Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What type of structure is characterized by minimal formalization and a wide span of control?

1. Matrix structure

2. Simple/Entrepreneurial structure

3. Flat structure

4. Divisional structure

The correct answer is: Simple/Entrepreneurial structure

The type of structure that is characterized by minimal formalization and a wide span of control is the simple or entrepreneurial structure. This organizational design is often adopted by small businesses or startups, particularly in their early stages, where the owner or a small group of individuals makes decisions and manages all operations without the need for formalized rules and procedures. In this structure, there is typically little hierarchy, which allows for quick decision-making and a flexible response to changes in the environment. The absence of layers of management results in a wide span of control, meaning that a manager or leader may oversee a larger number of employees directly. This structure fosters an informal culture, encouraging innovation and rapid implementation of ideas, which is crucial for businesses that are in their formative stages or operating in dynamic industries. Other structural types, such as matrix, flat, or divisional structures, incorporate more formalized processes and may feature narrower spans of control or varied reporting relationships, thus differentiating them from the characteristics of a simple or entrepreneurial structure.