Deck 10: Creating Effective Organizational Designs

Question 1

In a simple structure where the owner manager makes most of the important decisions,extensive rules and regulations are used to maintain order.

Answer 1

False
Explanation:A simple structure may foster creativity and individualism since there are generally few rules and regulations.

Question 2

Managers trained in rigid hierarchies do not find it difficult to transition to participative style required for effective teamwork.

Answer 2

False
Explanation:Often, managers trained in rigid hierarchies find it difficult to make the transition to the more democratic, participative style that teamwork requires.

Question 3

Three major contingencies that influence the chosen structure of a company are: the type of strategy that drives its foreign operations,its product diversity,and the extent to which the company is dependent on foreign sales.

Answer 3

True
Explanation:Three major contingencies that influence the chosen structure are (1) the type of strategy that is driving its foreign operations, (2) product diversity, and (3) the extent to which a firm is dependent on foreign sales.

Question 4

In a barrier-free organization,differences in skills,authority,and talent disappear.

Question 5

Jack Welch,former CEO of GE,believes that all internal and external organizational boundaries should vanish completely.

Question 6

Ambidextrous organizational designs are useful for firms that wish to create modest,incremental innovations at the same time as dramatic,breakthrough innovation.This is done by maintaining adaptability and alignment of values and coordination across organizational activities.

Question 7

Logitech International is an example of a company that began as a global start-up,with headquarters in both California and Switzerland and operations in both countries.

Question 8

One of the challenges of an ambidexterity in a firm is that it must ensure that it remains proactive in expanding or modifying its product-market scope to anticipate and satisfy market conditions.

Question 9

The strategy and structure of a firm change as the firm increases in size,diversifies into new product markets,and limits its geographic scope.

Question 10

Operational decision making in a large business places excessive demands on top management of the firm.

Question 11

As firms grow,owner managers often need to hire functional specialists to handle the increased information-processing burden.

Question 12

A worldwide product division structure is used when global strategies require that each division be responsible for overall efficiency and performance.

Question 13

A strategy of related diversification requires a need to reorganize only around product lines.This leads to a divisional structure.

Question 14

The most appropriate type of organizational structure to select is dependent upon the product or service the company provides.

Question 15

According to author Jeffrey Pfeffer,the advantages of teams are that employees control themselves,develop more creative solutions to problems,and permit the absorption of administrative tasks previously performed by specialists.

Question 16

Firms that place too strong a priority on either adaptability or alignment can expect short term gains only.

Question 17

To enhance integration and control of related product market activities,the functional structure minimizes centralization.

Question 18

Global start-ups occur after a corporation has exhausted all other possibilities for domestic growth.

Question 19

The O'Reilly and Tushman study on ambidextrous organizational designs found that there was little support for the argument that organizational structure,management practices employed and performance of both the breakthrough initiative and the traditional business are related.

Question 20

When a firm has international operations,choosing the most appropriate structure depends upon the extent of international expansion,the type of strategy,and the degree of market density.

Question 21

Which of the following is an advantage of a divisional type of organizational structure?

A) efficient use of managerial and technical talent
B) an enhanced ability to respond quickly to changes in the external environment
C) high degree of emphasis on long-term performance
D) uniformity in image and quality across divisions

Question 22

Which of the following is not a primary factor that a large firm with international operations should consider when choosing the appropriate structure for its organization?

A) the extent of international expansion
B) the type of strategy (global, multidomestic, or transnational)
C) the degree of product diversity
D) the degree of market diversity

Question 23

Successful organizations create ________ boundaries among the ________ activities as well as between the organization and its external customers,suppliers,and alliance partners.

A) impermeable; external
B) impermeable; internal
C) permeable; external
D) permeable; internal

Question 24

The appropriateness of the type of organizational structure depends upon the ________ and ________ of growth.

A) nature; magnitude
B) definition; accessibility
C) accessibility; nature
D) nature; definition

Question 25

Which of the following activities is not identified by organizational structure?

A) managerial
B) executive
C) social responsibility
D) administrative

Question 26

Structures help to ensure that ________ are used effectively in accomplishing the mission of the organization.

A) strategies
B) relationships
C) resources
D) boundaries

Question 27

Organizations that make it to the growth stage,design strategies to

A) reduce the tendency to increase operational scope.
B) leave exiting product-market domains.
C) increase the overall scope of operations.
D) reduce the commitment to new product-market domains.

Question 28

One of the factors that explained the effectiveness of ambidextrous organizational designs in the O'Reilly and Tushman study was that the reward systems emphasized traditional unit goals.

Question 29

A strategy of related diversification requires most firms to organize around geographical areas or product lines.This type of organizational growth leads to a(n)________ structure.

A) divisional
B) functional
C) matrix
D) international

Question 30

As illustrated in the opening case for Chapter 10,Boeing lost a lot of control and,therefore,incurred high operating costs for its build out of the 787 Dreamliner because it ________ design and manufacturing.

A) on-shored
B) internalized
C) outsourced
D) internationalized

Question 31

Organizational structure refers to the formalized patterns of interactions that link company ________,________,and ________.

A) processes; mechanisms; techniques
B) tasks; mechanisms; techniques
C) processes; people; mechanisms
D) tasks; technologies; people

Question 32

The two vital ongoing activities necessary for creating boundaryless organizations that managers today must concern themselves with are

A) financial returns and marketplace value.
B) market share and shareholder value.
C) type of structure, mechanisms, processes, and techniques for enhancing permeability.
D) product marketability and capital structure.

Question 33

When an organization with a simple structure increases its sales revenue and volume of outputs,it is most likely to develop a ________ structure.

A) divisional
B) functional
C) product-market
D) geographic

Question 34

When an organization with a functional structure diversifies into related product-markets,it generally

A) maintains its functional structure.
B) develops a divisional structure.
C) develops a matrix structure.
D) develops a worldwide product-division structure.

Question 35

Functional structures are usually found in organizations where there

A) is high volume production.
B) are unrelated product lines or service offerings.
C) is very little vertical integration.
D) there exists a strong need to decentralize decision making.

Question 36

A simple structure is characterized by

A) high specialization and low centralization.
B) low specialization and high centralization.
C) low formality and low creativity.
D) high formality and low centralization.

Question 37

In large organizations,a strategy of diversification requires a need to reorganize around ________ or ________.

A) product lines; geographic markets
B) product lines; competition
C) competitor lines; geographic markets
D) distribution lines; competitor markets

Question 38

Which of the following is an advantage of a functional type of organizational structure?

A) Decentralized decision-making enhances an organization-wide perspective across functions.
B) It facilitates the development of general management talent.
C) Pooling of specialists enhances coordination and control.
D) It is easy to establish uniform performance standards.

Question 39

Which of the following statements about simple organizational structures is false?

A) Small firms with a narrow product-market scope will adopt such a structure.
B) Decision-making authority is highly centralized.
C) There is little specialization of tasks.
D) Creativity and individualism are rare.

Question 40

Which of the following is a disadvantage of a functional type of organizational structure?

A) Differences in functional orientation may impede communication and coordination.
B) Use of managerial and technical talent is inefficient due to pooling of expertise in functional areas.
C) Decision making is centralized at the top of the organization.
D) Managers tend to be overly concerned with long-term strategies that minimize the importance of functional area strengths.

Question 41

Generally speaking discussions of the relationship between strategy and structure strongly imply that

A) strategy follows structure.
B) structure follows strategy.
C) strategy can effectively be formulated without considering structural elements.
D) structure typically has a very small influence on the strategy of a firm.

Question 42

One of the disadvantages of divisional structure design is that they divide ________,________,and knowledge.They insulate divisional managers from other divisional managers thus inhibiting their ability to coordinate activities,share resources,and learn from each other.

A) land, buildings
B) assets, structures
C) people, resources
D) people, buildings

Question 43

Strategic business unit (SBU)structures are best suited for corporations pursuing ________,whereas holding company structures are best suited for companies with ________ strategies.

A) product-market diversification; international
B) international diversification; product-market
C) related diversification; unrelated diversification
D) unrelated diversification; related diversification

Question 44

The relationship between strategy and structure can be best described as

A) strategy determines structure but structure does not determine strategy.
B) structure determines strategy but strategy does not determine structure.
C) strategy and structure influence each other.
D) a third force determines both strategy and structure.

Question 45

One of the reasons that Asian conglomerate business groups continue to grow and those in the United States are seen to be unfocused and unlikely to succeed is that

A) Asian conglomerates have a single corporation with a wide set of wholly owned subsidiaries.
B) U.S. conglomerates are made up of a set of legally separate corporations, each with its own board of directors and shareholders.
C) Asian conglomerates are made up of a set of legally separate corporations, each with its own board of directors and shareholders.
D) Asian conglomerates are structured similarly to those in the United States and Europe.

Question 46

Strategic business unit (SBU)and holding company structures result from extensive

A) diversification.
B) vertical integration.
C) international expansion.
D) organizational flattening.

Question 47

Important advantages of a holding company structure include

A) savings in personnel and overhead expenses associated with a small corporate office.
B) a high level of awareness at the corporate office of issues facing individual divisions.
C) a high level of control of division executives by executives at the corporate level.
D) gaining synergistic benefits across businesses.

Question 48

Which one of the following is not a primary type of organizational structures used to manage the international operations of a company?

A) international division
B) worldwide matrix
C) geographic-area division
D) home country product division

Question 49

A matrix organizational structure is characterized by a combination of the ________ structure and ________ structure.

A) functional; divisional
B) simple; functional
C) simple; divisional
D) holding-company; divisional

Question 50

BRCK began in 2014 and from the start designed its products in a developing country while manufacturing in a developed country.Its corporate headquarters are in Nairobi,Kenya,at a technology center that houses a small group of entrepreneurs.By 2016,the company was selling in 50 countries.BRCK is an example of a

A) multidomestic organization.
B) worldwide matrix organization.
C) worldwide product division structure.
D) global start-up organization.

Question 51

Which of the following is considered an advantage of a matrix structure?

A) the layering of matrices
B) increased clarity in reporting relationships
C) increased responsiveness to the market
D) fewer power struggles and reduced conflict

Question 52

If an international firm has a global strategy and a relatively low level of product diversity,the best choice for its organizational structure is a(n)________ structure.

A) worldwide functional
B) worldwide product division
C) worldwide matrix
D) international division

Question 53

As firms expand into foreign markets,they generally follow a pattern of change in structure that parallels the changes in their strategies.Which one of the following is not a major contingency that influences the structure they choose?

A) the type of strategy that is driving the company foreign operations
B) the research and development budget commitment
C) product diversity
D) the extent of the company dependence on foreign sales

Question 54

Which of the following is not an advantage of a strategic business unit (SBU)type of organizational structure?

A) Divisions with similar products, markets, or technologies are formed into homogeneous groups that can achieve synergies.
B) Divisional executives can respond quickly to market changes and opportunities.
C) Planning and control by the corporate office is more manageable.
D) The corporate office is more removed from the individual divisions.

Question 55

Whole Foods tried to overcome some of the limitations of a divisional structure by

A) decentralizing key activities.
B) redistributing financial support.
C) centralizing the purchasing function.
D) reducing power conflicts.

Question 56

An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organization structure?

A) functional structure
B) matrix structure
C) strategic business unit structure
D) holding company structure

Question 57

A global start-up faces many management challenges including

A) communication and coordination across time zones.
B) pressure to perform internally all primary activities of the value chain.
C) assuring financing from home country only.
D) hiring only from home country.

Question 58

Complicated working relationships,intense power struggles,and excessive reliance on group processes are disadvantages of which type of organizational structure?

A) divisional
B) matrix
C) holding company
D) functional

Question 59

Which of the following is not a disadvantage of a divisional type of organizational structure?

A) It can be very expensive compared to a functional organizational structure.
B) There is a strong tendency for divisions to focus on short-term performance.
C) There can be dysfunctional competition among divisions.
D) There is separation of strategic and operating control.

Question 60

If an international firm has a multidomestic strategy and a relatively high level of product diversity,the best choice for its organizational structure is a(n)________ structure.

A) worldwide functional
B) worldwide product division
C) worldwide matrix
D) international division

Question 61

What is the name of the practice that many modular organization use to grow?

A) operational effectiveness
B) outsourcing
C) strategic leveraging
D) strategic enabling

Question 62

Which of the following is not a disadvantage of the barrier-free form of organization?

A) Lack of strong leadership can lead to coordination problems.
B) Democratic process can be time-consuming and difficult to manage.
C) Additional integration issues result in a slower response to market changes.
D) If trust among employees is not sufficiently high, organizational performance may suffer.

Question 63

Organizations generally tend to become internally focused when faced with ________ and ________.

A) resource scarcity; declining performance
B) internal pressures; improving performance
C) resource abundance; declining performance
D) external pressures; resource abundance

Question 64

Communication and information technologies can plan an important role in bridging gaps and breaking down barriers between organizations.Firms can leverage ________ and ________ to facilitate automated communications and coordinated actions with suppliers,distributers,and other firm partners.

A) email; social media.
B) telephone systems; outsourced systems
C) point-of-sale inventory systems; RFID technology
D) cloud systems; banking.

Question 65

Tools and techniques used to achieve effective coordination and integration of key activities in an organization include all the following except

A) horizontal organization structures.
B) common culture and shared values.
C) horizontal diversification.
D) communications and information technologies.

Question 66

According to the study by O'Reilly and Tushman,effective ambidextrous structures had all the following attributes except

A) a clear and compelling vision.
B) managerial efforts were highly focused on revenue enhancement.
C) cross-fertilization among business units.
D) established units were shielded from the distractions of launching new businesses.

Question 67

Which of the following is not a disadvantage of virtual structures?

A) difficulty in individual and organizational knowledge sharing
B) potential loss of operational control among partners
C) loss of strategic control over emerging technology
D) difficulty in determining where one company ends and another begins due to close interdependencies

Question 68

A virtual organization may be most appropriate for firms

A) whose strategies require merging technologies.
B) whose product life cycles are just beginning.
C) who have no need to get to market quickly with new offers.
D) who have no need to meet competitive pressures.

Question 69

If a firm outsources some parts of its value chain in order to reduce costs and increase quality and at the same time engages in multiple alliances to penetrate new markets,this is an example of a firm using a ________ of organizational types.

A) combination
B) boundaryless consortium
C) bounded consortium
D) barrier-free collection

Question 70

The phrase that best defines a virtual organization is a(n)

A) dot.com company.
B) type of modular structure.
C) organization that uses information technology to integrate different functions.
D) continually evolving network of independent companies.

Question 71

Organizations are increasingly using teams for many reasons.The difference between a good team and an outstanding team has been found to be

A) the combined technical skills of the members.
B) similarities in the way team members solve problems.
C) the way team members treat each other.
D) similarities in the age and experience of team member.

Question 72

Which of the following is not a boundaryless organizational design?

A) virtual
B) modular
C) matrix
D) barrier-free

Question 73

What type of organization is defined as a central hub surrounded by networks of outside suppliers and specialists?

A) matrix organization
B) virtual organization
C) modular organization
D) barrier-free organization

Question 74

Effective ambidextrous organizations maintain adaptability,which means that

A) managers are focused on growth opportunities.
B) there is a clear sense of how value is being created in the short-term and how activities are properly integrated and coordinated.
C) divisional-goals are consistent with overall corporate goals.
D) managers must remain proactive in expanding and/or modifying their product-market scope to anticipate and satisfy market conditions.

Question 75

Effective ambidextrous organizations have alignment,which means that

A) employees are rewarded according to both profit and sales growth.
B) managers are focused on growth opportunities.
C) there is a clear sense of how value is being created in the short-term and how activities are properly integrated and coordinated.
D) divisional-level goals are consistent with overall corporate goals.

Question 76

According to author,Jeffrey Pfeffer,which of the following is not an advantage of teams?

A) Teams interact so closely and therefore coordination and integration becomes unnecessary.
B) Teams substitute peer-based control for hierarchical control of work.
C) Teams often develop more creative solutions because they share.
D) Teams permit the absorption of administrative tasks previously performed by specialists.

Question 77

In an ambidextrous firm,if too much focus is placed on ________,the firm with suffer low profitability in the short run.

A) alignment
B) adaptability
C) structure
D) opportunities

Question 78

Virtual organizations ________ whereas modular organizations ________.

A) are usually permanent; are usually temporary
B) accept interdependent destinies; pursue collective strategies
C) pursue collective strategies; forfeit strategic control
D) give up part of their strategic control; retain full strategic control

Question 79

Which of the following is not a strategic risk of outsourcing?

A) loss of critical skills
B) loss of cross-functional skills
C) loss of control over a supplier
D) loss of nonvital functions

Question 80

What advantages does outsourcing not provide an organization?

A) accessing best in class goods and services
B) enabling rapid expansion with relatively low capital investment
C) focusing scarce resources on core competencies
D) improved buyer positioning