Skip to content

IAI Actuarial Core Principles · Business Management · Communicating strategy; culture and structure in decision making; strategy case studies

Bharat General Insurance is organised by function: underwriting, claims, actuarial and finance each report separately to the CEO. Management finds that a new motor product is slowed because the functions optimise their own goals and rarely share information. Which weakness of a functional structure does this best illustrate?

The situation shows silo behaviour and poor cross-functional coordination, a classic weakness of functional structures. Departments pursue their own objectives and share little information, which slows products that need several functions to work together, unlike matrix dual reporting or regional duplication.

  1. ADuplication of resources across product lines
  2. BLack of specialist expertise within each department
  3. CSilo behaviour and poor cross-functional coordinationCorrect
  4. DExcessive local autonomy for regional managers
  5. Dual reporting lines causing conflicting instructions

Explanation

Functional structures group specialists together, which builds expertise but encourages silos with their own goals. The described lack of information sharing is poor coordination. Dual reporting is a matrix problem, and duplication or regional autonomy belong to product or geographic structures.

Did you get it right without looking?

One question tells you little. A timed set on Communicating strategy; culture and structure in decision making; strategy case studies shows your real accuracy, how long you take and where you lose marks.

Practise Communicating strategy; culture and structure in decision making; strategy case studiesFree diagnostic mock

More Communicating strategy; culture and structure in decision making; strategy case studies questions