Allied Tech is a multidomestic company that is undergoing organizational restructuring. Matt, the chief executive officer, meets with the heads of all the departments to decide the type of structure that would be most suitable for the firm. The heads agree that the firm would benefit from a divisional structure. However, Matt is not convinced with the idea. Which of the following statements justifies Matt's viewpoint in this scenario?
A) Organizations with a divisional structure often struggle to respond to market needs and opportunities, especially if these affect more than one functional unit simultaneously.
B) If the company adopts a divisional structure, it will not be able to organize units by the geographic location in which it serves.
C) A divisional structure will lead to inefficient knowledge flows between units and high coordination costs.
D) If the company adopts a divisional structure, it will not be able to develop specific and unique offerings for each target group.

Question

Quizplus · Accepted Answer

A divisional structure can indeed lead to inefficient knowledge flows between units due to the segmentation of operations by product, geography, or market, and this can also result in high coordination costs as each division operates semi-autonomously, requiring mechanisms for coordination and integration across the divisions.

Allied Tech Is a Multidomestic Company That Is Undergoing Organizational