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ACCA Applied Knowledge · Business and Technology · The formal and informal business organisation

Zara Foods operates 40 cafes. Head office sets all menus, prices and suppliers so that every cafe offers an identical customer experience and bulk discounts are obtained. Which advantage of centralisation does this best illustrate?

This illustrates consistency and economies of scale. By setting menus, prices and suppliers centrally, Zara Foods ensures an identical customer experience and obtains bulk purchase discounts. Local responsiveness, manager motivation and management development are advantages of decentralisation, not of the centralised approach described.

  1. AFaster response to local customer preferences
  2. BGreater consistency and economies of scale in decisionsCorrect
  3. CImproved motivation of cafe managers through delegated authority
  4. DBetter training of future senior managers

Explanation

Central control of menus, prices and suppliers gives uniform standards and purchasing power through bulk buying. Faster local response, motivation of local managers and management development are benefits of decentralisation, which is not what Zara Foods is doing here.

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