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ACCA Applied Knowledge · Business and Technology · Organisational culture

A family-owned trading firm has grown rapidly. The founder still makes nearly all major decisions, few formal procedures exist, and staff succeed by being close to the founder. The firm now plans to expand into five new countries. Which is the most significant weakness of its current Handy culture type in this situation?

The firm has a power culture, so its main weakness is dependence on the central founder. As it expands into several countries, one person cannot control all decisions, and the lack of formal systems makes managing a larger structure difficult.

  1. AEmployees will focus on their own professional interests rather than the firm's goals
  2. BReliance on one central figure limits the firm's ability to manage a larger, more complex structureCorrect
  3. CRigid rules and procedures will slow its response to new markets
  4. DTeams will be disbanded too quickly once each project ends

Explanation

The firm has a power culture, which depends on the central individual's ability and judgement. As the organisation grows and becomes more complex, the centre cannot control everything, so the culture struggles to scale. Rigid rules describe role culture, which is not present here.

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