What type of organizational structure divides an organization by areas of specialization?

The functional organizational structure is characterized by the division of an organization into specialized areas or departments based on specific functions, such as marketing, finance, human resources, and operations. Each department operates independently, focusing on its own area of expertise, which allows for a high level of specialization and efficiency within those functions. Employees often report to a functional manager, who oversees their work and ensures that departmental goals align with the organization's overall objectives.

This structure has distinct advantages, including the development of deep expertise within departments and streamlined communication within specialized teams. It also supports operational efficiencies and can lead to more effective resource allocation within each functional area. However, the functional structure may lead to challenges in interdepartmental communication and collaboration, as different departments might prioritize their objectives over the broader organizational goals.

In contrast, projectized structures organize teams around specific projects, while matrix structures blend functional and project-based arrangements. The demonstration structure does not exist in standard organizational design terminology, indicating that functional is indeed the most appropriate answer in this context.