Suppose a firm has decided to break its departments down into smaller units. While this likely will help with __________ issues, it raises the possibility that poor decisions will result due to __________.
A) economies of scope; suboptimization
B) economies of scale; risk aversion
C) span of control; suboptimization
D) economies of scope; risk aversion
E) economies of scale; economies of scope

Question

Quizplus · Accepted Answer

Breaking down departments into smaller units may improve span of control issues, but it also raises the possibility of suboptimization. When departments are too small, they may start making decisions that benefit only their small unit rather than the organization as a whole, leading to suboptimal results.

Suppose a Firm Has Decided to Break Its Departments Down