Skip to content

ACCA Applied Knowledge · Business and Technology · Business organisational structure

Which of the following is a disadvantage most closely associated with decentralisation?

The risk of dysfunctional decisions, where divisional managers pursue their own objectives rather than those of the organisation as a whole, is a key disadvantage of decentralisation. Slow decisions, limited local judgement and overloaded senior managers are problems of centralisation instead.

  1. ASlower decision-making because decisions must go up the hierarchy
  2. BLocal managers lack opportunity to exercise judgement
  3. CRisk of dysfunctional decisions where divisional managers pursue their own goals rather than those of the whole organisationCorrect
  4. DOverloading of senior managers with routine operational decisions

Explanation

Delegating authority can lead to a lack of goal congruence, with divisions optimising their own results at the expense of the organisation overall. The other options are problems of centralisation: slow decisions, limited local judgement and senior management overload.

Did you get it right without looking?

One question tells you little. A timed set on Business organisational structure shows your real accuracy, how long you take and where you lose marks.

Practise Business organisational structureFree diagnostic mock

More Business organisational structure questions