ACCA Applied Knowledge · Business and Technology · Business organisational structure
A retail chain with 200 stores is considering giving each store manager authority to set local prices, choose local suppliers and hire staff, while head office keeps control of overall strategy and brand standards. Which of the following is the MOST likely benefit of this approach?
The most likely benefit is that decisions will be more responsive to local market conditions. Store managers who set prices, choose suppliers and hire staff are close to customers. Consistency and bulk-purchasing economies are advantages of centralisation, which this decentralised approach weakens.
- ADecisions will be more responsive to local market conditionsCorrect
- BPolicies and procedures will be applied more consistently across all stores
- CEconomies of scale in purchasing will be maximised
Explanation
Decentralising decisions to store managers places authority close to local customers, so the business can respond faster to local conditions. Consistency of policy and maximum purchasing economies of scale are benefits of centralisation, because local choice of suppliers and prices tends to reduce them.
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