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ACCA Applied Knowledge · Business and Technology · The formal and informal business organisation

Marlow Retail Co has 80 stores. Head office sets prices, selects suppliers and approves all expenditure above $500. Store managers complain of slow responses to local competitors. Which change would be most consistent with decentralisation?

Allowing store managers to set prices within agreed limits is decentralisation because decision-making authority passes down to local level, letting them respond to local competitors quickly. The other options keep decisions with head office or add central approval and standardisation.

  1. ARequire all price changes to be approved by the finance director
  2. BAllow store managers to set prices within agreed limits to match local competitorsCorrect
  3. CIntroduce a single standard supplier list for all stores
  4. DReduce the number of head office approvals by raising the limit to $500 for managers only after review

Explanation

Decentralisation means delegating decision-making authority to lower levels. Letting store managers set prices within limits gives them authority to react locally. The other options retain or increase head office control.

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