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IIA-CIA-Part3 Exam - Question 114


A rapidly expanding retail organization continues to be tightly controlled by its original small management team. Which of the following is a potential risk in this vertically centralized organization?

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Correct Answer: C

A vertically centralized organization, where decision-making is concentrated in a small management team, can indeed lead to suboptimal decision-making. This happens because the small team might not have access to all the relevant information from different parts of the rapidly expanding organization. As a result, their decisions may not fully reflect the needs and conditions of various business units, leading to less effective overall outcomes for the organization.

Discussion

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CrazyhydraOption: C
Sep 28, 2023

C is correct, decision made by small management team may not fully capitalize on the insights and local knowledge of those working closely with specific operations, regions, or products.

TicoOption: A
Aug 19, 2021

I think A is correct. Why a vertically centralized organization has a risk to make suboptimal decisions?