‖. The second reason why changes in strategy often require changes in structure is that structure determines how resources will be allocated. In this case, as organization‘s structure is established along functional bus iness lines, it follows that resources are allocated along functions. It is only when new or revised strategies retain emphasis in the same area as the old strategies, otherwise structural changes become inevitable in strategy implementation. An organisational structure defines the reporting relationships in a company; in other words, who works for whom. In fact, there cannot be any one optimal organizational design or structure ideal for a particular strategy or kind of organization. What is suitable for one organization may not be suitable for same type of organization, notwithstanding successful organizations in an industry tend to structure themselves in the same manner. Small firms tend to be functionally structured (centralized), while medium-sized firms tend to be divisionally structured (decentralized). Large firms tend to use a strategic business unit (SBU) or matrix structure, (David 2011). Once a firm changes its strategy, the current organizational structure may become ineffectual. Nonetheless, what is more crucial is deciding what kinds of structural changes are necessary to effect new strategies and how to best accomplish these changes. This work is structured in the manner following the introduction in section 1 is section 2, definition and discussion of functional organization structure, then in section 3, advantages of functional structure will be discussed, in section 4, challenges of functional structure and operational issues. Remedies of functional and operational issues will make up section 5 while the paper ends in section 6 conclusion. II. Functional organization structure ―The importance of structure as a source of influence is so widely accepted that some experts define the concept as those features of the organization that serve to control or distinguish its parts‖, Gibson, Ivancevich, Donnlly Jr and Konopaske (2003). The key word in this definition is control. Workers behaviour is controlled in the organisation. We just don‘t do what we want to do or come to work when we want; we do what the organisation wanted and paid us to do. Functional organizational structure, also referred to as centralised structure is one of several reporting structures a company could implement. It is the most widely used structure because it is the simplest and least expensive of the seven alternatives. The other six structures are: divisional by geographic area, divisional by product, divisional by customer, divisional process, strategic business unit (SBU), and matrix, (David, 2011). In a functional structure, tasks and activities are grouped by business function, for example production/operations, finance/accounting, marketing, research and development, human resources management and management information system. This form of structure tend to sort their employees on their specific skills and job functions and best suited for smaller companies or those that focus on single product or service. Generally, all functional heads will report directly to the company president or managing director or CEO, as designated. In the view of Griffin (2014), because such structure is not designed to change rapidly, functional organisational structure works well in a stable environment where business strategies are less inclined to need changes or updating. This form of structure is particularly effective where there is large volume of standardised product or sales; reduced level of change within the industry; large fixed asset base and minimal amount of entirely new product line introductions. Functional organisational structure is also effective where there are minimal changes due to fashion or other changes in taste or technology and where competition is primarily based on cost (http://www.accountingtools.com/functional-org-structure) Indeed, functional organisation structure is ideal where activities of a business are organised around areas of specialization. It involves a considerable amount of process standardization with a business, with the real decision-making authority centred at the top of the organisation. Weihrich & Koontz (2005) inform that functional departmentation is not only the most widely used basis for organising activities but it is present in almost every enterprise at some level in the organisation structure. Furthermore, coordination of activities