Which of the following statements is tme about related diversification in the context of a multidivisional stmcture?
A)It makes it easier for corporate managers to assess the performance of individual divisions.
B)It has the lowest bureaucratic costs.
C)It requires sophisticated integrating devices to ensure coordination among divisions.
D)It involves divisions that operate autonomously, and the company can easily reward managers based upon their division's individual performance.
E)It provides scope for corporate managers to easily use output control.

Question

Quizplus · Accepted Answer

Related diversification involves divisions that are related to each other in terms of sharing resources, technology, or customers. This requires sophisticated integrating devices such as cross-functional teams and matrix structures to ensure coordination among divisions. While it allows for some economies of scope, it also involves higher bureaucratic costs and requires a more centralized approach to decision-making than unrelated diversification. Moreover, it can be difficult for corporate managers to assess the performance of individual divisions since there may be interdependencies and synergies across them, which is why performance measures may need to be tailored to the particularities of each division. Output control may also not be feasible as the output of one division can affect the output and performance of others.

Which of the Following Statements Is Tme About Related Diversification