The functional organization determines the existence of various supervisors, each specialized in certain areas. This means that the organization does not comply with the principle of unity of command':.

· Functional or divided authority. It is an authority that is based on knowledge.

· No superior has total authority over subordinates, but only partial and relative authority.

· Direct line of communication. Direct and without intermediaries, it seeks the greatest possible speed in communications between the different levels.

· Decentralization of decisions. Decisions are delegated to specialized charge bodies.

· Emphasis on specialization. Specialization of all the bodies in charge.

In a functional structure, the division of labor in an organization is grouped by the main activities or functions that must be performed within the organization of sales, marketing, human resources, and so on.

Each functional group within the organization is vertically integrated from the top to the bottom of the organization. For example, a Vice President of Marketing would lead all the marketing people, grouped into the marketing department.

Employees within the functional divisions of an organization tend to perform a specialized set of tasks, for example, the engineering department would be comprised solely of engineers. This leads to operational efficiency within that group. However, it could also lead to a lack of communication between functional groups within an organization, making the organization slow and inflexible.

As a whole, a functional organization is more suitable for a producer of standardized goods and services in high volume and low cost. The coordination and specialization of tasks are centralized in a functional structure, which makes producing a limited amount of efficient and predictable products or services.

On the other hand, improvements in efficiency can be made in functional organizations to vertically integrate their activities so that products are sold and distributed quickly and at low cost. For example, a small company could start making the components it requires for the production of its products instead of purchasing them from an external organization.