Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Which structure is characterized by grouping employees based on location?

1. Functional

2. Divisional

3. Geographical

4. Hierarchical

The correct answer is: Geographical

The structure characterized by grouping employees based on location is the geographical structure. This approach organizes a company’s workforce according to different regions or locations, which is particularly beneficial for businesses that operate in multiple areas or countries. By segmenting employees based on geography, organizations can tailor their operations, marketing, and services to meet the specific needs and preferences of local markets. This structure allows for better responsiveness to regional issues and can enhance communication and coordination among employees in the same area. In contrast, other structures, such as functional, divisional, and hierarchical, focus on different aspects of organization. The functional structure groups employees based on specific functions or roles within the company, like finance, marketing, or production. The divisional structure separates operations into semi-autonomous units based on product lines or market segments, rather than location. The hierarchical structure emphasizes a top-down approach in management, delineating clear levels of authority but is not specifically focused on geographic considerations. Each of these structures serves different organizational needs but does not inherently organize employees by location like a geographical structure does.