ACCA Applied Knowledge · Business and Technology · Business organisational structure
Helmund plc sells consumer electronics in three regions. Each region now operates as a semi-autonomous unit with its own marketing and production, while head office retains control of strategy, finance and capital allocation. Which is the most significant disadvantage of this divisional structure?
The most significant disadvantage is duplication of functions and resources across divisions. Each region has its own marketing and production, which raises costs and loses economies of scale, even though the structure improves local responsiveness and allows divisional performance to be measured.
- ADuplication of functions and resources across divisionsCorrect
- BInability to respond to local market conditions
- CLack of any performance measurement by division
- DDecisions all being taken by head office
Explanation
Divisional structures replicate functions such as marketing and production in each division, causing duplicated cost and lost economies of scale. They improve local responsiveness and allow divisional performance measurement. Day-to-day decisions are delegated, so not all are taken centrally.
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