Disadvantages of the regionalized organization structure include
A) the increased complexity of directing worldwide operations.
B) its inappropriateness for use in global companies.
C) its duplication of area and product specialists.
D) the need for placing specialized product managers with line authority onto headquarters' staff.
E) product coordination across regions can be challenging.

Question

Quizplus · Accepted Answer

Both multinational (multidomestic) and global companies organize themselves this way. Global companies consider the division in which the home country is located as just another division for purposes of resource allocation and development of management talent. Some U.S. global companies have created a North American division that includes Canada, Mexico, and Central American countries in addition to the United States, possibly in part to emphasize that the home country is given no preference. The geographic region structure is popular with companies that manufacture products with a rather low or stable technological content that requires strong marketing ability. It is also favored by firms with diverse products, each having different product requirements, competitive environments, and political risks. Many producers of consumer products, such as prepared foods, pharmaceuticals, and household products, employ a geographic region structure. The disadvantage of an organization divided into geographic regions is that each region must have its own product and functional specialists, so although the duplication of area specialists found in international product division structures is eliminated, duplication of product and functional specialists is necessary. Production coordination across regions presents challenges, as does global product planning. To address these, ICs often place specialized product managers on the headquarters staff. Although these managers have no line authority, they do provide input to corporate decisions concerning products.

Disadvantages of the Regionalized Organization Structure Include