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BT: Structure and governance

27 free practice questions on structure and governance, Section B of the ACCA Business and Technology (BT) question bank. Topics include Handy's cultural types, Corporate governance, Anthony's hierarchy, Corporate social responsibility, Organisational structure, Span of control. Each question carries its syllabus reference and a worked explanation. Practise them in the quiz with instant feedback, or read every question with its answer further down this page.

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All 27 structure and governance questions

The same questions the quiz above draws on, in syllabus order, each with its answer and worked explanation. All 27 are multiple choice.

Question 1 · Syllabus ref B2a · Organisational structure — matrix

A global technology firm organises staff so that an employee reports simultaneously to both a project manager and a functional department head. Which structure does this describe?

  1. Divisional structure
  2. Entrepreneurial structure
  3. Matrix structure
  4. Functional structure
Show answer and explanation

Answer: C. A matrix structure combines two reporting lines — typically functional (by department) and project or product-based. Employees have dual accountability. This improves flexibility and cross-functional resource use, but can create confusion over authority.

Question 2 · Syllabus ref B2b · Span of control

Which of the following best describes the effect of a wide span of control on an organisation's structure?

  1. More layers of management are needed, resulting in a taller organisation
  2. The organisation becomes more centralised in its decision-making
  3. Communication between departments becomes more formal and structured
  4. Fewer layers of management are needed, resulting in a flatter organisation
Show answer and explanation

Answer: D. Span of control refers to the number of subordinates a manager directly supervises. A wide span means each manager oversees many people — fewer managers are needed overall, so the organisation has fewer hierarchical layers and is therefore flatter. A narrow span produces a taller, more hierarchical structure.

Question 3 · Syllabus ref B3c · Handy's cultural types

Charles Handy described a culture dominated by a central powerful individual, where decisions are made informally based on that person's preferences. Which of Handy's four cultural types is this?

  1. Power culture
  2. Role culture
  3. Task culture
  4. Person culture
Show answer and explanation

Answer: A. Handy's power culture centres on a dominant individual — often a founder. Decision-making is informal and centralised. Handy depicted this as a spider's web, with all threads leading to the centre. It is common in small entrepreneurial organisations.

Question 4 · Syllabus ref B3c · Handy's cultural types — role culture

An organisation operates through clearly defined roles, procedures, and rules. Authority derives from position rather than personality, and employees are rewarded for following established processes. Which of Handy's cultural types best describes this organisation?

  1. Power culture
  2. Person culture
  3. Task culture
  4. Role culture
Show answer and explanation

Answer: D. Handy's role culture is characterised by formal structures, defined job descriptions, and adherence to rules and procedures. Authority comes from the position held, not the individual. Handy depicted this as a Greek temple — stable and strong when the environment is stable, but slow to adapt to change. It is common in large bureaucratic organisations.

Question 5 · Syllabus ref B4f · Corporate governance — remuneration committee

Which of the following best explains the purpose of a remuneration committee in a listed company?

  1. To review the accuracy of published financial statements
  2. To monitor the effectiveness of internal control systems
  3. To set executive directors' pay independently of those directors
  4. To approve the appointment of external auditors
Show answer and explanation

Answer: C. A remuneration committee is composed of independent non-executive directors. Its purpose is to determine executive remuneration objectively, removing the conflict of interest that would arise if executives set their own pay. This is a key requirement of corporate governance best practice.

Question 6 · Syllabus ref B2c · Anthony's hierarchy

A production supervisor monitors daily output and takes corrective action when actual production falls below the daily schedule. At which level of Anthony's hierarchy is this person operating?

  1. Tactical
  2. Strategic
  3. Directional
  4. Operational
Show answer and explanation

Answer: D. Anthony's hierarchy has three levels: strategic (long-term planning by senior management), tactical (medium-term resource decisions by middle management), and operational (day-to-day control of specific tasks). Monitoring daily output and making immediate corrections is a classic operational-level activity.

Question 7 · Syllabus ref B2d · Centralisation vs decentralisation

Which of the following is an advantage of decentralisation?

  1. Local managers can respond more quickly to local conditions and customer needs
  2. Decisions are more consistent across the organisation
  3. Senior management retains tighter control over strategic direction
  4. There is less risk of duplication of effort across divisions
Show answer and explanation

Answer: A. Decentralisation delegates decision-making authority to lower levels of the organisation. A key advantage is that local managers — who are closer to customers and operational realities — can respond faster and more appropriately to local conditions. The disadvantages include potential inconsistency and loss of central control.

Question 8 · Syllabus ref B2c · Anthony's hierarchy — strategic, tactical, operational

A supermarket chain's head office makes a decision to exit the petrol forecourt business and redeploy capital into online grocery delivery infrastructure. At which level of Anthony's hierarchy does this decision sit, and what are its main characteristics?

  1. Operational level — it is a day-to-day decision about how resources are deployed on the shop floor
  2. Tactical level — it allocates resources across departments and is made by middle management over a one-year planning horizon
  3. Strategic level — it sets the direction of the business, has long-term implications, is made by senior management, and involves high levels of uncertainty
  4. Strategic level — it is made by senior management but has no significant impact on day-to-day operations
Show answer and explanation

Answer: C. Anthony's hierarchy has three levels: strategic (long-term direction-setting, high uncertainty, senior management), tactical (medium-term resource allocation, middle management), and operational (short-term day-to-day activities, junior management). Exiting an entire business segment and redeploying capital into new infrastructure are classic strategic decisions: they set long-term organisational direction, are made at board level, carry significant uncertainty, and have major implications for structure, staffing, and operations. Option A is incorrect — this is not an operational matter. Option B misidentifies it as tactical. Option D is partly right but incomplete — strategic decisions always have material operational consequences.

Question 9 · Syllabus ref B3c · Hofstede's dimensions — power distance

A global company notices that employees in one of its overseas subsidiaries rarely question decisions made by senior managers, even when they disagree. Employees in its home country, by contrast, regularly challenge and debate management decisions. Which of Hofstede's cultural dimensions best explains this difference?

  1. Uncertainty avoidance — one culture is more comfortable with ambiguous situations than the other
  2. Power distance — the overseas culture has a high acceptance of unequal distribution of power, while the home culture has low power distance
  3. Individualism vs collectivism — one culture prioritises group harmony over individual expression
  4. Masculinity vs femininity — the two cultures have different attitudes towards competition and achievement
Show answer and explanation

Answer: B. Hofstede's power distance dimension measures the degree to which less powerful members of society accept and expect unequal distribution of power. In a high power distance culture, subordinates accept that managers make decisions without question; in a low power distance culture, employees feel comfortable challenging authority. This directly explains the behaviour described. Uncertainty avoidance (Option A) relates to tolerance of ambiguity and risk, not deference to authority. Individualism vs collectivism (Option C) relates to whether people identify primarily as individuals or as part of a group. Masculinity vs femininity (Option D) relates to attitudes towards competition, assertiveness, and gender roles.

Question 10 · Syllabus ref B4f · Corporate governance — non-executive directors

Which of the following best describes the primary role of non-executive directors (NEDs) in a company's governance structure?

  1. To manage the day-to-day operations of the company alongside the executive directors
  2. To represent the interests of employees on the board and negotiate on their behalf
  3. To provide independent oversight, scrutinise management performance, and challenge the executive team in the interests of shareholders and other stakeholders
  4. To replace executive directors during periods of poor performance or corporate crisis
Show answer and explanation

Answer: C. Non-executive directors are board members who do not hold executive management roles within the company. Their primary governance function is to provide independent oversight — scrutinising strategy, monitoring the performance of executive management, and ensuring that the board acts in the interests of shareholders and other stakeholders rather than solely in the interests of the executives. They also serve on audit, remuneration, and nomination committees where independence is critical. Option A confuses NEDs with executive directors. Option B describes an employee representative role, which is not the primary function of NEDs. Option D is incorrect — NEDs do not ordinarily replace executives.

Question 11 · Syllabus ref B5b · Corporate social responsibility — supply chain

A clothing manufacturer sources fabrics from a supplier that uses child labour in its production facilities. The clothing manufacturer argues that it has no legal responsibility for its suppliers' practices. Which of the following statements about corporate social responsibility (CSR) best challenges this position?

  1. CSR recognises that organisations have responsibilities to a broad range of stakeholders that extend beyond their direct legal obligations — including responsibility for the social and ethical impact of their supply chain
  2. CSR only applies to publicly listed companies and is not relevant to privately owned manufacturers
  3. The manufacturer is correct — legal compliance is the only standard a business is required to meet under CSR principles
  4. CSR requires businesses to prioritise social objectives over financial performance in all circumstances
Show answer and explanation

Answer: A. Corporate social responsibility holds that organisations have duties to a wide range of internal, connected, and external stakeholders that go beyond minimum legal compliance. Supply chain ethics are explicitly a component of CSR — companies are expected to take responsibility for the social impact of their suppliers' practices, particularly where those practices involve harm to vulnerable groups. Option B is incorrect — CSR applies to all organisations regardless of ownership structure. Option C fundamentally misunderstands CSR; legal compliance is the floor, not the ceiling. Option D is an overstatement — CSR does not require sacrificing financial performance, but rather integrating social and ethical considerations into business strategy.

Question 12 · Syllabus ref B1b · Impact of informal organisation

Which of the following best describes a positive impact the informal organisation can have on a business?

  1. It can accelerate communication and problem-solving by bypassing slow formal channels
  2. It eliminates the need for formal management structures and hierarchies
  3. It always aligns with and reinforces the objectives of the formal organisation
  4. It reduces the risk of conflict by providing an alternative authority structure
Show answer and explanation

Answer: A. The informal organisation — the network of unofficial relationships, communication flows, and social groupings — can be a positive force when it speeds up communication and enables problems to be resolved quickly without waiting for formal approval chains. However, it does not replace formal structures, does not always align with formal objectives (it can undermine them), and does not inherently reduce conflict — informal cliques can actually increase it. Managers should understand and work with the informal organisation rather than ignore it.

Question 13 · Syllabus ref B2e · Departmental functions — finance

Which of the following activities falls within the remit of the finance department of a large organisation?

  1. Setting the organisation's strategic direction and long-term objectives
  2. Managing working capital and ensuring the organisation has sufficient liquidity
  3. Managing relationships with customers and handling complaints
  4. Procuring raw materials and managing supplier relationships
Show answer and explanation

Answer: B. The finance department's core activities include financial reporting, management accounting, treasury management (including working capital and liquidity), tax compliance, and financial control. Setting strategic direction (A) is the board's responsibility. Customer relationships (C) are managed by sales or customer service. Procurement and supplier management (D) are purchasing or supply chain functions. Working capital management — ensuring the business has enough cash and liquid assets to operate — is a central treasury function.

Question 14 · Syllabus ref B3c · Schein's cultural model

Edgar Schein described organisational culture as operating at three levels. Which of the following correctly identifies all three levels in order from most visible to least visible?

  1. Basic assumptions, shared values, and visible symbols
  2. Norms, rituals, and mission statements
  3. Artefacts, espoused values, and basic underlying assumptions
  4. Power structures, control systems, and stories
Show answer and explanation

Answer: C. Schein's model of organisational culture has three levels: Artefacts (the visible, tangible surface layer — dress code, office layout, rituals, language), Espoused values (the stated beliefs, strategies, and goals the organisation claims to hold), and Basic underlying assumptions (the deepest, often unconscious beliefs that drive behaviour and are taken for granted). Moving from most to least visible: artefacts are observable by anyone, espoused values are communicated but not always enacted, and basic assumptions are rarely articulated but most influential. Option D describes elements of Johnson's Cultural Web, a different framework.

Question 15 · Syllabus ref B4a · Purpose of business committees

Which of the following best describes a primary purpose of formal committees within a business organisation?

  1. To replace the need for individual managerial decision-making across the organisation
  2. To ensure all decisions are escalated to the most senior level of management
  3. To provide a forum for employees to raise grievances with management
  4. To bring together individuals with different knowledge and expertise to reach collective decisions
Show answer and explanation

Answer: D. Committees bring together people with different knowledge, skills, and perspectives to make collective decisions, coordinate activities, or provide oversight. They leverage the synergy of diverse expertise. They do not replace individual management (A) — managers still make day-to-day decisions. They do not escalate all decisions upward (B) — many committees operate at middle management level. Grievance procedures (C) are a separate HR mechanism, not a committee purpose.

Question 16 · Syllabus ref B5a · Corporate social responsibility

A large retailer voluntarily reduces its plastic packaging beyond what is legally required and publishes an annual sustainability report. Which concept does this behaviour best illustrate?

  1. Corporate social responsibility
  2. Legal compliance
  3. Corporate governance
  4. Stakeholder management
Show answer and explanation

Answer: A. Corporate social responsibility (CSR) refers to an organisation's voluntary commitment to behave ethically and contribute to sustainable economic development, going beyond legal minimum requirements. The retailer's voluntary reduction in plastic and transparent reporting are classic CSR actions. Legal compliance (B) describes meeting minimum legal requirements — this organisation exceeds them. Corporate governance (C) relates to the systems of accountability and control for how a company is directed. Stakeholder management (D) is broader — CSR is one element of how organisations respond to stakeholder expectations.

Question 17 · Syllabus ref B2g · Outsourcing

A manufacturing company decides to contract its IT support function to an external specialist provider rather than maintaining an in-house team. Which term describes this arrangement, and what is a key risk?

  1. Offshoring — the company risks losing control of its IT infrastructure to an overseas competitor
  2. Delayering — the company reduces management layers but retains control of the IT function internally
  3. Outsourcing — the company becomes dependent on the external provider and may lose internal expertise over time
  4. Franchising — the external provider operates under the company's brand and systems
Show answer and explanation

Answer: C. Outsourcing means contracting an internal function to an external specialist. Key risks include dependency on the provider, loss of internal knowledge and capability, and reduced control over service quality. Offshoring (A) specifically involves relocating to another country — not described here. Delayering (B) removes management layers within the organisation — it does not involve external providers. Franchising (D) involves licensing a business model to third parties — an entirely different concept.

Question 18 · Syllabus ref B3a · Organisational culture — definition

Which of the following best defines organisational culture?

  1. The formal system of policies, procedures, and rules that govern employee conduct
  2. The mission statement and strategic objectives published by the organisation's board
  3. The management style adopted by the chief executive and senior leadership team
  4. The shared values, beliefs, norms, and assumptions that shape how people behave within an organisation
Show answer and explanation

Answer: D. Organisational culture is the deep, often implicit set of shared values, beliefs, and assumptions that influence how people think, feel, and act within an organisation — sometimes described as 'the way we do things around here.' It is not the same as formal policies (A), which are explicit and documented. The mission statement (B) is an expression of stated intent, not necessarily the lived culture. The CEO's management style (C) influences culture but is not the same as the culture itself.

Question 19 · Syllabus ref B4b · Board of directors — roles and responsibilities

Which of the following best describes the role of non-executive directors (NEDs) on the board of a listed company?

  1. To provide independent oversight of executive management and protect the interests of shareholders
  2. To manage the day-to-day operations of the company alongside executive directors
  3. To represent the interests of employees in board-level decision-making
  4. To replace executive directors when they underperform or leave the organisation
Show answer and explanation

Answer: A. Non-executive directors are independent of management — they do not run the business but provide external perspective, challenge executive decisions, and protect shareholder interests through independent oversight. Key NED roles include serving on audit, remuneration, and nomination committees. They do not manage operations (B) — that is the executive directors' role. Employee representation (C) is a separate governance mechanism in some jurisdictions. NEDs do not routinely step in to run the business (D) — in a crisis an interim executive may be appointed separately.

Question 20 · Syllabus ref B4c · Corporate governance frameworks

The UK Corporate Governance Code operates on a 'comply or explain' basis. What does this mean in practice?

  1. Companies that do not comply with the Code face automatic regulatory fines
  2. Companies must either follow the Code's provisions or explain publicly why they have not done so
  3. All listed companies are legally required to comply with every provision of the Code
  4. Companies can choose whether to adopt the Code but face no reporting obligation if they do not
Show answer and explanation

Answer: B. 'Comply or explain' is a principles-based approach: companies are expected to follow the Code's provisions, but where they deviate they must explain their reasoning publicly in their annual report. This explanation allows shareholders to judge whether the deviation is appropriate. Non-compliance is not automatically penalised (A) — the market and shareholders provide the accountability mechanism. Legal compulsion (C) would be a rules-based approach. There is a reporting obligation (D) — explanation is required when provisions are not followed.

Question 21 · Syllabus ref B2h · Bureaucracy and its limitations

Max Weber identified bureaucracy as a rational form of organisation. Which of the following represents a disadvantage of a highly bureaucratic structure?

  1. Clear accountability and role definition make it difficult to assign responsibility for outcomes
  2. Slow decision-making and poor adaptability to change due to rigid rules and hierarchical approval processes
  3. Standard procedures reduce efficiency by requiring each transaction to be processed differently
  4. The absence of rules means employees have too much discretion, leading to inconsistent outcomes
Show answer and explanation

Answer: B. Bureaucracy's weaknesses include rigidity — formal rules, hierarchical structures, and lengthy approval processes slow decision-making and make adaptation to change difficult. This is sometimes called 'red tape.' Option A is incorrect — bureaucracy actually provides clear accountability and role definition, which is an advantage. Option C misrepresents bureaucracy — standard procedures increase consistency and efficiency. Option D is the opposite — bureaucracy has many rules, not an absence of them.

Question 22 · Syllabus ref B3b · Cultural influences on organisations

Geert Hofstede identified several dimensions of national culture that affect how people work and organisations operate. Which of the following describes the 'power distance' dimension?

  1. The degree to which individuals prioritise personal goals over group loyalty and collective objectives
  2. The extent to which a society tolerates uncertainty and ambiguity in unstructured situations
  3. The extent to which less powerful members of society accept and expect that power is distributed unequally
  4. The degree to which a society values long-term planning over short-term results and immediate gratification
Show answer and explanation

Answer: C. Power distance measures acceptance of hierarchy — in high power distance cultures, inequality is accepted and expected; in low power distance cultures, people expect more equal relationships and challenge authority more readily. Option A describes the individualism/collectivism dimension. Option B describes uncertainty avoidance. Option D describes long-term versus short-term orientation. Hofstede's dimensions are frequently examined in BT — knowing each dimension's definition is essential.

Question 23 · Syllabus ref B2c · Scalar chain

Fayol's principle of the 'scalar chain' refers to which of the following?

  1. The total number of subordinates a manager can effectively supervise
  2. The unbroken line of authority from the most senior to the most junior level of an organisation
  3. The principle that each employee should receive instructions from only one superior
  4. The process of delegating authority downward through the management hierarchy
Show answer and explanation

Answer: B. The scalar chain (one of Fayol's 14 principles of management) describes the line of authority running from the top to the bottom of the organisation — the chain of command. It clarifies reporting relationships and communication lines. Option A describes span of control. Option C describes unity of command — another of Fayol's separate principles, often confused with the scalar chain. Option D describes delegation, which operates within the scalar chain but is not the chain itself.

Question 24 · Syllabus ref B3d · Cultural change

A newly appointed chief executive wants to shift the organisation's culture from one of risk avoidance to one that encourages innovation and calculated risk-taking. Which of the following approaches is most likely to be effective?

  1. Issuing a revised mission statement and values document that describes the desired culture
  2. Replacing all middle managers simultaneously to remove those who embody the old culture
  3. Visibly role-modelling the desired behaviours, rewarding innovation, and restructuring incentives to align with the new cultural values
  4. Reducing the number of formal policies and procedures to give employees more freedom immediately
Show answer and explanation

Answer: C. Cultural change requires sustained action, not just stated intent. The most effective approach combines visible leadership behaviour (leaders modelling the desired culture), reward systems aligned with new values, and structural changes that reinforce the new direction. A revised mission statement (A) signals intent but alone has little impact on deep cultural assumptions. Replacing all middle managers (B) is disruptive, impractical, and not guaranteed to change culture. Removing policies (D) without replacing them with new norms creates confusion rather than cultural change.

Question 25 · Syllabus ref B4d · Audit committee

Which of the following best describes the role of the audit committee in a listed company?

  1. To provide independent oversight of financial reporting, internal controls, and the relationship with external and internal auditors
  2. To conduct the annual external audit of the financial statements on behalf of shareholders
  3. To set the remuneration of executive directors and senior management
  4. To approve all major capital expenditure decisions made by the executive team
Show answer and explanation

Answer: A. The audit committee is a sub-committee of the board, composed of independent non-executive directors. Its responsibilities include overseeing financial reporting integrity, reviewing internal controls, managing the relationship with both internal and external auditors, and reviewing the external auditor's independence. It does not conduct the audit (B) — that is the external auditor's role. Remuneration (C) is set by the remuneration committee. Capital expenditure approval (D) is an executive or board function.

Question 26 · Syllabus ref B4g · Governance — shareholder rights

Which of the following is a right typically held by ordinary shareholders in a listed company?

  1. The right to a guaranteed minimum dividend payment each year
  2. The right to vote on significant matters at general meetings, including the appointment of directors
  3. The right to direct the day-to-day management decisions of the executive team
  4. The right to receive full details of all pending commercial negotiations before they are concluded
Show answer and explanation

Answer: B. Ordinary shareholders have voting rights at general meetings (AGM and EGM) — including voting on director appointments, remuneration reports, and other significant matters. They do not have guaranteed dividend rights (A) — dividends are discretionary and subject to sufficient distributable reserves. They do not have rights to direct management (C) — they appoint directors who then manage. They do not have access to commercially sensitive pre-deal information (D) — this would create market abuse risks.

Question 27 · Syllabus ref B2i · Shared services

A large multinational consolidates its finance, HR, and IT support functions from multiple country operations into a single central unit serving all divisions. Which organisational arrangement does this describe?

  1. A matrix structure — combining functional and divisional reporting lines
  2. A strategic business unit — a standalone division with full profit and loss responsibility
  3. A shared services centre — centralising common support functions to achieve economies of scale and consistency
  4. Outsourcing — contracting the functions to an external specialist provider
Show answer and explanation

Answer: C. A shared services centre consolidates common support functions (finance, HR, IT, legal) from across an organisation into a single unit serving multiple business units. This achieves economies of scale, standardises processes, and reduces duplication. It is an internal arrangement, not a matrix structure (A) which combines two reporting lines. A strategic business unit (B) is a semi-autonomous division with its own strategy, not a support function. Outsourcing (D) would involve an external provider — shared services remains internal.

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