What are functional areas of business?

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Karen P.L. Hardison eNotes educator| Certified Educator

In terms of organization in a business, functional areas are the divisions of organization that shape and track (1) people's involvement in tasks and (2) completion of task objectives. Functional areas can be identified in both centralized top-down structures and in decentralized, e.g., matrix, structures.

In terms of division of labor in an organization, functional areas are the departments (consisting of one or more people in small or large businesses) in which specialized tasks are preformed by specifically trained people. This is more apparent in centralized structures even though decentralized matrix structures have departmentalization overseeing the fluidity of interchangeable matrices.

Some functional area departments commonly seen in business are:

  • the finance department.
  • the research and development department.
  • the finance and accounting department.
  • the human resources department.
  • the marketing department.
  • the sales department.
  • the administration department.
  • the production department.
  • the customer service department.
  • the distribution department.

Functional areas identify (a) key tasks to be performed in a business and identify the (b) key skills required to fulfill the function and identifies the (c) individual(s) responsible for key task fulfillment.

The purpose of functional areas and identification of functional areas is to ensure efficiency in carrying out key tasks in terms of goals and employee skill correlation with task fulfillment. The aim of efficiency is the successful accomplishment of the goals and objectives of the business.

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