ACCA Applied Knowledge · Business and Technology · The formal and informal business organisation
Which factor would most strongly favour a more decentralised structure?
A large organisation operating in diverse markets with differing local conditions favours decentralisation, because local managers understand their markets and can respond quickly. Small single-site businesses, the need for uniform standards and crisis situations all tend to favour centralised decision-making.
- AA small business operating from a single location
- BA need for strict uniform standards across all units
- CA large organisation operating in diverse markets with differing local conditionsCorrect
- DA crisis requiring rapid, unified action by the whole organisation
Explanation
Large, geographically or product-diverse organisations benefit from local managers who understand differing conditions and can respond quickly. A single small site, uniform standards and crisis management all favour centralised control.
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