Which statement about functional grouping is true?

• A. It groups by skills and expertise into functional areas
• B. It centralises management which can slow communication
• C. It eliminates duplication
• D. It groups by geographical location

Answer: (A)

Functional grouping organizes the business around what people do, gathering together those with similar skills and expertise into departments such as marketing, finance, human resources, and operations. This setup makes it easier to develop deep expertise, standardize processes, share best practices, and train and advance staff within a function. That direct description is the reason the statement about grouping by skills and expertise into functional areas is the true one. The other ideas describe potential consequences or alternatives rather than the defining feature: centralised management and slower cross-functional communication can happen in some structures, but aren’t the defining element of functional grouping; grouping by geographical location reflects a regional approach rather than a function; and functional structures don’t inherently eliminate duplication—silos can actually lead to duplicated efforts across functions.