ACW271 MANAGEMENT ACCOUNTING TOPIC 7 TUTORIAL Question 1 Divisionalized structures are normal in large firms and occur even when centralized structures would be feasible. Requirements: (a) Explain and discuss the arguments for divisionalized structures in large firms. (b) Explain the costs and potential inefficiencies of a divisionalized structure. (c) Explain how adoption of a divisionalized structure changes the role of top management and their control of subordinates. Question 2 German global company Siemens AG had a turnover of almost 76 billion in 2015, recording a profit after taxes of 7.4 billion, according to its annual report. The company operates globally, with 351 000 employees globally. Siemens is a diverse organization. Looking at the home page of the company's website, we get an idea of how diverse. The web page lists ten divisions: Power and gas Wind power and renewables Power generation services Energy management Building technologies . Mobility Digital factory Process industries and drives Healthcare Financial services Each division is further broken down. For example, the process industries and drives division includes process automation, sensor systems, integrated drive systems and plant engineering software. This level of information suggests a quite detailed organizational structure. While the website does not tell us the exact internal structures, we could expect that some activities (e.g. financial services) may be cross-sector and/or cross-divisional. The 2015 Annual Report confirms this, noting 'The Division Financial Services (SFS) supports the activities of our Industrial Business and also conducts its own business with external customers' (p. 2). Required: 1. What advantages does a divisionalized structure have for decision-making at Siemens? 2. Would a divisionalized structure be suited to fast-food giant McDonalds? 1