Restructuring at Digital Arts (Scenario)
Victor Lee is the founder and president of Digital Arts, a Vancouver-based company that makes games for popular electronic game consoles. The company has experienced tremendous growth over the years, but now Victor is concerned that the company's structure has become too tall and rigid. He explains, "Twenty years ago we started with five people and one product. Today we are a global operation with 500 people employed in six countries producing over 200 game titles." Digital Arts is currently organized into five specialized departments: product development, production, marketing, accounting, and human resources. To coordinate the workflow, many rules and regulations have been introduced. Victor now worries that the increased bureaucracy is beginning to stifle innovation. He ponders several restructuring options.
-Another option is to establish separate business units for each of the six countries in their global operation.Each regional manager would have strategic and operational authority over his or her unit.Digital Arts would then have a ________ structure.
A)functional
B)divisional
C)matrix
D)network

Question

Restructuring at Digital Arts (Scenario)
Victor Lee is the founder and president of Digital Arts, a Vancouver-based company that makes games for popular electronic game consoles. The company has experienced tremendous growth over the years, but now Victor is concerned that the company's structure has become too tall and rigid. He explains, "Twenty years ago we started with five people and one product. Today we are a global operation with 500 people employed in six countries producing over 200 game titles." Digital Arts is currently organized into five specialized departments: product development, production, marketing, accounting, and human resources. To coordinate the workflow, many rules and regulations have been introduced. Victor now worries that the increased bureaucracy is beginning to stifle innovation. He ponders several restructuring options. 
-Another option is to establish separate business units for each of the six countries in their global operation.Each regional manager would have strategic and operational authority over his or her unit.Digital Arts would then have a ________ structure.
A)functional
B)divisional
C)matrix
D)network

Quizplus · Accepted Answer

The best choice is a divisional structure. This would allow each regional manager to have greater autonomy and decision-making power, as well as greater ability to respond to local market demands and trends. It would also allow for more focused innovation and creativity within each regional unit. A functional structure would not address the issue of bureaucracy and would maintain the current rigid departmental boundaries. A matrix structure would introduce even more complexity and potential conflicts. A network structure is typically used for highly flexible and decentralized organizations, which may not be suitable for Digital Arts given its size and complex operations.