Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What characterizes a virtual structure in an organization?

1. All functions are performed in-house

2. Functions are rented from external providers

3. It has a fixed location for operations

4. Only sales and marketing functions are outsourced

The correct answer is: Functions are rented from external providers

A virtual structure in an organization is characterized by relying on external providers for various functions rather than performing all operations in-house. This model allows organizations to be more flexible and responsive to market changes, as they can scale services up or down based on current needs without the overhead of maintaining a full range of internal capabilities. By renting functions from external providers, companies can leverage specialized expertise, reduce operational costs, and focus on their core business activities. The other options reflect traditional organizational models. Performing all functions in-house contradicts the principles of a virtual structure, which emphasizes external partnerships. A fixed location for operations suggests a conventional physical presence that is not aligned with the dynamics of a virtual approach, where operations can be geographically dispersed. Lastly, limiting outsourced functions to just sales and marketing does not capture the essence of a virtual structure, which encompasses a broader range of outsourced activities, allowing for a comprehensive and strategic use of external resources.