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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.

  1. AOperations carried out in several countries with very different customer needs and regulationsCorrect
  2. BA small number of employees working at one site
  3. CA need for tight, uniform control over cash and borrowing
  4. 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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