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ACCA Applied Knowledge · Business and Technology · Business organisational structure

Zenith Retail operates stores in four countries. Each country has its own manager who is responsible for all functions, including buying, sales and staffing, in that country because customer tastes and local regulations differ. Which statement best describes the main advantage of this structure?

Geographical departmentation lets each country manager tailor decisions to local customer tastes and regulations. Authority for all functions sits within the region, so responses are faster and better suited to the market. The drawback is duplicated functions and weaker central economies of scale.

  1. AIt achieves economies of scale by centralising all purchasing in one specialist team
  2. BIt allows decisions to be tailored to local conditions and customer needsCorrect
  3. CIt removes the need for any central head office control
  4. DIt ensures that every employee reports to two managers, improving coordination

Explanation

Geographical departmentation lets managers respond to local markets and regulations. It usually duplicates functions, so it does not give central purchasing economies, and head office control is still needed. Dual reporting is a feature of matrix structures, not this one.

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