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22 March, 12:54

Island Home Goods pursues a related diversification strategy, deriving less that 70 percent of revenues from its original business unit, Island Furniture, and maintaining several related units including Island Lighting and Island Hardware. Which of the following structures is most likely to support this strategy? A. M-Form with centralized decision-making power (cooperative multidivisional) B. M-Form with centralized decentralized decision-making power (competitive multidivisional) C. functional with centralized decision-making powerD. functional with decentralized decision-making power

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  1. 22 March, 16:12
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    Answer: A. M-Form with a centralized decision - making power (cooperative multi-divisional).

    Explanation:

    The Multi - divisional Form (cooperative multi - divisional) is a business structure which supports related diversification. In this structure, there is a centralized control, manning several other businesses. Here, complementary goods and services are added to an existing business line as can be seen in the case of Island Home goods.

    The cooperative M-Form is centralized at the corporate office, and it employs the Related constrained strategy, whereas, the competitive M-Form is Decentralized to divisions and operates an unrelated strategy. This means that the several business divisions are independent in the competitive form or unrelated diversification.
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