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Multi-divisional Structure

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBL Exams › Multi-divisional Structure

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by Ken Garrett.
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  • October 28, 2017 at 11:13 pm #413549
    ngaryitess
    Participant
    • Topics: 29
    • Replies: 40
    • ☆☆

    How is top management’s level of control a disadvantage in such a structure?
    Gary

    October 28, 2017 at 11:43 pm #413552
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10606
    • ☆☆☆☆☆

    Their problem is to coordinate divisions whilst not interfering with divisional heads’ autonomy. Setting transfer prices is an example. Rather than instruct divisions about how many units to make, sell partially completed etc (such interference in commercial decisions is likely to be resented by dividional management), head office sets a transfer price which should manipulate divisions into making goal congruent decisions.

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