Divisionatisation

Question 1

what is organisational behaviour

Answer 1

human behaviour within organisations, behaviour of procurement, production and sales managers

Question 2

what is organisational behaviour influenced by

Answer 2

influenced by management accounting and control systems,
influenced by decisions taken by others,
culture

Question 3

what does contingency theory mean *

Answer 3

there is no best way to organise a corporation or to make decisions, instead the optimal course of action is contingent (dependent) on other factors

Question 4

what are examples of contingent factors *

Answer 4

complexity of external environment,
competitive strategy (nature of products),
technology,
industry variables (specific factors to this market),
knowledge

Question 5

what are the two ways of structuring a large organisation

Answer 5

functionally,

divisionally

Question 6

explain way of structuring a large organisation ‘functionally’ *

Answer 6

all activities of a similar type within a company, such as production, sales, distribution, are under the control of the appropriate departmental head

Question 7

explain way of structuring a large organisation ‘divisionally’ *

Answer 7

split into divisions in accordance with the products made/ services provided or in accordance with geographical location

Question 8

explain divisionalisation

Answer 8

divisional managers who are responsible for all functions within their division,
there is the functional structure within each division

Question 9

is it common for all of the company to be divisionalised

Answer 9

also common for only part of a company to be divisionalised,

generally leading to decentralisation of decision making process

Question 10

advantages of divisionalisation *

Answer 10

can improve quality of decisions,
motivates managers,
frees top management from day to day decision making,
valuable career progression for future senior managers

Question 11

disadvantages of divisionalisation *

Answer 11

potential conflict between decisions for benefit of divisions vs best interests of company overall,
greater costs of activities that are common to all divisions,
risk for top management to lose control

Question 12

what are some conditions for effective use of divisionalisation *

Answer 12

divisions are:
engaging in dissimilar activities,
independent,
carefully regulated,

managers need to be held responsible for their actions (budgets and variances, who is responsible for what?)

Question 13

what is the term responsibility accounting used to describe *

Answer 13

the delegation of authority, and

the performance of decentralised organisational subunits measured in terms of accounting results

Question 14

what are the three types of responsibility centre *

Answer 14

cost centre,
profit centre,
investment centre

Question 15

what is meant by cost centre *

Answer 15

manager: responsible for cost

Question 16

what is meant by profit centre *

Answer 16

manager: responsible for costs plus revenues

Question 17

what is meant by investment centre *

Answer 17

manager: responsible for profit plus investment/capital employed