Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Which organization type consists of a small core staff while all work is outsourced?

1. Virtual organization

2. Hollow organization

3. Modular organization

4. Functional organization

The correct answer is: Virtual organization

The organization type that consists of a small core staff while all work is outsourced is best described as a hollow organization. In a hollow organization, the core team manages relationships and coordinates activities but relies heavily on external contractors or partners to perform the majority of functions and operations. This structure allows for flexibility and cost savings, as the organization can scale its activities up or down without the overhead associated with a larger permanent workforce. In contrast, a virtual organization often relies on technology to connect a dispersed workforce and may not have a distinct core staff, while a modular organization consists of semi-autonomous modules that can be combined or reconfigured for different projects. A functional organization is structured around specific functions, like marketing or finance, and usually has a more traditional, hierarchical shape. Each of these alternative models does not primarily focus on the outsourcing of all work as distinctly as a hollow organization does, making it the most fitting answer for this question.