The Main Drawback of the Functional Structure Is That

question 31

Multiple Choice

The main drawback of the functional structure is that

• A) the structure is easily overwhelmed if the firm grows rapidly.
• B) the formality and bureaucracy involved reduce efficiency and effectiveness.
• C) it is more expensive to operate than the simple structure.
• D) it is sometimes difficult to communicate across functions.

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Definitions:

Price Index

A statistical measure that shows changes in the average price level of a selected basket of goods and services over time.

Real Gross Domestic Product

The total value of all goods and services produced within a country in a specific period, adjusted for inflation, indicating the actual growth of an economy.

Intrinsic Value

The actual, fundamental value of an asset, irrespective of its market value, determined through objective calculation or estimation.

Cost of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and attract funds.