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ACCA Applied Knowledge · Business and Technology · Business organisational structure

Which factor would most strongly favour a move towards greater centralisation in an organisation?

A need for tighter control after a serious fraud favours greater centralisation, because concentrating authority at the top improves oversight and consistency. Dispersed operations, skilled local managers wanting autonomy and rapidly changing local conditions all push an organisation towards decentralisation instead.

  1. AGeographically dispersed operations serving very different customers
  2. BA need for tight control after a serious fraud caused by weak oversightCorrect
  3. CHighly skilled local managers seeking more autonomy
  4. DRapidly changing local market conditions

Explanation

A need for tight control and consistent oversight after a fraud supports concentrating authority at the centre. Dispersed operations, skilled local managers and rapidly changing local conditions all favour decentralisation because they require local knowledge and responsiveness.

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