ACCA Strategic Professional · Strategic Business Leader · Enabling success: organising
Kestrel Retail sells identical products through 200 stores. Its board is concerned about brand consistency, pricing discipline and the risk of a single store's misconduct damaging reputation. It also wants to exploit buying power with suppliers. Which structural approach best fits these priorities?
Centralising pricing, branding and purchasing while giving stores limited operational discretion best fits. Centralisation delivers consistency, tighter control and economies from bulk buying, which are the board's priorities. Autonomous stores with their own suppliers or pricing would undermine brand uniformity and purchasing power.
- ACentralise pricing, branding and purchasing decisions, while allowing stores limited operational discretionCorrect
- BFully decentralise pricing and purchasing to store managers to encourage local initiative
- CWiden spans of control to eliminate the regional management layer and leave stores unsupervised
- DCreate autonomous profit centres with their own suppliers and brand identities
Explanation
Brand consistency, pricing control, reputation protection and bulk-buying economies are classic benefits of centralisation. Full decentralisation or independent supplier arrangements would sacrifice these. Removing supervision would weaken control rather than support it.
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