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ACCA Applied Knowledge · Business and Technology · Business organisational structure

Which of the following is the most likely advantage of a centralised organisational structure?

Greater consistency of policies and procedures is the main advantage of centralisation. When decisions are made at the top, the same rules apply throughout the organisation. Faster local decisions, autonomy-driven motivation and management development are benefits associated with decentralisation instead.

  1. AFaster decisions made by local managers who know their market
  2. BGreater consistency of policies and procedures across the organisationCorrect
  3. CHigher motivation among junior managers through greater autonomy
  4. DBetter development of future senior managers at lower levels

Explanation

Centralisation keeps decision-making at the top, so policies, pricing and procedures can be applied uniformly. The other options are advantages of decentralisation, where local managers have authority, decide faster and gain experience.

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