Skip to content

CA Intermediate · Financial Management and Strategic Management · Strategy Implementation and Evaluation

Kaveri Auto Components Ltd. is moving from a functional structure to one with separate divisions for two-wheeler parts and four-wheeler parts, each with its own profit responsibility and head. Corporate office keeps control of overall strategy and capital allocation. The main advantage of this change is:

The main advantage is clear profit accountability at the division level, which frees corporate management to concentrate on overall strategy and capital allocation. Divisional structures typically duplicate functions and decentralise decisions, so claims of eliminated duplication or greater centralisation are incorrect.

  1. AClear accountability for profit at the division level, with corporate staff freed for strategic issuesCorrect
  2. BElimination of duplication of functions across divisions
  3. CGreater centralisation of all operating decisions at the top
  4. DReduced need for coordination between divisions

Explanation

A divisional structure fixes profit responsibility on division heads and lets top management focus on strategy. Option B is wrong because divisions usually duplicate functions, raising cost. Options C and D are wrong because divisional structure decentralises operating decisions.

Did you get it right without looking?

One question tells you little. A timed set on Strategy Implementation and Evaluation shows your real accuracy, how long you take and where you lose marks.

Practise Strategy Implementation and EvaluationFree diagnostic mock

More Strategy Implementation and Evaluation questions