Question 1

Problems in effectively managing the multidivisional structure include:

Accepted Answer

The answer of Problems in effectively managing the multidivisional structure...

Question 2

In a multidivisional structure:

Accepted Answer

The answer of In a multidivisional structure:
...

Question 3

Corporate managers' capabilities in organizational design are vital in ensuring the success of a merger or acquisition.

Accepted Answer

Corporate managers need to have knowledge and skills in organizational design to effectively integrate two companies after a merger or acquisition. This includes understanding the current organizational structures, identifying redundancies, developing new structures, and communicating changes to employees. Without these capabilities, a merger or acquisition may fail to achieve its intended benefits.

Question 4

Which of the following corporate strategies results in the highest bureaucratic costs?

Accepted Answer

The answer of Which of the following corporate strategies results...

Question 5

A company, EricMotors, has three business units.Each of these business units performs all the value chain functions needed to pursue the business model successfully.What are these business units referred to as?

Accepted Answer

Self-contained divisions are business units that perform all the necessary functions to operate independently, aligning with the description given for EricMotors' business units.

Question 6

Which of the following statements is tme about transfer pricing in the context of multidivisional organizational structure?

Accepted Answer

Transfer pricing can create a competitive environment among divisions that can damage coordination and corporate culture. This is because the divisions may start focusing on their own profitability at the expense of overall corporate goals.

Question 7

Implementation problems can arise in unrelated acquisitions when managers from the acquiring company apply inappropriate structure and controls to manage the new business.

Accepted Answer

This statement is true. Implementation problems can arise in unrelated acquisitions due to various reasons, including applying inappropriate structure and controls by the acquiring company's managers to the new business. This can create conflicts and hinder the integration process, leading to operational and cultural issues in the post-merger phase.

Question 8

Which of the following is an advantage of the multidivisional structure?

Accepted Answer

The multidivisional structure allows the corporate office to better monitor and evaluate the performance of each division, making it easier to identify inefficiencies.

Question 9

Corporate managers must treat the internal new-venturing process as a form of entrepreneurship.

Accepted Answer

This statement is true. Internal new-venturing involves creating new products, services or processes within an existing organization. The process of identifying opportunities, developing innovative ideas, and taking risks to create something new is similar to the process of entrepreneurship. Therefore, corporate managers should treat the internal new-venturing process as a form of entrepreneurship and provide the necessary resources and support to encourage innovation and creativity within the organization.

Question 10

Gemini Pharmaceuticals Inc.is a large finn that operates in many industries.The various units of the firm like packaging and chemical laboratories function independently and have their own organizational structures.The operations and strategies of all the units are monitored by the corporate headquarters staff.Gemini Pharmaceuticals Inc.is mostly an example of a:

Accepted Answer

Gemini Pharmaceuticals Inc. operates in multiple industries and has independent units with their own organizational structures, which are monitored by the corporate headquarters. This is characteristic of a multidivisional structure, also known as a conglomerate structure. In this structure, the company is divided into several divisions or units, each with their own set of employees, functions, and structure. The corporate headquarters oversees the operations and strategies of each unit, while giving them a certain degree of autonomy.

Question 11

A joint venture occurs when two equal-sized finns agree to blend their operations, creating one larger firm.

Accepted Answer

A joint venture does not necessarily have to involve equal-sized firms. It can involve firms of different sizes and can also involve firms from different countries.

Question 12

Which of the following statements is tme about related diversification in the context of a multidivisional stmcture?

Accepted Answer

Related diversification involves divisions that are related to each other in terms of sharing resources, technology, or customers. This requires sophisticated integrating devices such as cross-functional teams and matrix structures to ensure coordination among divisions. While it allows for some economies of scope, it also involves higher bureaucratic costs and requires a more centralized approach to decision-making than unrelated diversification. Moreover, it can be difficult for corporate managers to assess the performance of individual divisions since there may be interdependencies and synergies across them, which is why performance measures may need to be tailored to the particularities of each division. Output control may also not be feasible as the output of one division can affect the output and performance of others.

Question 13

Which of the following statements is true about vertical integration in the context of a multidivisional organizational structure?

Accepted Answer

Vertical integration in the context of a multidivisional organizational structure is managed through a combination of corporate and divisional controls. This allows for coordination and communication between the different divisions and ensures that the overall corporate strategy is being implemented. This approach can also lead to greater efficiency and cost savings. However, it can also lead to transfer pricing problems, which may arise when divisions set prices for goods or services transferred between them.

Question 14

Which of the following is a disadvantage of the multidivisional structure?

Accepted Answer

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Question 15

In a joint venture, sometimes one company insists on having a 51% share or more, giving it the ability to buy out the other party at some point in the future should problems emerge.

Accepted Answer

It is not uncommon for one company in a joint venture to insist on having a majority share or control of the venture, which can be achieved with a 51% or more ownership. This provides the company with greater decision-making power and potentially the ability to buy out the other party should conflicts or issues arise in the future.

Question 16

The multidivisional organization structure offers all of these advantages except:

Accepted Answer

The multidivisional organization structure usually leads to more competition for resources as each division is given autonomy and expected to compete for resources based on their performance. Therefore, the option "lesser competition for resources" is not a benefit of this structure.

Question 17

A joint venture can be dangerous to a company if its partuer is acquired by a competitor.

Accepted Answer

If a company's joint venture partner is acquired by a competitor, it could result in a conflict of interest and potentially harm the company's business or reputation. The competitor could gain inside knowledge or control over the joint venture, giving them an advantage over the original company. Therefore, a joint venture can be dangerous to a company in this situation.

Question 18

Sometimes companies can simply realize the joint benefits from collaboration without having to form a new company.

Accepted Answer

Companies can enter into a collaboration agreement where they work together and share resources, expertise and knowledge without having to form a new company. This can allow both companies to benefit from joint efforts and cost savings without taking the risks associated with forming a new entity.

Question 19

Which of the following statements is true about the multidivisional structure?

Accepted Answer

The multidivisional structure can have divisions with functional, matrix, or market structures within them. This allows for a more flexible approach to organizing the company based on the needs of each division. The other statements are false; the multidivisional structure is designed to improve coordination and control by delegating decision-making to each division, it does not have divisions that are dependent on each other for day-to-day value chain operations, it is typically more hierarchical than a functional or product structure, and it does have a corporate headquarters office.

Question 20

Which of the following statements is true about of unrelated diversification in the context of a multidivisional structure?

Accepted Answer

It is associated with the lowest level of bureaucratic costs.

Quiz 13: Implementing Strategy in Companies That Compete Across Industries and Countries