Which of the following is a disadvantage of a worldwide area structure?

Question

Quizplus · Accepted Answer

The worldwide area structure tends to be favored by firms with a low degree of diversification and a domestic structure based on functions. This structure divides the world into geographic areas, each area being a self-contained, largely autonomous unit. Firms choose this structure because it facilitates local responsiveness. Decision making is decentralized, allowing subsidiaries to customize marketing to local needs. A key disadvantage of this structure, however, is the fragmentation of the organization into highly autonomous entities that ensues, making it difficult to realize location and experience curve economies. Firms that choose this structure find it difficult to respond to pressures for cost reductions or to transfer core competencies within the firm.

Which of the Following Is a Disadvantage of a Worldwide