Which of the following statements is true about vertical integration in the context of a multidivisional organizational structure?
A)It is a less expensive strategy to manage than unrelated diversification.
B)It makes delegation of authority easier between corporate and divisional managers.
C)It does not require the exchange of information and skills among managers of different divisions.
D)It is managed through a combination of corporate and divisional controls.
E)It often increases the scope for transfer pricing problems.

Question

Quizplus · Accepted Answer

Vertical integration in the context of a multidivisional organizational structure is managed through a combination of corporate and divisional controls. This allows for coordination and communication between the different divisions and ensures that the overall corporate strategy is being implemented. This approach can also lead to greater efficiency and cost savings. However, it can also lead to transfer pricing problems, which may arise when divisions set prices for goods or services transferred between them.

Which of the Following Statements Is True About Vertical Integration