Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What characterizes a divisionalized structure in an organization?

1. A strong central control

2. A high degree of autonomy for business units

3. A focus on customer outputs

4. A strict adherence to defined processes

The correct answer is: A high degree of autonomy for business units

A divisionalized structure is characterized by a high degree of autonomy for business units. In this type of organizational setup, each division operates semi-independently and is responsible for its own resources, goals, and operations. This autonomy enables divisions to be more adaptable and responsive to their specific market conditions, customer needs, and competitive pressures. Each division often functions like a self-contained entity within the larger organization, managing its own activities such as marketing, production, and finance. While some degree of central coordination may exist to ensure that the overall corporate strategy aligns with individual divisions, the key feature of a divisionalized structure is that it empowers divisions to make decisions tailored to their distinct environments. This flexibility supports innovation and swift decision-making, which can enhance the organization's overall performance in diverse markets. The other options, while they touch upon important aspects of organizational structures, do not accurately reflect the core characteristic of a divisionalized approach.