Certification in Supplier Diversity Practice Exam

The effectiveness of a functional organization tends to decrease as the organization:

1. Increases its product range

2. Reduces its geographical reach

3. Grows in size and complexity

4. Begins to standardize procedures

The correct answer is: Grows in size and complexity

The effectiveness of a functional organization tends to decrease as the organization grows in size and complexity because larger organizations often face challenges related to communication and coordination. In a functional structure, departments are typically siloed, which can hinder collaboration and slow down decision-making processes as complexity increases. As an organization grows, it may also introduce more layers of management, which can lead to delays in information flow, increased bureaucracy, and difficulties in maintaining a cohesive strategic vision. Additionally, with size and complexity comes a greater diversity of tasks, projects, and goals that may not be aligned well across different functional areas. This misalignment can lead to inefficiencies, where teams may prioritize their own departmental objectives over the overall goals of the organization. Therefore, as organizations grow, ensuring alignment and effective communication across functions becomes more challenging, ultimately impacting their effectiveness. In contrast, increasing product range, reducing geographical reach, or standardizing procedures may have specific implications, but they do not inherently disrupt the functional organization’s ability to operate as size and complexity do.