Megaline, Inc

question 105

Multiple Choice

Megaline, Inc., follows the competitive form of the multidivisional structure. It has five divisions. One division has not met the rate-of-return goals for the past year. One division has exceeded the rate-of-return goals. The other three divisions met the rate-of-return goals. The headquarters office is making decisions about where to allocate capital in the next year. Which scenario is the MOST likely?

• A) The poorest performing division will get the highest capital allocation so that it can fix its problems and achieve the rate-of-return goal next year.
• B) The highest performing division will get the highest capital allocation because it has the best prospects for creating more wealth for the shareholders next year.
• C) The average performing divisions which met the rate-of-return goals will receive the highest allocation because their performance exactly matched corporate requirements.
• D) All divisions will receive the same capital allocation for the next year because this organizational structure rewards divisional managers based on achievement of strategic goals.

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