CAIE A-Level Business A2 7.1.2 Types of Structure Topic Practice

Analyse two advantages to CD of changing to a geographical organisational structure.

Note:

- Only reward advantages.

- If more than two advantages are referred to, reward the best two.

2

Indicative content

Responses may include:

AO1 Knowledge and understanding

Definition of organisational structure / geographical organisational structure (max K1 mark)

- The internal, formal framework of a business that shows the way in which management is linked together, and how authority is passed through the organisation.

- Structure based on geographical area in which each division is self-contained with its own functional areas.

Benefits of a geographical structure:

- Better customer service.

- More responsive to changing local needs.

- Measure the performance and profitability of each division separately.

- Greater focus on specific market segments.

- Improved customer communication.

- Quicker decisions.

- Reduce costs of production

- Competition between geographic units

- Preparation of managers in geographic units for promotion

AO2 Application

Max one ${ }^{\text {APP }}$ for application for the first element and max one ${ }^{\text {APP }}$ for application for the second element.

- CD's expansion to country C in 2022 is not yet profitable.

- Plans to open factories in two new countries.

- Current plans to export to three new countries.

- Ambitious plans for further international expansion.

- Comment on current hierarchical functional structure.

2

AO3 Analysis
Limited analysis AN - candidate shows one link in the chain of analysis.
Developed analysis L2AN - candidate shows two or more links in the chain of analysis.
- Different international markets may have differing needs in terms of the product, pricing and promotion. A geographical
structure can respond more effectively to those needs AN and thus increase sales L2AN.
- Facilitates the establishment of companies' business units at different local as well as regional levels. This enables
regional managers to better understand local needs, preferences, and tastes AN. As such, they can make relevant
products and better satisfy customers and thus increase sales L2AN.
- A geographical structure can promote improved communication between the local customers and local divisions of the
business. Such local divisions can better interact with local customers and create value for the business AN resulting in
an increase in profitability L2AN.
- Enables local managers to make prompt decisions without the consent of the central management. Quick decision-
making enables CD to serve the right customers at the right time AN resulting in increased sales L2AN.
- May enable CD to better estimate the demand of the local customers and as such it helps to reduce the cost of
overproduction and wastage of raw materials AN leading to an increase in profits L2AN.
Accept all valid responses.