Deck 9: Organization Size, Life Cycle, and Decline

Question 1

What is the major goal of an organization during the entrepreneurial stage of the life cycle?

A) Growth
B) Goal-setting
C) Survival
D) Complete organizational structure

Answer 1

C

Question 2

During the ____ stage, the organization begins to develop clear goals and direction.

A) entrepreneurial
B) elaboration
C) formalization
D) collectivity

Answer 2

D

Question 3

In contrast to large businesses, small business is characterized by:

A) constituting a large percentage of all exporters.
B) decreasing percentage of employees in the economy as a whole.
C) fewer numbers, as merger mania continues to create a larger proportion of large firms in the world economy.
D) the front/back combinations that combine small units into larger ones.

Answer 3

A

Question 4

Research on personnel ratios has found that:

A) clerical and professional support staff ratios decrease in proportion to organization size.
B) small organizations are very inefficient because direct workers as a percent of total employees is so low.
C) personnel ratios for professional support staff are higher in small firms than in large firms.
D) there is a lowered administrative ratio in large firms.

Question 5

High formalization is most closely associated with which of the following?

A) Organic structure
B) Small size
C) Large size
D) Responsive style

Question 6

A primary reason identified for the organizational design success of United Parcel Service was:

A) its organic structure enables it to operate more efficiently than the bureaucratic U.S. Postal Service.
B) its adoption of the bureaucratic model.
C) that it doesn't have many rules or formalized procedures and thus can be more innovative.
D) it hires primarily college students who are the best employees possible.

Question 7

Organizations going through the life cycle:

A) usually reach elaboration in 12-18 months.
B) tend to become very bureaucratic by the collectivity stage.
C) usually resolve crises associated with each stage, or face restricted growth.
D) tend to experience their wildest and most rapid growth period in the formalization stage.

Question 8

Apple was in the ____ stage when it was created by Steve Jobs and Stephen Wozniak in Wozniak's parents' garage.

A) collectivity
B) entrepreneurial
C) formalization
D) elaboration

Question 9

____ percent of businesses that make it past the first year still fail within five years because they can't make the transition from the entrepreneurial stage.

A) Ten
B) Twenty-three
C) Fifty-two
D) Eighty-four

Question 10

Departments emerge and are established, along with a beginning division of labor, in a newly established hierarchy at which stage in the life cycle?

A) Entrepreneurial
B) Formalization
C) Collectivity
D) Elaboration

Question 11

Crucial arguments for success in a global economy are:

A) vertical hierarchy mechanistic structure.
B) responsiveness and flexibility.
C) economies of scale and complex structure.
D) organization finding and developing a stable market.

Question 12

What type of top management style does a bureaucratic organization in the formalization stage possess?

A) Team approach
B) Delegation with control
C) Individualistic
D) Charismatic

Question 13

Small organizations are characterized by which of these?

A) Mechanistic
B) Complex
C) Global reach
D) Niche finding

Question 14

Rules and standard procedures as developed by Weber were to:

A) help managers get tough with lazy employees.
B) keep managers in their positions of control and power.
C) enable activities to be performed in a predictable and routine manner.
D) punish anyone who got out of line.

Question 15

Large organizations are characterized by all of these except:

A) a vertical hierarchy.
B) complexity.
C) economies of scale.
D) niche finding.

Question 16

Max Weber developed the concept of a bureaucracy to make organizations:

A) more rational and efficient.
B) more empathetic.
C) less formal.
D) quicker to respond to stakeholders.

Question 17

Which of the following is not a dimension of bureaucracy that Weber envisioned as desirable?

A) Rules and procedures
B) Specialization and division of labor
C) Hierarchy of authority
D) Trained employees

Question 18

The primary reason that the CEO of a large company such as McDonald's would push decisions as far down the hierarchy as he can is to:

A) develop managers.
B) make decisions more quickly.
C) appear more American and thereby increase sales.
D) save himself the trouble of making these decisions.

Question 19

Which of the following characterizes the formalization stage of the life cycle?

A) More formal and less frequent communication
B) Top management concern with planning and strategy
C) Incentive system based on profits is implemented for managers
D) All of these

Question 20

Tyler Jones is the CEO of a medium-sized manufacturer of bedding and blankets. Tyler insists on making all decisions as to styles that are manufactured, the type of material that will be used in each, the sources from whom the company will purchase yard goods, thread, and buttons, and the shippers the company will use. Which of the following terms describes this company?

A) Elaboration stage
B) Centralization
C) Formalization
D) Standardization

Question 21

A condition in which a substantial, absolute decrease in an organization's resource base occurs over a period of time is referred to as:

A) market control.
B) bureaucracy.
C) organizational decline.
D) centralization.

Question 22

Which of the following is the first stage of decline?

A) Blinded
B) Dissolution
C) Inaction
D) Faulty action

Question 23

Which of the following is not a type of authority that could explain the creation and control of a large corporation?

A) Charismatic authority
B) Rational-legal authority
C) Traditional authority
D) Competitive authority

Question 24

All of the following are factors that cause organizational decline except:

A) vulnerability.
B) increased product prices.
C) environmental decline or competition.
D) organizational atrophy.

Question 25

The use of ____ control requires that outputs be sufficiently explicit for a price to be assigned and that competition exist.

A) bureaucratic
B) clan
C) traditional
D) market

Question 26

Which of the following is not one of the organizational control strategies?

A) Technical
B) Clan
C) Market
D) Bureaucracy

Question 27

Small organizations are characterized by all of the following except

A) flexibility.
B) simplicity.
C) global reach.
D) entrepreneurship.

Question 28

Which of the following is the use of rules, policies, hierarchy of authority, written documentation, standardization, and other bureaucratic mechanisms to standardize behavior and assess performance?

A) Market control
B) Bureaucratic control
C) Traditional control
D) Clan control

Question 29

More than one type of authority may exist in organizations, but ____ authority is the most widely used form to govern internal work activities and decision making, particularly in large organizations.

A) traditional
B) charismatic
C) appointed
D) rational-legal

Question 30

In which stage the organization faces serious problems, and indicators of poor performance cannot be ignored?

A) Faulty action
B) Dissolution stage
C) Blinded
D) Crisis stage

Question 31

Carson is the manager of Cutter's Consulting, a consulting company composed of professionals from different fields. In such a company, Carson would be wise to:

A) bring the organization immediately into revitalization.
B) have little formalization.
C) use as much authority as possible.
D) discourage horizontal communication because it violates the chain of command.

Question 32

Which of the following is not true regarding organizations in the entrepreneurial stage of development?

A) The founders are entrepreneurs.
B) The organization is nonbureaucratic.
C) The organization is formal.
D) The hours of work are long.

Question 33

_____ is defined as the length of formal training and experience of employees.

A) Professionalism
B) Education
C) Personnel ratio
D) Authority

Question 34

____ authority is based on devotion to the exemplary character or to the heroism of an individual person and the order defined by him or her.

A) Rational-legal
B) Traditional
C) Charismatic
D) Informal

Question 35

When downsizing, all of the following can help smooth the downsizing process and ease tensions for employees who leave and remain except:

A) help the survivors thrive.
B) communicate more, not less.
C) provide assistance to displaced workers.
D) let workers deal with the situation on their own and in their own ways.

Question 36

According to the Small Business Administration, small businesses represent around _____ percent of all firms in the United States.

A) 25
B) 50
C) 75
D) 99

Question 37

____ is the use of social characteristics, such as shared values, commitment, traditions, and beliefs to control behavior.

A) Market control
B) Clan control
C) Traditional control
D) Bureaucratic control

Question 38

Clan control is most often used in:

A) small, informal organizations or in organizations with a strong culture.
B) small, formal organizations or in organizations with a weak culture.
C) large, informal organizations or in organizations with a weak culture.
D) large, formal organizations or in organizations with a strong culture.

Question 39

In the ____ stage, denial occurs despite signs of deteriorating performance.

A) blinded
B) inaction
C) faulty action
D) crisis

Question 40

A form of organization called ____ has emerged that is made up completely of professionals.

A) incident commanders
B) clan members
C) formal collaborations
D) professional partnerships

Question 41

Formalization refers to rules, procedures, and written documents that prescribe the rights and duties of employees.

Question 42

The following organization is in its collectivity stage: Employees at Ace identify with the company mission and goals, and they typically put in 55-hour workweeks. Ace is established in the marketplace, and is concentrating on getting more and more dealers to sign on. Ace does not have a written policies and procedures manual for its own employees.

Question 43

In the elaboration stage, an organization's growth is rapid, and employees are excited and committed to the organization's mission.

Question 44

The elaboration stage involves the installation and use of rules, procedures, and control systems.

Question 45

There are ten stages of life cycle development that an organization must generally go through in order to reach the final stage when rewards are personal and aimed at those who contribute to organizational success.

Question 46

Weber believed that a well-managed bureaucracy would ensure efficient organizational functioning in both government and business settings.

Question 47

The life cycle phenomenon is a powerful concept used for understanding problems facing organizations and how managers can respond in a positive way to move an organization to the next stage.

Question 48

Small companies are standardized, often mechanistically run, and complex.

Question 49

As organizations become larger, a larger percentage of top administrators is necessary.

Question 50

Weber's prediction of the triumph of bureaucracy proved accurate.

Question 51

In the collectivity stage, departments are established along with a hierarchy of authority, job assignments, and a beginning division of labor.

Question 52

Large size enables companies to take risks that could ruin smaller firms, and scale is crucial to economic health in some industries.

Question 53

As organizations become larger, greater centralization is necessary.

Question 54

Some warning signs for organizational _____ include excess administrative and support staff, cumbersome administrative procedures, lack of effective communication and coordination, and outdated organizational structure.

A) decline
B) vulnerability
C) atrophy
D) competition

Question 55

Managers at the American Red Cross are struggling with raising enough funds to cover expenses. Donations have been declining for several years, and major disasters have strained the organization's resources. Which of the following is considered responsible for the organizational decline at the American Red Cross?

A) Organizational atrophy
B) Environmental decline
C) Vulnerability
D) Downsizing

Question 56

Ninety-nine percent of businesses that make it past the first year still fail within five years because they can't make the transition from the entrepreneurial stage.

Question 57

In a large company going through the organizational life cycle, the replacement of top management may occur in its elaboration stage as it struggles to revitalize.

Question 58

In 2008, with sales declining and the stock plummeting, Borders' then-CEO told a newspaper reporter who interviewed him about the company's situation: "We're not in trouble; we're not in trouble at all." Borders was in the ____ stage of decline.

A) crisis
B) blinded
C) inaction
D) faulty action

Question 59

Despite the increasing size of many companies, the economic vitality of the U.S. is tied to small and midsize businesses.

Question 60

As organizations become larger, a smaller percentage of technical and professional support staff is recommended.

Question 61

Discuss each stage of the life cycle.

Question 62

Small organizations have a flat structure and an organic, free-flowing management style that encourages entrepreneurship and innovation.

Question 63

Traditional authority refers to control coming from exemplary character of an individual and the aura he or she creates.

Question 64

Bo Burlingham, editor-at-large at Inc.magazine, believes that leaders of "small giants" ought to be intimately connected with the community in which they do business.

Question 65

Communicating more, not less, providing assistance to displaced workers, and help the survivors thrive are three ways for organizations to deal with downsizing.

Question 66

Market control occurs when price competition is used to evaluate the output and productivity of an organization or its major departments and divisions.

Question 67

It is impossible for companies to find ways to be both big and small.

Question 68

At Shizugawa Elementary School and Toyota Motors, bureaucratic control was carried to such an extreme that it created problems.

Question 69

Describe the life cycle of a specific organization that has gone through at least three stages of the organizational life cycle. In your answer explain the crisis this organization is now facing, and how you would recommend that it overcome its crisis.

Question 70

Describe the differences between large and small organizations.

Question 71

When clan control works, bureaucratic control is still needed.

Question 72

Clan control is generally used by companies that are small and informal or have a strong culture.

Question 73

Increased training can substitute for bureaucratic rules and procedures.

Question 74

As organizations increase in size, the net effect for direct workers is that they decline as a percentage of total employees.

Question 75

Requirements of the market control strategy are tradition, shared values and beliefs, and trust.

Question 76

Market control is most frequently used in the control of functional departments.

Question 77

Is bigger organization size better? Whether you say yes or no, defend your answer. Then explain the countering or opposite position, trying to make it as convincing an argument as you can.

Question 78

Explain the relationship between organizational size and at least three specific structural characteristics.

Question 79

The crisis for organizations in the elaboration stage is the need for leadership.

Question 80

Describe the organizational characteristics associated with each stage of the life cycle.