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ACCA Applied Knowledge · Business and Technology · The formal and informal business organisation

A multinational conglomerate has several product divisions. Each division manager has considerable autonomy, but head office monitors each division through performance targets such as return on investment. Which statement about this configuration is correct?

The divisionalised form coordinates mainly through standardisation of outputs, using targets such as return on investment, and its key part is the middle line of divisional managers. Direct supervision suits a simple structure, and mutual adjustment with key support staff suits an adhocracy.

  1. AHead office coordinates mainly by standardising outputs, and the middle line is the key partCorrect
  2. BHead office coordinates mainly by direct supervision of the operating core, and the strategic apex is the key part
  3. CHead office coordinates mainly by mutual adjustment, and the support staff are the key part

Explanation

In the divisionalised form, the middle line (divisional managers) is the key part and coordination is by standardisation of outputs through performance control. Direct supervision and mutual adjustment are not the main mechanisms; the second option describes a simple structure and the third an adhocracy.

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