ACCA Applied Knowledge · Business and Technology · Business organisational structure
Which of the following factors would most strongly favour a decentralised structure for an organisation?
Operating in several countries with different customer needs and regulations favours decentralisation, because local managers understand their markets and rules and can respond quickly. A small single-site firm, tight cash control and crisis situations all point towards centralised decision-making.
- AOperations carried out in several countries with very different customer needs and regulationsCorrect
- BA small number of employees working at one site
- CA need for tight, uniform control over cash and borrowing
- DA crisis requiring very fast and uniform action across all units
Explanation
Geographic spread and diverse local markets and regulations mean local managers are better placed to decide, favouring decentralisation. A small single-site business, a need for tight financial control and crisis conditions all favour centralised decision-making.
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