Functional Decomposition

AAA

DEFINITION of 'Functional Decomposition'

A method of business analysis that dissects a complex business process to show its individual elements. Functional decomposition is used to facilitate the understanding and management of large and/or complex processes and can be used to help solve problems. Functional decomposition is also used in computer engineering to help with software design.

INVESTOPEDIA EXPLAINS 'Functional Decomposition'

Basically, functional decomposition takes something complicated and simplifies it. The individual elements of the process and their hierarchical relationship to each other are commonly displayed in a diagram called a functional decomposition diagram. Other common business methods for simplifying complex problems and processes include decision trees, which allow users to consider multiple possible solutions to a problem, and flow charts, which show the sequence of a process.



RELATED TERMS
  1. Decision Tree

    A schematic tree-shaped diagram used to determine a course of ...
  2. Correlation

    In the world of finance, a statistical measure of how two securities ...
  3. Covariance

    A measure of the degree to which returns on two risky assets ...
  4. Regression

    A statistical measure that attempts to determine the strength ...
  5. Standard Deviation

    1. A measure of the dispersion of a set of data from its mean. ...
  6. Financial Modeling

    The process by which a firm constructs a financial representation ...
Related Articles
  1. Regression Basics For Business Analysis
    Investing Basics

    Regression Basics For Business Analysis

  2. One Portfolio For Asset Allocation
    Investing Basics

    One Portfolio For Asset Allocation

  3. An Introduction To The Relative Strength ...
    Active Trading

    An Introduction To The Relative Strength ...

  4. Do Financial Decisions Get Better With ...
    Active Trading Fundamentals

    Do Financial Decisions Get Better With ...

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center