ACCT30002 Chap.2 Structure and Responsibility
Structure and Responsibility
Structure allocates decision rights, information and accountability. This chapter compares functional and divisional forms, explains why actual influence can differ from the organisation chart, and links responsibility centres to controllability. It also examines span, delegation and silos so that structural recommendations name the interdependence being managed rather than merely redrawing reporting lines.
Functional grouping concentrates expertise, supports scale and promotes consistent methods, but horizontal coordination can weaken when a customer or process crosses several specialties. Divisional grouping improves local focus and clarifies profit responsibility, yet duplicates resources and can encourage units to shift costs or reject cooperation that benefits the firm.
The organisation chart shows intended authority, while actual communication and influence may follow a different route. Analysis should therefore map who supplies information, recommends, decides and reviews. Responsibility centres translate structure into evaluation scope: cost, revenue, profit and investment centres differ according to the decisions delegated.
Controllability does not require pretending external effects disappear. Reports can separate controllable components, compare relevant peers and use structured judgment where context matters. Delegation speeds decisions when local knowledge is valuable, while centralisation protects consistency where consequences are shared.
Silos arise when interdependent work lacks shared objectives, credible escalation or a mechanism for resolving trade-offs. A useful recommendation targets the critical handoff and states both the coordination gain and the new structural cost.
What this chapter covers
- 01
Structure as a control mechanism
- 02
Functional specialization and coordination
- 03
Divisional responsiveness and duplication
- 04
Cost, revenue, profit and investment centres
- 05
Controllability and contextual evaluation
- 06
Silos, shared measures and cross-functional ownership
Worked example · free
Match evaluation to authority
- 1Map decisions controlled locally and centrally.
- 1Separate controllable staffing and promotion effects.
- 1Disclose central price and asset constraints.
- 2Add service quality to protect the operating objective.
Key terms
- Functional structure
- Grouping by specialist activity such as sales, operations or finance.
- Divisional structure
- Grouping by product, region or customer with local responsibility.
- Controllability principle
- Evaluation should reflect results a manager can influence or explain.
Structure and Responsibility FAQ
When is a functional structure useful?
It supports specialist depth, scale economies and consistent methods where expertise is important. Its main risk is horizontal coordination because customer or product work crosses functions. Shared workflow ownership may be needed without removing specialist homes.
Why can divisionalisation cause suboptimization?
Divisions have clearer local results and may protect those results by shifting costs, withholding capacity or rejecting cooperation. Measures and transfer policies should make firm-wide consequences visible while preserving useful local information and responsiveness.
Does controllability mean removing all external effects?
No. Complete controllability is unrealistic. Reports can separate components, use relative benchmarks and discuss context. The aim is fair influence and learning while retaining visibility of resources and consequences genuinely connected to the role.
How can a firm repair a silo without redrawing everything?
Map the interdependent workflow and locate the handoff where information or authority fails. Add a targeted mechanism such as an end-to-end owner, shared outcome, sign-off boundary or cross-functional forum with decision rights. State the evidence and closure route, then monitor whether coordination improves without creating duplicated work, blurred accountability or excessive meeting burden.
Exam move
For each case, map authority, information and accountability in three columns. Choose the responsibility-centre type only after the map. End by stating the coordination benefit and the new structural cost. Rehearse the functional and divisional forms as trade-offs rather than good and bad options. Give each form one information advantage, one coordination risk and one performance-measure consequence.
For a responsibility-centre question, identify who controls prices, costs and assets before selecting cost, revenue, profit or investment accountability. Mark centrally fixed decisions and external effects so evaluation does not attribute them to the wrong manager. Trace one workflow across unit boundaries and locate the handoff where delay or distortion occurs.
Then choose a targeted mechanism, such as an end-to-end owner, shared measure, sign-off boundary or cross-functional forum with real decision rights. Explain why the mechanism resolves that interdependence and how management will detect duplicated work, blurred authority or meeting burden. Close with a balanced sentence naming what the redesign improves and what it makes harder.
Add a span-and-delegation exercise that asks which decisions require local speed and which consequences justify central consistency. Draw the intended chart and then a dotted map of actual information flow to expose informal influence. For a silo case, avoid recommending broad collaboration until the exact interdependence is identified. State the forum's decision authority, required evidence and closure mechanism.
Review whether every evaluation measure falls within delegated authority or is accompanied by contextual adjustment.
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