Which of the following statements is true regarding a multidivisional structure?
A) A multidivisional structure is the least suitable for an organization which produces a wide range of complex products.
B) A multidivisional structure decreases division of labor which ultimately decreases organizational effectiveness.
C) As an organization moves from functional to multidivisional structure, the level of vertical differentiation increases.
D) A multidivisional structure avoids duplication of organizational activities.

Question

Quizplus · Accepted Answer

As an organization moves from functional to multidivisional structure, the level of vertical differentiation increases. This is because in a multidivisional structure, there are separate divisions for different products or markets which require their own specialized departments and managers, increasing the level of hierarchy within the organization. Option A is not true as a multidivisional structure is suitable for organizations with diverse product lines. Option B is not true as a multidivisional structure actually increases division of labor through separate divisions. Option D is not necessarily true as there could still be some overlapping activities between divisions.

Which of the Following Statements Is True Regarding a Multidivisional