Deck 10: Creating Effective Organizational Designs

Question 1

A global startup typically benefits from lower communication,coordination,and transportation costs.

Answer 1

False
Explanation: There is no reason for every start-up to be global. Being global necessarily involves higher communication, coordination, and transportation costs.

Question 2

A small firm with a simple structure often fosters creativity and individualism because of its informal atmosphere.

Answer 2

True
Explanation: The simple structure is highly informal and the coordination of tasks is accomplished by direct supervision. A simple structure may foster creativity and individualism since there are generally few rules and regulations.

Question 3

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

Answer 3

False
Explanation: A simple structure may foster creativity and individualism since there are generally few rules and regulations.

Question 4

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

Question 5

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

Question 6

When a firm has international operations,choosing the most appropriate structure depends upon the extent of international expansion,the type of strategy,and the degree of market diversity.

Question 7

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

Question 8

Global start-ups occur after a corporation has exhausted all other possibilities for domestic growth.

Question 9

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

Question 10

The strategy and structure of a firm change as the firm increases in size,diversifies into new product markets,and limits its geographic scope.

Question 11

One major advantage of the holding company form of organization structure is that it minimizes the duplication of functional activities between product lines.

Question 12

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

Question 13

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

Question 14

As firms grow,owner managers often need to hire functional specialists to handle the increased information-processing burden.

Question 15

A strategy of related diversification requires a need to reorganize around product lines and geographic markets.This leads to a divisional structure.

Question 16

A matrix organization is organized strictly along product lines.

Question 17

A major disadvantage of a divisional structure is that when divisions are separated to manage individual product markets,there is a separation of strategic and operational control.

Question 18

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

Question 19

Operational decision making in a large business places excessive demands on top management of the firm.

Question 20

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

Question 21

According to the text,boundaryless organizational structures are most effective when they replace rather than complement traditional organizational structures.

Question 22

Managers trained in rigid hierarchies do not find it difficult to transition to participative style required for effective teamwork.

Question 23

A barrier-free organization creates successful relationships between internal and external constituencies and sometimes with competitors as well.

Question 24

Horizontal organization structures facilitate resource sharing and help to create a sense of common purpose.

Question 25

One of the advantages of boundaryless structures is that they can be implemented without upgrading the skills of workers and managers.

Question 26

The virtual type of organization is a network of independent companies linked together to share skills,costs,and access to the markets of each other.

Question 27

According to author Jeffrey Pfeffer,the advantages of teams are that employees control themselves,develop more creative solutions to problems,and permit the absorption of administrative tasks previously performed by specialists.

Question 28

Outsourcing in noncore functions of modular companies offers the advantage of decreased overall costs,but the company will be unable to focus on scarce resources in the areas where it holds competitive advantage.

Question 29

The structure of a firm typically has almost no effect on its strategy.

Question 30

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

Question 31

Modular companies can achieve rapid growth because they do not require large investments in fixed assets.

Question 32

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

Question 33

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

Question 34

Managing virtual structures requires new and difficult-to-acquire managerial skills.

Question 35

According to the text,the factor that most distinguishes a superior team from a good team is talent.

Question 36

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 37

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

Question 38

Different types of boundaries place limits on organizations in order to foster high degrees of interaction with inside influences and varying levels of permeability.

Question 39

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

Question 40

Jack Welch,former CEO of GE,believes that all internal and external organizational boundaries should vanish completely.

Question 41

Which of the following is not a primary factor that a large firm with international operations should consider when choosing the appropriate structure for its organization?

A) the extent of international expansion
B) the type of strategy (global, multidomestic, or transnational)
C) the degree of product diversity
D) the degree of market diversity

Question 42

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

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

Question 43

Functional structures are usually found in organizations where _____________.

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

Question 44

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 45

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

Question 46

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

Question 47

An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organization structure?

A) functional structure
B) matrix structure
C) strategic business unit structure
D) holding company structure

Question 48

When an organization with a functional structure diversifies into related product-markets,it generally _____________.

A) maintains its functional structure
B) develops a divisional structure
C) develops a matrix structure
D) develops a worldwide product-division structure

Question 49

Procter and Gamble used communities of practice and human resource practices to help it achieve effective collaboration and integration across its different business units.This effort resulted in the successful development of the Crest Whitestrips product and is an example of good use of boundary-constrained organizational design.

Question 50

In large organizations,a strategy of diversification requires a need to reorganize around ______________ or _____________.

A) product lines; geographic markets
B) product lines; competition
C) competitor lines; geographic markets
D) distribution lines; competitor markets

Question 51

Strategic business unit (SBU)and holding company structures result from extensive _____________.

A) diversification
B) vertical integration
C) international expansion
D) organizational flattening

Question 52

Which of the following is not an advantage of a strategic business unit (SBU)type of organizational structure?

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 53

Which of the following statements about simple organizational structures is not true?

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 54

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 55

Which of the following is not a disadvantage of a divisional type of organizational structure?

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 56

A strategy of related diversification requires most firms to organize around geographical areas or product lines.This type of organizational growth leads to ______________ structure.

A) a divisional
B) a functional
C) a matrix
D) an international

Question 57

Strategic business unit (SBU)structures are best suited for corporations pursuing _____________,whereas holding company structures are best suited for companies with ______________ strategies.

A) product-market diversification; international
B) international diversification; product-market
C) related diversification; unrelated diversification
D) unrelated diversification; related diversification

Question 58

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 59

A matrix organizational structure is characterized by a combination of the ______________ and _____________.

A) functional structure; divisional structure
B) simple structure; functional structure
C) simple structure; divisional structure
D) holding company structure; divisional structure

Question 60

Ambidextrous organizational designs are useful for firms that wish to create modest,incremental innovations at the same time as dramatic,breakthrough innovation.This is done by maintaining adaptability and alignment of values and coordination across organizational activities.

Question 61

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 62

A global start-up faces many management challenges including _____________.

A) communication and coordination across time zones
B) pressure to perform internally all primary activities of the value chain
C) assuring financing from home country only
D) hiring only from home country

Question 63

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 the strategy of a firm

Question 64

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

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

Question 65

Nike is a company that makes use of the concept of product expatriates.Product expatriates are _____________.

A) managers from the home country sent abroad to oversee the marketing of company products
B) managers from suppliers who come to work at the company headquarters
C) managers of the company sent abroad to work at the plants of its suppliers
D) local nationals hired by the company in the countries from which it sources products

Question 66

If an international firm has a multidomestic strategy and a relatively high level of product diversity,the best choice for its organizational structure is ______________ structure.

A) a worldwide functional
B) a worldwide product division
C) a worldwide matrix
D) an international division

Question 67

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) Additional integration issues result is a slower response to market changes.
D) If trust among employees is not sufficiently high, organizational performance may suffer.

Question 68

Which of the following is not a boundaryless organizational design?

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

Question 69

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

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

Question 70

The relationship between strategy and structure can be best described as _____________.

A) strategy determines structure but structure does not determine strategy
B) structure determines strategy but strategy does not determine structure
C) strategy and structure influence each other
D) a third force determines both strategy and structure

Question 71

If an international firm has a global strategy and a relatively low level of product diversity,the best choice for its organizational structure is ______________ structure.

A) a worldwide functional
B) a worldwide product division
C) a worldwide matrix
D) an international division

Question 72

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 73

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

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

Question 74

A virtual organization may be most appropriate for firms _____________.

A) whose strategies require merging technologies
B) whose product life cycles are just beginning
C) who have no need to get to market quickly with new offers
D) who have no need to meet competitive pressures

Question 75

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

Question 76

What advantages does outsourcing not provide an organization?

A) accessing best in class goods and services
B) enabling rapid expansion with relatively low capital investment
C) focusing scarce resources on core competencies
D) improved buyer positioning

Question 77

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 member

Question 78

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 79

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 80

According to author,Jeffrey Pfeffer,which of the following is not an advantage of teams?

A) Teams interact so closely and therefore coordination and integration becomes unnecessary.
B) Teams substitute peer-based control for hierarchical control of work.
C) Teams often develop more creative solutions, because they share.
D) Teams permit the absorption of administrative tasks previously performed by specialists.