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ACCA Strategic Professional · Strategic Business Leader · Enabling success: organising

Zentara Ltd is a regional bakery that makes one product line in one country. Its owner-manager takes all key decisions, and staff are grouped into production, sales and finance departments. The owner now plans to launch three unrelated product lines in three countries. Which structural change is most consistent with this expansion?

A divisional structure suits a firm moving from one product in one country to several unrelated products in several countries. It gives each unit delegated authority and market focus, whereas a functional structure with tighter central control would overload the owner and slow decisions.

  1. AMove to a divisional structure with product or geographic units given delegated authorityCorrect
  2. BKeep the functional structure but increase central control by the owner
  3. CReplace the structure with a pure network of outsourced partners without any core management
  4. DCreate a simple structure where all staff report directly to the owner

Explanation

Diversification into unrelated products and markets makes a single functional structure hard to manage because functional heads cannot understand all markets. A divisional structure lets each product or geographic unit have its own responsibility and decisions. Increasing central control would worsen the overload on the owner.

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