Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Divisionalisation involves the division of a business into what?

1. Centralized regions

2. Functional teams

3. Autonomous regions of product businesses

4. Vertical hierarchies

The correct answer is: Autonomous regions of product businesses

Divisionalisation refers to the organizational strategy of dividing a business into semi-autonomous segments or divisions that focus on specific products, services, or geographical areas. This structure allows each division to operate independently while being responsible for its own resources, performance, and operational decisions. The primary goal of such a structure is to enhance flexibility, facilitate better management control, and improve responsiveness to market changes. Choosing to organize the business into autonomous regions of product businesses means that each division has the freedom to develop its strategies, manage its operations, and make decisions relevant to its specific market, which leads to improved accountability and focus. Each division can compete effectively because it can tailor its strategies to the particular needs of its market segment, thus enhancing the overall agility of the business. In contrast, the other options pertain to different organizational structures that do not capture the essence of divisionalisation. Centralized regions might suggest a top-down approach with less independence for divisions, functional teams focus on specific roles rather than market responsiveness, and vertical hierarchies denote a more linear and rigid organizational framework, which can constrain flexibility and responsiveness compared to a divisional structure.