A functional organizational structure is referred to a business structure that organizes employees according to their specialty, skill, or related roles. It is organized into levels of hierarchy that include various departments and is led by designated leaders. A functional organizational structure is ideal for medium and small businesses and companies with one or two product lines. For example, A.B. Company is a small business that manufactures diapers and employs nearly one hundred people. The organization's entire task is divided into different functions. A specialist performs each function. The functional head is in charge of his function's activities throughout the organization.