When Business-Unit Managers Inability to Remain Informed Across Multiple Business

question 73

True/False

When business-unit managers inability to remain informed across multiple business units leads them to blame poor performance on difficult competitive conditions, even when it is the result of their inability to craft a successful business model, organizational problems increase. Top managers must spend an enormous amount of time and effort to solve them which increases bureaucratic costs and cancels out the profit-enhancing advantages of pursuing diversification, such as those obtained from sharing or leveraging competencies.

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Definitions:

Absolute Advantage

A term used in international trade theory to describe the ability of a country to produce a good more efficiently than another country.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than others, leading to more efficient trade patterns.

Specialize

To specialize means focusing on a narrow area of knowledge or skill within a wider field, aiming to become an expert or highly skilled in that specific area.

Opportunity Cost

Overlooking potential gains available from different alternatives by settling on one choice.