Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Which departmentation type likely leads to resource duplication?

1. Functional departmentation

2. Geographic departmentation

3. Product/Brand departmentation

4. Divisional structure

The correct answer is: Geographic departmentation

Geographic departmentation organizes a company’s activities based on geographical regions, such as countries, states, or areas. While this structure allows for responsiveness to local markets and customer needs, it can lead to the duplication of resources. This occurs because each geographic division often requires its own set of resources, such as sales teams, marketing, and logistics. Each division operates similarly to a mini-company, which means that rather than sharing resources across the entire organization, divisions might create their own independent resources to serve their specific geographic area effectively. This can result in increased operational costs, inefficiencies, and potential redundancy because resources that could be centralized are instead spread out across multiple divisions. For instance, two divisions in different locations might each maintain separate marketing, HR, and IT departments, leading to overlapping functions and wasted expenditure. The other types of departmentation typically focus on unifying efforts around a function, product lines, or divisions that may not inherently require such localized resources, thereby minimizing the chances of resource duplication.