Question 1

The Chapter 11 Opening Case about Borders shows that although strategy has an important influence on structure,once a particular structure is in place,that structure influences strategy.

Accepted Answer

The case clearly demonstrates how Borders' initial strategy of expanding rapidly and diversifying did not align with their organizational structure, which hindered their ability to adapt to changes in the industry. Eventually, the company had to file for bankruptcy and restructure in order to survive, showing how structure influenced the strategy.

Question 2

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 are often based on subjective judgments about the appropriateness of the firm's strategies given the external environment and its internal resources and capabilities. Examples of strategic controls include financial measures such as return on investment, market share, and profitability, as well as non-financial indicators such as customer satisfaction, employee engagement, and innovation metrics. These controls are intended to ensure that the firm's strategy is still valid and effective in light of changing market conditions and competitive dynamics.

Question 3

An overriding lesson from the Chapter 11 Opening Case about Borders is that failure to properly structure an organization can contribute to poor strategic decisions and eventually bankruptcy.

Accepted Answer

The Chapter 11 Opening Case about Borders highlights how poor organization structure can lead to poor strategic decisions and ultimately bankruptcy.

Question 4

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

Accepted Answer

This statement accurately describes the characteristics of a simple structure.

Question 5

Strategy has an important influence on structure,although once in place,structures influence strategy.

Accepted Answer

Strategy is often formulated with consideration for the current organizational structure, and changes in strategy may require changes in structure to effectively implement. However, once a structure is in place, it can also constrain or enable future strategic choices.

Question 6

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

The answer of With a related diversification corporate-level strategy,financial controls...

Question 7

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

This statement accurately describes the purpose of organizational controls. Controls help ensure that strategy is being implemented effectively, allow for monitoring of performance against predetermined goals, and recommend adjustments if necessary.

Question 8

The centralized structure used by Borders (Chapter 11 Opening Case)did not provide information from local stores that might have been useful in changing its technology strategy more quickly than it did. This example illustrates the effect of structure on strategy.

Accepted Answer

The statement is true as the centralized structure of Borders limited the flow of information from local stores to the management, which resulted in a slow response to changing technology trends. This highlights how organizational structure affects the company's ability to adapt to changing market conditions and adjust the strategy accordingly.

Question 9

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 the behavior and actions of employees to ensure that they are in line with the company's overall strategy. This type of control is more effective in encouraging cooperation, communication, and sharing of ideas among employees, which is critical for a differentiation strategy that relies on innovation and creativity. Financial controls, on the other hand, focus on managing costs and financial performance and are less likely to promote the desired behavior for a differentiation strategy.

Question 10

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 indeed emphasized the importance of balancing strategic and financial controls and recognized the negative impact of overly focusing on financial controls on Dell's performance.

Question 11

Research shows that structure has a more important influence on strategy than the reverse and hence the emphasis of the chapter on the subject of structure.

Accepted Answer

The answer of Research shows that structure has a more...

Question 12

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

Accepted Answer

Research has actually shown that the best structure for an organization depends on its competitive strategy and goals. Different strategies may require different structures, such as tall vs flat hierarchies or centralized vs decentralized decision-making.

Question 13

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

Accepted Answer

As organizations grow and their strategic needs change, they often need to adjust their structure to best support those needs. This can include adding or removing departments, creating new teams or functions, or altering reporting structures. Failure to customize the structure to fit the organization's needs can hinder growth and success.

Question 14

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 15

To properly execute strategic controls in firms using related diversification,the executives must have a deep understanding of each unit's business-level strategy.

Accepted Answer

For effective strategic control in firms using related diversification, executives must have a comprehensive understanding of each unit's business-level strategy to ensure they align with the overall corporate strategy. This enables them to monitor performance, adjust goals and targets, and take corrective actions as necessary to achieve strategic objectives. Without a clear understanding of the business-level strategies, the executives cannot determine if the units are performing as expected, making it difficult to implement effective strategic controls.

Question 16

As shown in the Chapter 11 Opening Case,Borders was able to structure its operations in ways that allowed it to manage the different businesses in each country and market effectively.

Accepted Answer

Borders struggled with international operations and eventually went bankrupt, indicating it was not able to manage its businesses effectively across different countries and markets.

Question 17

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

Accepted Answer

The answer of Companies and business units of large diversified...

Question 18

Organizational structures must be both stable and flexible.

Accepted Answer

Organizational structures need to be stable to provide a reliable framework for operations, but they also need to be flexible to adapt to changes in the environment or business needs.

Question 19

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

Accepted Answer

While financial controls are important for any company or business unit, strategic controls are especially important for those using a differentiation strategy. This is because differentiation relies on the ability to provide unique and valuable products or services to customers, which requires ongoing strategic analysis and adaptation. Financial controls alone may not be sufficient to ensure continued success and competitiveness in this context.

Question 20

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

Accepted Answer

As a firm grows and becomes more complex, it usually shifts from a simple structure to a functional structure in order to better organize and manage its various departments and functions.

Quiz 11: Organizational Structure and Controls