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ACCA Applied Knowledge · Business and Technology · Business organisational structure

A multinational splits itself into semi-autonomous business units, each responsible for its own product range and profit, with head office setting overall strategy and monitoring results. What is a main advantage of this divisional structure?

A main advantage is that divisional managers can focus on their own products or markets and be held accountable for the performance of their unit. The structure tends to duplicate functions and allows differing procedures, and it decentralises rather than concentrates decision making.

  1. AIt eliminates duplication of functions across the group
  2. BIt allows divisional managers to focus on their own markets and be held accountable for performanceCorrect
  3. CIt guarantees that all units follow identical procedures
  4. DIt concentrates all decision making with one individual

Explanation

Divisional structures delegate authority to unit managers who focus on specific products or markets and can be judged on divisional results. They tend to duplicate functions, may differ in procedures, and decentralise rather than concentrate decisions.

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