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

Question 1

Decisions about strategy and structure are interrelated.

Answer 1

True
Explanation: Structure follows strategy.

Question 2

When leadership changes,so does the company's culture.

Answer 2

True
Explanation: Leadership change and M&As usually lead to a change of the organizational culture as well.

Question 3

Organizational structure _________.

A) Specifies the firm's formal reporting relationships, procedures, controls, and authority and decision-making processes
B) Specifies the firm's informal reporting relationships, procedures, controls, and authority and decision-making processes
C) Specifies the firm's formal value proposition, the markets it will serve, and how the firm will provide value in those markets
D) Specifies the firm's control mechanisms, grievance procedures, reporting relationships, procedures, and authority over decision-making processes

Answer 3

A
Explanation: Structure provides necessary formal functions in terms of authority, reporting channels, decision making, and central control.

Question 4

Organic structure is preferred when a firm is pursuing differentiation strategies.

Question 5

What is the main lesson from the Yahoo case (in Strategy Highlight 11.1)?

A) Developing a core competence is important.
B) Structure needs to be in place to ensure strategic implementation.
C) Codified rules and norms are necessary to guide employee behavior.
D) Cross-functional collaboration enhances R&D.

Question 6

Zappos's core competency is ________.

A) Product quality
B) Distribution
C) Just in time production
D) Customer service

Question 7

A high degree of formalization streamlines the decision-making process.

Question 8

If a firm emphasizes performance and outcomes,it usually focuses more on output controls.

Question 9

The main lesson from ChapterCase 11 about Zappos is that __________.

A) Appropriate culture and structure is essential for strategic implementation
B) Structure rarely evolves when strategy changes
C) Employees need tighter control to ensure service quality
D) Strategy has no impact on organizational culture

Question 10

Which of the following is TRUE?

A) Organizations tend to change their structure too frequently, which erodes their competitive advantage.
B) Large organizations can retain a simple structure as long as they have a differentiation strategy.
C) Flexibility in structure is more important than stability.
D) Strategy has a more important influence on structure than structure has on strategy.

Question 11

When a firm is small in size with low organizational complexity,a functional structure is often used.

Question 12

Companies and business units using the differentiation strategy should emphasize extrinsic strategic controls.

Question 13

Usually,a company founder defines and shapes an organization's culture.This is called founder imprinting.

Question 14

Specialization increases productivity without any side effects.

Question 15

Zappos's culture guides employees' behavior and further enhances the firm's core competency.

Question 16

The degree of formalization for McDonald's is low.

Question 17

Usually when a firm's strategic business-level focus is cost leadership,it uses organic structure.

Question 18

W.L.Gore uses a simple structure because it is small in size with less formalization.

Question 19

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

Question 20

The key elements of organizational structure are specialization,centralization,formalization,and hierarchy.

Question 21

When a firm pursues differentiation strategy,it usually employs a(n)______ structure.

A) Mechanistic
B) Organic
C) Competitive
D) Centralized

Question 22

__________ organizations have a low degree of specialization and formalization as well as a flatter structure.

A) Mechanistic
B) Specialized
C) Competitive
D) Organic

Question 23

Organizational design is __________.

A) The method of entering international markets
B) A process of creating, implementing, and modifying the structure of an organization
C) A process of creating new competence within the organizational structure
D) A way to streamline the organizational learning process

Question 24

What is the framework that an organization adopts to divide tasks,deploy resources,and coordinate departments?

A) Layer
B) System
C) Strategy
D) Structure

Question 25

_______ determines the formal,position-based reporting lines.

A) Specialization
B) Formalization
C) Centralization
D) Hierarchy

Question 26

Which of the following are the benefits of organic structure?

A) Flexible information flow
B) Faster decision making
C) Higher employee motivation
D) All of these

Question 27

The number of levels of hierarchy determines a manager's ___________,which is how many employees directly report to a manager.

A) Leadership
B) Communication skill
C) Span of control
D) Authority

Question 28

Organizational ________ refers to a firm's resistance to change in the status quo.

A) Strategy
B) Culture
C) Core competence
D) Inertia

Question 29

A firm's _______ specifies the work to be done and resource distribution.

A) Strategy
B) Structure
C) Culture
D) Control

Question 30

What are the three key levers a firm needs to design its organization for competitive advantage?

A) Core competence, labor, quality product
B) Structure, technology, and well-defined policy
C) Structure, culture, and control
D) Structure, strategy, and strategic alliances

Question 31

McDonald's uses detailed standard operating procedures throughout the world to ensure product quality.Therefore,McDonald's has a high degree of _________.

A) Specialization
B) Formalization
C) Centralization
D) Hierarchy

Question 32

__________ describes the degree to which a task is divided into separate jobs.

A) Specialization
B) Formalization
C) Centralization
D) Hierarchy

Question 33

According to Alfred Chandler,structure follows strategy implies that _________.

A) Structure is static and remains intact throughout time
B) Structure is not as important as strategy
C) Structure is as dynamic as strategy
D) Structure has little or no effect on strategic implementation

Question 34

_______ organizations are characterized by a high degree of specialization and formalization,with tall hierarchy that relies on centralized decision making.

A) Organic
B) Mechanistic
C) Specialized
D) Competitive

Question 35

W.L.Gore's organizational structure is __________.

A) Informal and decentralized
B) Formal and decentralized
C) Highly centralized and informal
D) Formal and less specialized

Question 36

Structural stability affects the organization's ability to ____________.

A) Resist organizational inertia
B) Cope with uncertainty about cause-and-effect relationships in the global economy
C) Develop new competitive advantages
D) Predictably manage its daily work routines

Question 37

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

A) Specialization
B) Formalization
C) Centralization
D) Hierarchy

Question 38

BP's failure to handle the Gulf oil spill in 2010 indicates that BP has a high degree of _______.

A) Specialization
B) Formalization
C) Centralization
D) Hierarchy

Question 39

Which organizational form would you use to describe both Zappos and W.L.Gore?

A) Specialized
B) Organic
C) Mechanistic
D) Competitive

Question 40

One of the drawbacks of a high degree of formalization is ______.

A) The loss of competitive advantage
B) Organizational inertia
C) Multipoint competition
D) A slow decision-marking process

Question 41

In the M-form structure,divisions/functional areas can usually be organized around which of the following?

A) Geographic markets
B) Product/services
C) Groups of related businesses
D) All of these

Question 42

A matrix structure is the combination of the ______ and ______ structure.

A) Simple; functional
B) Functional; M-form
C) M-form; network
D) Simple; network

Question 43

The more _____ a firm,the more the structure will have to be designed to accommodate coordination.

A) Focused
B) Diversified
C) Basic
D) Concentrated

Question 44

A(n)______ structure is recommended when a firm has a fairly narrow focus in terms of product/service offerings.

A) Simple
B) Functional
C) M-form
D) Network

Question 45

Typically,successful firms pursuing a differentiation strategy will __________.

A) Have a very hierarchical structure
B) Require a structure which is very formal
C) Use cross-functional development teams
D) Develop free-standing business units

Question 46

When a firm diversifies into different product lines and geographies,a(n)_______ structure is preferred.

A) Simple
B) M-form
C) Functional
D) Network

Question 47

A typical college of business (or school of management)has several areas such as management,marketing,finance,accounting,MIS,and so on.This is an example of a(n)_________ structure.

A) Simple
B) M-form
C) Functional
D) Matrix

Question 48

When using a matrix structure,a firm tends to pursue a(n)________ global strategy.

A) International
B) Standardized
C) Transnational
D) Localization

Question 49

Management using the M-form structure to support a(n)___________ strategy should ideally concentrate decision making at the top of the organization.

A) Single-business
B) Domain business
C) Related diversification
D) Unrelated diversification

Question 50

A company offering a limited line of standard products,that competes in a similar manner with a narrow,local market focus,and whose competitive advantage is a focus on low cost derived from gaining economies of scale should organize around a ________.

A) Functional structure
B) Matrix structure that combines functional departments with geographic divisions
C) Geographic structure that creates independent units in each of the countries where the firm competes
D) Group of product divisions, each with a geographic focus

Question 51

In order to implement a cost-leadership strategy,a firm may choose a ________ structure.

A) Simple and organic
B) Functional and organic
C) Functional and mechanistic
D) Simple and M-form

Question 52

Which of the following is NOT associated with an organizational structure that supports a cost-leadership strategy?

A) Centralization
B) Formalization
C) Specialization
D) Integration

Question 53

Typically,an organization using a simple structure would be _________.

A) Small
B) Large
C) Of any size if the firm is privately held
D) Small if the firm is a public company

Question 54

John Garcia just graduated from law school and wants to open his own law office.It is best for John to use a(n)______ structure.

A) Functional
B) Simple
C) M-form
D) Matrix

Question 55

Which of the following is a TRUE statement about organizational structures for implementing strategies?

A) A cost-leadership strategy requires a simple structure emphasizing high specialization, centralization, and structured job roles.
B) A differentiation strategy requires an organic structure with limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions.
C) An integrated cost-leadership/differentiation strategy requires a command and control structure using high formalization, decentralized decision making, and vertical coordination.
D) A focused strategy requires a functional structure featuring high levels of both specialization and formalization.

Question 56

One disadvantage of the functional structure is that __________.

A) Career paths and professional development are limited
B) Dual reporting relationships blur lines of authority
C) The CEO cannot coordinate and control the efforts of functional-level employees
D) Communication is difficult among organizational functions

Question 57

The benefits of a simple structure include all of the following EXCEPT ________.

A) Ease of coordination within the organization
B) The lack of need for sophisticated information systems
C) Active involvement by the owner-manager
D) Specialists that can develop deep expertise

Question 58

Walmart's effective strategy/structure configuration is ____________.

A) Cost leadership/functional
B) Differentiation/simple
C) Integration/M-form
D) Cost leadership/network

Question 59

Which of the following does NOT cause a firm to move from a functional structure to a multidivisional structure?

A) Increasing diversification
B) International expansion
C) The need for knowledge-sharing among specialists
D) The need for greater amounts of data and information to operate

Question 60

Managers using M-form structures to support a(n)__________ strategy should decentralize decision making.

A) Single business
B) Domain business
C) Related diversification
D) Unrelated diversification

Question 61

______ defines appropriate employee attitudes and behaviors.

A) Value
B) Norm
C) Socialization
D) Founder imprinting

Question 62

A ___________ structure allows the firm to connect centers of excellence,wherever their global location.

A) Simple
B) Functional
C) Network
D) M-form

Question 63

Carly Fiorina intended to change HP's culture by _________.

A) Creating new rules and norms
B) Laying off key talents
C) Acquiring another company
D) Liquidating the company

Question 64

Organizational culture can be the basis of a firm's competitive advantage because __________.

A) Culture can be regarded as valuable, rare, and inimitable assets
B) Culture is trademarked and copyright protected
C) Culture is universally the same across the firm
D) Culture is usually a liability, not an asset

Question 65

Usually,employees learn about an organization's culture through _____.

A) Values
B) Norms
C) Socialization
D) Founder imprinting

Question 66

When following a global standardization strategy,a(n)_______ structure is preferred.

A) Functional
B) M-form
C) Simple
D) Matrix

Question 67

All of the following are benefits of a matrix structure,EXCEPT __________.

A) Flexibility in assigning teams
B) Promotes cross-functional collaboration
C) Structural simplicity
D) Reduces the duplication of resources

Question 68

When pursuing international strategy,a(n)______ structure is preferred.

A) Functional
B) M-form
C) Simple
D) Matrix

Question 69

The primary avenues of culture change are __________.

A) New leadership
B) Mergers and acquisitions
C) A change of structure
D) All of these

Question 70

Which of the following statements is TRUE?

A) Organizational culture cannot change because it represents the company's core values.
B) Organizational culture can become a liability if it is not comprehended thoroughly by employees.
C) Organizational culture is a set of codified rules that guide employees' behavior.
D) Organizational culture usually comes from other organizations.

Question 71

Which group is largely responsible for creating a firm's culture?

A) Front line workers
B) Lower management
C) Top management
D) Middle management

Question 72

When pursuing localization strategy,a(n)________ structure is preferred.

A) Functional
B) M-form
C) Simple
D) Matrix

Question 73

Organizational culture is difficult to imitate because of ________.

A) Causal ambiguity and social complexity
B) Core competence and competitive advantage
C) Socialization and internalization
D) None of these

Question 74

Which of the following is TRUE?

A) It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages.
B) Changes in culture are too frequent to have any impact on strategic implementation.
C) It is always better to focus on output control and performance.
D) According to research, more than 50 percent of firms change culture successfully.

Question 75

When co-founder Jerry Yang was fired from Yahoo,what was the method then used to change Yahoo's culture?

A) Liquidating the company
B) Bringing in new leadership
C) Laying off key engineers
D) Acquiring another company

Question 76

_______ describes the collectively shared values and norms of an organization's members.

A) Organizational culture
B) Regional cluster
C) Competitive advantage
D) Core competency

Question 77

Which of the following is FALSE?

A) A positive culture motivates employees by appealing to high ideals.
B) Employees feel that they are part of a larger community by internalizing the firm's values and norms.
C) A positive culture encourages employees to make decisions not only with their heads but also with their hearts.
D) A strong control mechanism needs to be in place to ensure a smooth business operation.

Question 78

Regional clusters,a collection of interdependent firms,represent a ______ structure.

A) Simple
B) Functional
C) Network
D) M-form

Question 79

Which of the following statements is TRUE?

A) The Southwest Airlines culture encourages employees to have cross-departmental collaboration, which results in reduced turnaround time.
B) Zappos has a tall hierarchical structure that promotes centralized decision making.
C) McDonald's used organic structure to promote decentralized decision making to solve real-time problems.
D) Most of the small and less complex organizations use a functional structure.

Question 80

______ defines what is considered important.

A) Value
B) Norm
C) Socialization
D) Founder imprinting