Question 1

Organizational structures must be both stable and flexible.

Accepted Answer

Organizational structures need stability to maintain order and consistency, but they also require flexibility to adapt to changes and new challenges in the business environment.

Question 2

Research shows that structure has a more important influence on strategy than the reverse.

Accepted Answer

Research in strategic management often suggests that strategy typically influences structure, as organizations design their structures to support their strategic objectives.

Question 3

The simple structure is used by owner-managed firms that are characterized by informal relationships, few rules, limited task specialization, and unsophisticated information systems.

Accepted Answer

The simple structure is typical in owner-managed firms due to its informal nature, minimal rules, and lack of complexity in both task specialization and information systems.

Question 4

As a firm grows, it typically shifts from a simple structure to a functional structure.

Accepted Answer

As firms grow, they often require more specialization and division of labor, leading them to adopt a functional structure where employees are grouped based on their specific roles or functions.

Question 5

A centralized structure does not provide information from local stores that would be useful in changing its technology quickly.This example illustrates the effect of structure on strategy.

Accepted Answer

A centralized structure can limit the flow of local information to decision-makers, affecting the organization's ability to adapt its strategy quickly in response to local needs or changes.

Question 6

Over time, large and complex organizations must customize their structure to fit their unique strategic needs.

Accepted Answer

Organizations often need to adapt their structures to align with their specific goals, strategies, and environments to remain effective and competitive.

Question 7

Organizational inertia often prompts top management to initiate structural change when organizational performance levels drop.

Accepted Answer

The answer of Organizational inertia often prompts top management to...

Question 8

Strategic controls are largely subjective criteria intended to verify that the firm is using appropriate strategies for the conditions in the external environment and the company's competitive advantages.

Accepted Answer

Strategic controls involve qualitative assessments to ensure that a firm's strategies align with external conditions and leverage its competitive advantages effectively.

Question 9

According to Michael Dell, an overemphasis on financial controls to produce attractive short-term results contributed to performance difficulties at Dell, Inc.This point emphasizes the importance of properly balancing the use of strategic and financial controls.

Accepted Answer

Michael Dell highlighted that focusing too much on financial controls for short-term gains can lead to performance issues, underscoring the need for a balance between strategic and financial controls for long-term success.

Question 10

Companies and business units using the differentiation strategy should emphasize financial rather than strategic controls.

Accepted Answer

Differentiation strategy focuses on creating unique products or services, which requires strategic controls to ensure alignment with the company's vision and innovation goals, rather than just financial metrics.

Question 11

A simple structure is an organizational form in which the owner-manager makes all major decisions directly and monitors all activities, while the staff serves as an extension of the manager's supervisory authority.

Accepted Answer

A simple structure is characterized by centralized decision-making and direct supervision by the owner-manager, with staff acting as extensions of the manager's authority.

Question 12

Organizational controls guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable.

Accepted Answer

Organizational controls are mechanisms that help ensure that strategies are effectively implemented by comparing actual performance with expected outcomes and suggesting corrective actions if necessary.

Question 13

Specialization refers to the extent to which decision-making authority is retained at higher managerial levels.

Accepted Answer

Specialization refers to the division of labor and the extent to which tasks are divided into separate jobs, not decision-making authority.

Question 14

Research has consistently shown that there is one best way to structure all organizations, regardless of competitive strategy.

Accepted Answer

Research indicates that there is no single best way to structure organizations; the optimal structure depends on various factors, including the organization's strategy, environment, and goals.

Question 15

To effectively use strategic controls in firms using related diversification strategies, the executives must have a deep understanding of the business-level strategies being implemented within individual strategic business units.

Accepted Answer

Executives need to understand the business-level strategies of individual units to ensure alignment and synergy across the diversified firm, which is crucial for effective strategic control.

Question 16

There are three variations of the multidivisional structure.

Accepted Answer

The three variations of the multidivisional structure are the product division structure, the geographic division structure, and the market division structure.

Question 17

With a related diversification corporate-level strategy, financial controls are used by corporate leaders to verify the sharing of appropriate strategic factors such as knowledge, markets, and technologies across businesses.

Accepted Answer

Financial controls are typically used to monitor financial performance, while strategic controls are used to ensure the sharing of strategic factors like knowledge, markets, and technologies in related diversification.

Question 18

Companies and business units of large diversified firms using the cost leadership strategy should focus on strategic controls.

Accepted Answer

Companies using the cost leadership strategy should focus on financial controls to ensure cost efficiency and maintain competitive pricing.

Question 19

RexMacDonald, Inc., uses a differentiation strategy that relies on cooperation, communication, and sharing of ideas among employees.In order to foster this behavior, RexMacDonald should emphasize strategic controls over financial controls.

Accepted Answer

Strategic controls focus on long-term goals and qualitative measures, which align with fostering cooperation and communication, whereas financial controls focus on short-term financial metrics.

Question 20

Strategy has a more important influence on structure, although once in place, structure influences strategy.

Accepted Answer

The statement reflects the idea that strategy initially shapes the organizational structure, but once established, the structure can also impact future strategic decisions.

Quiz 11: Organizational Structure and Controls