Certified Internal Auditor (CIA) Part 3: Business Knowledge for Internal Auditing — Question 119

To execute its new strategy of differentiation (based mainly on innovation, flexibility, and responsiveness) while maintaining control on operations and reducing any duplication of resources, an organization has introduced many changes that are relevant to its organizational structure. Which of the following structures would best fit the new strategy?

Answer options

• A. The functional structure.
• B. The divisional structure.
• C. The team approach.
• D. The virtual network approach.

Correct answer: B

Explanation

The divisional structure is ideal for supporting differentiation strategies, as it allows for flexibility and responsiveness in various market segments. The functional structure may hinder innovation due to its rigid hierarchy, while the team approach may not provide the necessary control over operations. The virtual network approach, although innovative, could lead to challenges in resource management and consistency across the organization.