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CMA Foundation · Fundamentals of Business Economics and Management · Organisation Structure, Responsibility, Accountability and Delegation of Authority

A company operating in several states finds that its products are sold in very different local markets, and its managers in each region understand local customers well. Which approach is most suitable for the company's decision-making?

Decentralising marketing decisions to regional managers is most suitable. Because markets differ across states and regional managers understand local customers, giving them authority allows quicker, better-informed decisions. Total centralisation would slow responses, and accountability must still be retained for control.

  1. AStrong centralisation of all decisions at head office
  2. BDecentralisation of marketing decisions to regional managersCorrect
  3. CAbolishing regional offices
  4. DRemoving accountability of regional managers

Explanation

Diverse local markets and regional managers' knowledge of customers favour giving them authority over marketing decisions. Complete centralisation would slow responses and ignore local information. Removing accountability would weaken control.

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