Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What is one of the advantages of geographic departmentation?

1. Standardization of processes

2. Increased cost of administration

3. Local decision making

4. Centrally controlled marketing efforts

The correct answer is: Local decision making

Geographic departmentation is a structure where an organization segments its operations and resources based on geographical locations. One of the primary advantages of this approach is local decision making. When departments are organized by geography, they can respond more quickly and effectively to the unique needs and conditions of that particular area. This often leads to more tailored strategies that align with local market demands, cultural nuances, and customer preferences. Local decision-making capability also empowers managers and teams at different locations to address issues immediately, making it easier to adapt marketing strategies, customer service practices, and operational processes in a way that resonates with the local populace. This can enhance customer satisfaction and improve the overall effectiveness of business operations in diverse markets. In contrast, standardization of processes, while beneficial in certain contexts, does not highlight the geographic advantage, and increased administration costs are often seen as a drawback. Centrally controlled marketing efforts may lack the localized insight necessary for effective engagement in different regions. Hence, the emphasis on local decision-making is a clear advantage of geographic departmentation that organizations often leverage to optimize their operations and customer relations.