Which of the following is a drawback of decentralizing a multinational company?
A) It may lead to increased exchange rate risk.
B) It may result in lack of control and results in increasing risk.
C) It creates less responsiveness to the needs of a subunit's customers, suppliers, and employees.
D) It may lead to an increase in bureaucracy.

Question

Quizplus · Accepted Answer

Decentralization may result in a lack of control and an increase in risk as decision-making power and authority are distributed across different subunits. This may lead to conflicting objectives and goals, making it difficult to achieve overall organizational objectives. Additionally, with decentralized operations, there may be a lack of coordination, communication, and consistency among the different units, leading to overall inefficiency.

Which of the Following Is a Drawback of Decentralizing a Multinational