Problems in effectively managing the multidivisional structure include
A) distortion of information.
B) competition for resources.
C) transfer pricing.
D) all of these.
E) none of these.

Question

Quizplus · Accepted Answer

The multidivisional structure is known to face a number of challenges, including information distortion, competition for resources, and transfer pricing issues. Information may be distorted as it moves between different divisions, making it difficult for top management to fully analyze and understand performance. Additionally, each division may compete for scarce resources such as capital, which can lead to inefficiencies and conflict within the company. Finally, transfer pricing can be a difficult issue to manage, particularly when divisions are located in different countries, with different tax structures and regulations. Overall, while the multidivisional structure can offer benefits such as increased efficiency and flexibility, it also requires careful management to overcome these and other potential challenges.

Problems in Effectively Managing the Multidivisional Structure Include