Analyse the benefits of changing to a decentralised organisational structure as AC continues to expand.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2021). The mark or mark type is shown in brackets.

1. [Level 2 Knowledge 3 marks] 3 marks Three relevant points about decentralised structure and benefits
2. [Level 2 Application 2 marks] 2 marks Two points applied
3. [Level 2 Analysis 5 marks] 4-5 marks Good use of theory and/or reasoned argument to explain benefit(s)
4. [Knowledge] Definition of decentralisation: Decision-making powers are passed down the organisation to empower subordinates and regional/product managers. Managers in functional areas, departments or divisions within the business take decisions that, in a centralised structure, would be taken at head office.
5. [Knowledge] Likely characteristic of decentralisation is a flatter organisational structure.
6. [Knowledge] Benefits of decentralisation may include: Local decisions can be made that reflect different conditions.
7. [Knowledge] Benefits of decentralisation may include: Junior managers can develop their skills.
8. [Knowledge] Benefits of decentralisation may include: Empowerment of managers and employees.
9. [Knowledge] Benefits of decentralisation may include: Directors may have more time to focus on strategic issues.
10. [Knowledge] Benefits of decentralisation may include: Decision-making can be quicker.
11. [Knowledge] Benefits of decentralisation may include: Decision-making can be more responsive to market changes.
12. [Knowledge] Knowledge of centralisation. Note: Defining both centralisation and decentralisation is only 1 knowledge mark.
13. [Application] Linking centralisation to issues including: Workers feeling they are not valued and/or trusted.
14. [Application] Linking centralisation to issues including: Problems in manufacturing, e.g. labour turnover of 15%.
15. [Application] Linking centralisation to issues including: Operations manager has said he has insufficient authority to solve production problems.
16. [Application] Linking centralisation to issues including: Falling sales in export markets in past two years.
17. [Application] Linking centralisation to issues including: Responding to foreign manufacturers selling fitness equipment in country Κ.
18. [Application] Linking centralisation to issues including: Expansion plans including selling to consumer market, exporting to country P or diversification.
19. [Analysis] Expansion plans may benefit from greater autonomy, allowing better decisions to be made and therefore supporting plans to sell to consumer market, exporting to country P or diversification.
20. [Analysis] Local decisions can be made that reflect different conditions, therefore making AC more responsive to local conditions abroad. This will help managers increase demand in export markets.
21. [Analysis] Diversification to fitness centres. Fitness centre managers can respond to local market conditions and therefore increase customer satisfaction leading to higher sales and, potentially, profit.
22. [Analysis] Operations manager will have greater authority to make changes to improve productivity and deal with quality problems. If productivity increases, this will increase output and profits.
23. [Analysis] Empowerment increases motivation and may impact labour turnover and thus reduce costs of recruitment and training.
24. [Analysis] Decentralisation may give directors more time to focus on strategic issues such as expansion and this will increase the likelihood of success.
25. [Analysis] Accept any reasonable answer (ARA)