Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What is a characteristic of a divisional structure?

1. Decentralization to business units or regions

2. Centralization of decision-making

3. Uniform product development across all divisions

4. Standardized management across divisions

The correct answer is: Decentralization to business units or regions

A divisional structure is characterized by decentralization to various business units or regions, allowing each division to operate semi-autonomously. This structure enables divisions to respond more swiftly and effectively to local market conditions and customer needs, as they are empowered to make their own decisions regarding operations, marketing, and resource allocation. This approach contrasts with centralization, where decision-making authority is concentrated at the top levels of management. In a divisional structure, each division often has its own management, which fosters a greater sense of ownership and accountability within the division. Additionally, divisions can focus on specific products, markets, or geographical areas, tailoring their strategies to meet diverse requirements. While uniform product development and standardized management can lead to efficiencies, they are not intrinsic characteristics of a divisional structure, which inherently embraces a degree of flexibility and autonomy to enhance responsiveness and innovation at the divisional level.