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ACCA Applied Knowledge · Business and Technology · Business organisational structure

A multinational group lets each divisional manager decide pricing, hiring and local investment up to a set limit, but the board retains control over overall strategy and large capital projects. The main reason a board would keep control of large capital projects centrally is to:

The board keeps large capital projects under central control to make sure major commitments of resources fit the group's strategy and risk appetite. Delegation of routine matters continues within limits, so reporting and authority limits remain necessary, and central approval does not speed up local decisions.

  1. AReduce the need for any divisional performance reporting
  2. BEnsure major resource commitments align with group strategy and risk appetiteCorrect
  3. CRemove the need for delegated authority limits
  4. DIncrease the speed of routine local decisions

Explanation

Large capital projects commit significant resources and affect group risk, so the board keeps control to ensure alignment with strategy and risk appetite. Retaining control does not remove reporting needs, does not eliminate authority limits (which exist because of delegation) and does not speed up local decisions.

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