A functional structure is an organizational design that groups employees based on their specific skills and functions. In this setup, departments such as marketing, finance, and human resources operate independently, allowing for specialization and efficiency. Each department is managed by a department head who oversees the team's activities and performance. This structure promotes clear lines of authority and communication within each function. However, it can lead to challenges in collaboration between departments, as each may prioritize its own goals over the organization's overall objectives. Effective communication strategies are essential to mitigate these issues.