Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Which organizational structure primarily focuses on core activities while outsourcing other functions?

1. Flat structure

2. Divisional structure

3. Hollow structure

4. Matrix structure

The correct answer is: Hollow structure

The hollow structure is designed to focus on core activities while outsourcing other functions. This type of organizational structure allows a company to concentrate its resources and expertise on its main competencies, such as strategic planning or product development, while delegating non-core activities — such as payroll, customer service, or IT support — to external providers. By adopting this structure, organizations can benefit from cost savings, increased flexibility, and access to specialized skills that may not be practical to maintain in-house. It allows companies to remain agile and responsive to market changes, while also potentially enhancing innovation through collaboration with external partners. The other organizational structures do not inherently emphasize the outsourcing of functions to the same extent. For instance, a flat structure often reduces levels of management and relies on a broad range of generalist employees within the organization rather than outsourcing. A divisional structure is characterized by various units handling specific products or markets internally rather than outsourcing those functions. Lastly, a matrix structure combines functional and divisional approaches and does not prioritize outsourcing but rather fosters collaboration among different organizational divisions. Thus, the hollow structure is uniquely positioned to align with the concept of focusing on core activities while outsourcing other functions.