Deck 9: Strategic Control and Corporate Governance

Question 1

Which of the following is considered to be 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

Answer 1

C

Question 2

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

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

Answer 2

B

Question 3

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

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

Answer 3

B

Question 4

A divisional structure

A) is organized around functional area departments.
B) typically improves the performance of firms pursuing a strategy of vertical integration.
C) facilitates the development of general managers.
D) enhances centralized decision making.

Question 5

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 faced by individual divisions.
C) a high level of control of division executives by executives at the corporate level.
D) gaining synergistic benefits across businesses.

Question 6

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 a firm's strategy.

Question 7

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)

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

Question 8

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 9

Brinker International found that the diverse markets served by their bakeries and restaurants made it difficult focus on the unique aspects faced by each chain and consequently changed from a

A) simple structure to a functional structure
B) divisional structure to a matrix structure
C) functional structure to a divisional structure
D) virtual structure to an ambidextrous structure

Question 10

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 11

All of the following are advantages of a strategic business unit (SBU) type of organizational structure except

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 12

All of the following statements about simple organizational structures are true except

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 13

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

Question 14

Diversified Canadian conglomerate Weston has put its businesses into three primary SBUs, which are

A) bakeries, retail and food processing.
B) retail, shipping, and online sales through Loblaws.com.
C) baked goods, unbaked goods, and grains and oilseeds.
D) retail, wholesale, and manufacturing.

Question 15

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) a high degree of emphasis on long term performance
D) uniformity in image and quality across divisions

Question 16

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 17

All of the following are disadvantages of a divisional type of organizational structure except

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 18

At Sharp Corporation, work is divided into units that specialize in production, marketing, research and development, and other management tasks. This is an example of a

A) simple structure.
B) functional structure.
C) divisional structure.
D) matrix structure.

Question 19

Functional structures are usually found in organizations where there is

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

Question 20

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

Question 21

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

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

Question 22

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

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

Question 23

The phrase that best defines a virtual organization is

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

Question 24

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 non-vital functions

Question 25

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

Question 26

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

Question 27

The strategic business unit (SBU) and holding company structure are variants of the functional form of structure.

Question 28

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) Fewer internal barriers means fewer political issues to deal with.
D) If trust among employees is not sufficiently high, organizational performance may suffer.

Question 29

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 members.

Question 30

Which of the following is not a boundaryless organizational design?

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

Question 31

An organization that has both adaptability and alignment is known as

A) a matrix organization
B) an ambidextrous organization
C) a virtual organization
D) a boundaryless organization

Question 32

A major disadvantage of adopting a divisional structure is the tendency for managers to focus on short-term objectives.

Question 33

Which of the following boundaries exist between the functional areas of an organization?

A) vertical boundaries
B) horizontal boundaries
C) external boundaries
D) all of these

Question 34

A simple organizational structure may lead to problems such as unclear boundaries of authority and few career advancement options.

Question 35

There is no link between a firm's strategy and its structure.

Question 36

The strategic business unit (SBU) structure is also referred to as the conglomerate structure.

Question 37

Complete the following sentence: "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 38

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 39

The boundaries between levels in an organization's hierarchy are known as

A) vertical boundaries.
B) horizontal boundaries.
C) external boundaries.
D) geographic boundaries.

Question 40

One disadvantage of a functional structure is that differences in functional orientation may impede organization coordination and communication.

Question 41

An advantage of the barrier-free form of organizing is that internal cooperation and shared objectives are not required for it to work.

Question 42

Briefly describe the strategic business unit (SBU) organizational structure. What are the advantages of this form of organizing?

Question 43

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

Question 44

Because the modular form of organizing involves outsourcing vital functions, modular firms often forfeit full strategic control.

Question 45

Modular companies can achieve rapid growth because they don't require large investments in fixed assets.

Question 46

Describe the attributes of a simple organizational structure. What are the advantages and disadvantages associated with using the simple organizational form?

Question 47

The matrix structure attempts to combine the advantages of the functional and product-oriented structure.

Question 48

Outsourcing relieves companies of the requirement to maintain skill levels needed to manufacture essential components.

Question 49

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

Question 50

One of the risks of outsourcing is a loss of cross-functional skills.

Question 51

The virtual organization is characterized by participating firms which pursue a collective strategy that enables them to cope with environmental uncertainty through cooperative efforts.

Question 52

The virtual type of organization is a network of independent companies linked together to share skills, costs, and access to one another's markets.

Question 53

A matrix organization is organized strictly along product lines.

Question 54

Boundaryless structures replace traditional structures.

Question 55

A major disadvantage of the matrix structure is that it duplicates the use of specialized personnel, equipment, and facilities.

Question 56

Describe the attributes of a functional organizational structure.

Question 57

What are the advantages and disadvantages associated with using the divisional organizational form?

Question 58

The purpose of boundaryless forms of organizing is to facilitate the widespread sharing of knowledge and information across internal and external boundaries of the organization.

Question 59

How do organizational structures change as organizations grow and mature? What are the dominant patterns of growth?

Question 60

An ambidextrous organization achieves both adaptability and alignment.

Question 61

Discuss how changes in today's workforce and the business environment have contributed to growth in the use of boundaryless organizational designs.

Question 62

Outline the basic ideas behind the ambidextrous organizational design.

Question 63

Explain why there is no "one best way" to design strategic rewards systems.

Question 64

Outline the three main contingencies that seem to influence the structure adopted by firms with international operations.

Question 65

Describe the attributes of a matrix organizational structure. What are the disadvantages associated with using the matrix organizational form?

Question 66

Discuss the uses and challenges of the barrier-free organizational structure.

Question 67

Discuss the basic idea of the modular organizational structure.
The modular organization outsources non-vital functions, tapping into the knowledge and expertise of "best in class" suppliers, but retains strategic control. Outsiders may be used to manufacture parts, handle logistics, or perform accounting activities. The value chain can be used to identify the key primary and support activities performed by a firm to create value: Which activities do we keep "in-house," and which activities do we outsource to suppliers? The organization becomes a central hub surrounded by networks of outside suppliers and specialists and parts can be added or taken away. Both manufacturing and service units may be modular.