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Different business structures: by function and area
Every business, from a sole trader to the largest company, is organised in a particular way. You should review this structure regularly to ensure that it fits the objectives of the business. More

Businesses can be organised by:

function
geographical area
product
project
Structure by function
Larger businesses are traditionally organised into departments according to their role. Individuals, teams and line managers in sales, for example, will be grouped together and report to the head of department, ie the sales director.

The advantages of this type of structure are:

specialisation - departments focus on one area of work
accountability - there are clear lines of management
clarity - employees understand their own and others' roles
The disadvantages are:

closed communication - for example, the sales team may not interact much with other departments and therefore may not realise how their work affects or can be informed by the activities of these departments
co-ordination may become difficult
departments may become resistant to change
Structure by area
Some businesses organise their activity according to geographical area. This is common in large multinational companies but it might also be appropriate for medium-sized businesses, eg a group of taxi firms, a small retail chain or a fast-food chain with several branches, as each site can operate according to local demand but still be directed by business policy.

The advantages of this type of structure are:

divisions can better serve local needs and communicate with local customers
you can encourage positive competition between departments
The disadvantages are:

there may be conflict between local and central management
potential duplication of resources and functions