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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.

  1. AA small business operating from a single location
  2. BA need for strict uniform standards across all units
  3. CA large organisation operating in diverse markets with differing local conditionsCorrect
  4. 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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