Question 1

While working a night job at a call center, Eric creates an app called EatOut, which can be used to place orders at restaurants, rate the restaurants, and make reservations. Because he receives good responses for his app, he quits his current job to focus his efforts on EatOut. He creates a start-up called BestApps and hires three people to help him improve EatOut and maintain the servers that run it. In this scenario, BestApps most likely has a ________ structure.

Accepted Answer

In this scenario, BestApps most likely has a simple structure. A simple structure generally is used by small firms with low organizational complexity. In such firms, the founders tend to make all the important strategic decisions and run the day-to-day operations.

Question 2

Which of the following is an advantage offered by a functional structure?

Accepted Answer

A functional structure allows for a higher degree of specialization and deeper domain expertise than a simple structure. Higher specialization also allows for a greater division of labor, which is linked to higher productivity.

Question 3

Burnley and Co., a graphic design firm, has offices in New York, Texas, California, New Mexico, and New Jersey. Each of these offices is headed by a president who reports directly to Emma Burnley, the CEO. The heads of the centralized HR, Finance, and Marketing teams report to Emma Burnley as well. Managers in the various offices also report to the CEO directly. Based on this information, which of the following statements is most likely to be true?

Accepted Answer

Based on this information, the statement that is most likely to be true is that Emma Burnley has a wide span of control. Hierarchy determines the formal, position-based reporting lines and thus stipulates who reports to whom. The number of levels of hierarchy, in turn, determines the managers' span of control-how many employees directly report to a manager. In tall organizational structures, the span of control is narrow. In flat structures, the span of control is wide, meaning one manager supervises many employees.

Question 4

Uptown Office Systems recently underwent a reorganization. Based on customer feedback, the company eliminated many of its middle management positions and implemented a flatter structure. Which of the following is a possible drawback of this decision?

Accepted Answer

In flat structures, the span of control is wide, meaning one manager supervises many employees. In recent years, firms have de-layered by reducing the headcount (often middle managers), making the organizations flatter and more nimble. This, however, puts more pressure on the remaining managers, who have to supervise and monitor more direct reports due to an increased span of control.

Question 5

BioCure Inc. is a pharmaceutical company that has many breakthroughs in medicine to its credit. Unlike many other pharmaceutical companies, BioCure has a relaxed work environment where employees are free to discuss projects with each other. Employees are encouraged to choose the projects that interest them; communication between team members and their supervisors is open and easy. Because of the company's work culture, its employees feel motivated to work harder and display more entrepreneurial behaviors. In this scenario, BioCure Inc. is most likely an organization that is

Accepted Answer

In this scenario, BioCure Inc. is most likely an organic organization. Organic structures tend to be correlated with the following: a fluid and flexible information flow among employees in both horizontal and vertical directions; faster decision making; and higher employee motivation, retention, satisfaction, and creativity. Organic organizations also typically exhibit a higher rate of entrepreneurial behaviors and innovation.

Question 6

Fine Lines Inc. is a notebook manufacturing company based in Ohio. Fine Lines' main market is Ohio. It aims at providing its products at better prices than its competitors. Which of the following structures is Fine Lines Inc. likely to use if it has functional setup?

Accepted Answer

Fine Lines Inc. is most likely to use a mechanistic structure if it has a functional setup. A functional structure is recommended when a firm has a fairly narrow focus in terms of product/service offerings (i.e., low level of diversification) combined with a small geographic footprint. To effectively implement a cost-leadership strategy, managers must create a functional structure that contains the organizational elements of a mechanistic structure.

Question 7

W. L. Gore & Associates is organized in such a way that it has no formal job titles, job descriptions, or chains of command. This implies that it has

Accepted Answer

As mentioned in Strategy Highlight 11.1, W. L. Gore & Associates is organized in an informal and decentralized manner: It has no formal job titles, job descriptions, chains of command, formal communication channels, and written rules or standard operating procedures.

Question 8

Which of the following accurately describes an organic organization?

Accepted Answer

Organic organizations often are flexible and foster fast decision making and high employee motivation.

Question 9

Ruby, a recent fashion design school graduate, has received praise for her clothing designs from her peers and friends on social networking sites; this has inspired her to set up a store where she can design and sell apparel. After experiencing some success with sales, she recruits two employees to handle customers at the store. However, she handles other day-to-day affairs herself, while continuing to design clothes. Which of the following is likely to be a pitfall of this organizational structure established by Ruby?

Accepted Answer

A likely pitfall of this organizational structure established by Ruby is that once the firm starts growing and attracting more customers she is likely to feel overloaded. A simple structure generally is used by small firms with low organizational complexity. In such firms, the founders tend to make all the important strategic decisions and run the day-to-day operations. Typically, neither professional managers nor sophisticated systems are in place, which often leads to an overload for the founder and/or CEO when the firms experience growth.

Question 10

To effectively implement a differentiation strategy, managers rely on a functional structure that resembles an organization that is highly

Accepted Answer

To effectively implement a differentiation strategy, managers rely on a functional structure that resembles an organic organization.

Question 11

Galaxy Toys Inc., a toy manufacturing company, encourages its employees to enjoy their work by taking on additional responsibilities or switching jobs with each other. It allows its employees immense flexibility in charting their own career path within the organization. Chris has worked at Galaxy Toys for eight years, but has never had a boss or supervised an employee. Which of the following is most likely true in this scenario?

Accepted Answer

The statement that is most likely true in this scenario is that Galaxy Toys Inc. has a flat organizational structure. Hierarchy determines the formal, position-based reporting lines and thus stipulates who reports to whom. If many levels of hierarchy exist between the front-line employee and the CEO in a firm, it has a tall structure. In contrast, if there are few levels of hierarchy in a firm, it has a flat structure.

Question 12

Telescopic Inc., a web development firm, is headed by Rob Dennis, the CEO. Each functional department of the company-marketing, finance, and HR-has a president who reports to the CEO directly. Each department has various managers who manage teams. The managers report to the presidents, and the team leads report to the managers. Finally, the employees at the lowest level report to their team leads. It is rare for a lower-level employee to interact with the CEO of the company. In this scenario, Telescopic Inc. can be said to have a(n)

Accepted Answer

In this scenario, Telescopic Inc. can be said to have a tall hierarchical structure. Hierarchy determines the formal, position-based reporting lines and thus stipulates who reports to whom. If many levels of hierarchy exist between the front-line employee and the CEO in a firm, it has a tall structure.

Question 13

Cheetah, a web development firm, wants to implement an organic structure to foster innovation and attract the most talented creative minds. Which of the following features will make it difficult to do so?

Accepted Answer

A cost-leadership strategy is typically associated with mechanistic structures, which allow for standardization and economies of scale. A differentiation strategy is more commonly used by organic firms.

Question 14

A high degree of formalization in an organization is most likely to

Accepted Answer

The drawbacks of formalization are that it might hinder a firm's innovation and customer service, and its ability to make a quick decision. It can also reduce creativity and innovation.

Question 15

Which of the following is an unintended side effect of a high degree of specialization in an organization?

Accepted Answer

Specialization describes the degree to which a task is divided into separate jobs-that is, the division of labor. While a high degree of the division of labor increases productivity, it can also have unintended side effects such as reduced employee job satisfaction due to repetition of tasks.

Question 16

Why does a functional structure rely on a flat organizational structure?

Accepted Answer

A functional structure allows for an efficient top-down and bottom-up communication chain between the CEO and the functional departments, and thus relies on a relatively flat structure.

Question 17

Tony's Tacos is a nationwide fast-food chain. Decision power resides at the top of the organization. Each job is documented in minute detail. The firm has many levels of supervision, including vice presidents and regional managers. Tony's headquarters provides detailed instructions to each of its franchisees so that they provide comparable quality and service across the board. Based on this scenario, which of the following is an accurate statement about Tony's?

Accepted Answer

Tony's has a high degree of specialization (employees are assigned specific tasks such as food prep, cook, cashier), formalization (each job documented in minute detail; detailed instructions to each of its franchisees), and centralization (decision power resides at the top) and relies on a tall hierarchy (many levels of supervision).

Question 18

________ refers to the degree to which decision making is concentrated at the top of the organization.

Accepted Answer

Centralization refers to the degree to which decision making is concentrated at the top of the organization. Centralized decision making often correlates with slow response time and reduced customer satisfaction.

Question 19

McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's

Accepted Answer

Mechanistic organizations are characterized by a high degree of specialization and formalization, and a tall hierarchy that relies on centralized decision making. To ensure standardized operating procedures and consistent food quality throughout the world, McDonald's operates Hamburger University, a state-of-the-art teaching facility in a Chicago suburb, where 50 full-time instructors teach courses in chemistry, food preparation, and marketing.

Question 20

Jen works as a front-line employee for a nationwide retail store. She reports to a floor manager, who reports to a departmental manager, who reports to a regional supervisor, who reports to a vice president, who reports to the CEO. Which of the following best describes this retail store?

Accepted Answer

Jen works for a retail store that has a tall structure. If many levels of hierarchy exist between the front-line employee and the CEO, the firm has a tall structure.

Quiz 11: Organizational Design: Structure, Culture, and Control