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ACCA Strategic Professional · Strategic Business Leader · Enabling success: organising

Dunmore Pharma operates in a stable, mass-production environment making a limited range of generic drugs. A consultant proposes replacing its functional structure with a matrix organised around product teams and geographic managers. Applying contingency thinking, which assessment is most appropriate?

The matrix is probably unsuitable. Contingency thinking says structure should fit the environment and strategy, and a stable, narrow, mass-production setting is best served by a functional structure that gains efficiency from specialisation, whereas a matrix adds cost and complexity suited to dynamic, complex settings.

  1. AThe matrix is likely unsuitable, as a stable, low-complexity environment fits a functional structure with efficiency from specialisationCorrect
  2. BThe matrix is ideal, as matrix structures always improve performance in any environment
  3. CThe matrix is suitable only if the firm abandons all specialist departments
  4. DThe matrix is needed because stable environments require maximum flexibility

Explanation

Contingency theory links structure to environment and strategy. Stable conditions and a narrow product range favour functional, mechanistic structures that deliver efficiency. A matrix adds cost and complexity suited to dynamic, multi-product or multi-market settings, so it is not justified here.

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