Deck 12: Implementing Strategy in Companies That Compete in a Single Industry

Question 1

Flat structures can lead to information distortion when data are being sent either up or down the hierarchy.

Answer 1

False

Question 2

Effective organizational design can allow a company to obtain a competitive advantage but it has no impact on profitability.

Answer 2

False

Question 3

Controls at each level should provide the basis on which managers at the levels below design their control systems.

Answer 3

True

Question 4

When companies become too tall and the chain of command too long, strategic managers tend to lose control over the hierarchy and, subsequently, their strategies.

Question 5

Silica Dustcloud Inc.is a decentralized organization.This means that the organization promotes flexibility and reduces bureaucratic costs because lower-level managers are authorized to make on-the-spot decisions.

Question 6

The purpose of organizational structure is to provide managers with specific feedback on how well an organization and its members are performing and building competitive advantage.

Question 7

Information technology (IT) is playing an increasing role in strategy formulation.However, strategy implementation is not affected by IT in general.

Question 8

A division is a way of grouping functions to allow an organization to better produce and dispose of its goods and
senriCes.

Question 9

For each function, a cost leader adopts output controls that allow it to monitor and evaluate functional performance closely.

Question 10

The need for integrating mechanisms is greater when a company's structure is more complex.

Question 11

The reward system affects motivation, however, the type of organizational culture that develops in a company is primarily affected by the founder's values and not the reward system.

Question 12

Bradley is a new employee in the sales department at a local car dealership.In his first few months on the job, he will be learning the norms and values of the organization.This refers to organizational socialization.

Question 13

Organizational structure contributes to the strategy formulation by providing the framework of tasks and roles that reduces transaction difficulties and allows employees to think and behave in ways that allow a company to achieve superior performance.

Question 14

An important purpose of control systems is to motivate employees to work toward increasing efficiency, quality,
innovation, and responsiveness to customers.

Question 15

Effective strategy implementation is very important for cost leaders, but it is of less importance to differentiators.

Question 16

Span of control refers to the number of subordinates who report directly to one supervisor.

Question 17

Research finds that centralization of authority is never advantageous, not even in time of crisis.

Question 18

Control through culture is ineffective because employees do not internalize values.

Question 19

A product structure requires that support activities from a company's value chain be decentralized so that independent specialists in support activities exist within each product group.

Question 20

Control systems can help managers evaluate how efficiently they are producing goods and services.

Question 21

Ambrosia Inc.is organized into Consumer, Medical, and Pharmaceutical units to serve the needs of its different customer groups.Ambrosia is using a market structure.

Question 22

The process of deciding how a company should create, use, and combine organizational structure, control systems, and culture to pursue a business model successfully is referred to as:

A)organizational behavior.
B)organizational norm.
C)organizational design.
D)organizational ecology.
E)organizational density.

Question 23

To a large degree, any organization's tasks are a function of its:

A)market area.
B)labor supply.
C)supervisors.
D)strategies.
E)compensation plan.

Question 24

Organizational structure can be defined as:

A)the means through which a company assigns employees to specific tasks and roles and specifies how these tasks and roles are to be linked together to increase efficiency, quality, innovation, and responsiveness to customers.
B)the blueprint that states how managers intend to use organizational resources to most efficiently achieve organizational goals.
C)the specific collection of values, norms, beliefs, and attitudes that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization..
D)the degree to which a company specifies how decisions are to be made so that employees' behavior becomes predictable.
E)the process of redesigning business processes to achieve dramatic improvements in performance, such as cost, quality, service, and speed.

Question 25

Control through organizational culture is so powerful because:

A)it eliminates the need for managers in large companies.
B)it makes employees follow organizational values, after they've internalized them, without thinking about them.
C)it results in maximum decentralization and the elimination of bureaucracy.
D)it achieves increased performance through the alignment of organizational goals with external societal expectations.
E)it achieves external control through motivated coworkers.

Question 26

Restructuring always involves flattening the organizational hierarchy and downsizing the work force.

Question 27

Standardization is a form of:

A)output control.
B)fmancial control.
C)organizational inertia.
D)organizational culture.
E)behavior control.

Question 28

Fortunately, whenever different functions work together, bureaucratic costs inevitably declines.

Question 29

Building capabilities in organizational design that allow a company to develop a competitive advantage starts at the functional level.

Question 30

The degree to which a company specifies how decisions are to be made so that employees' behavior becomes predictable is referred to as:

A)uniformity of output.
B)conformity.
C)standardization.
D)maximization of effort.
E)behavioral control.

Question 31

Control through organizational culture:

A)is less expensive than output control.
B)reduces mutual adjustment.
C)involves employees internalizing the norms and values of the organization.
D)includes setting individual goals.
E)includes obtaining specific feedback to help managers evaluate performance.

Question 32

Silica Dustcloud Inc.plans to change its organization structure from a market structure to a functional structure and create separate divisions.This change will better serve its different groups of customers.

Question 33

Flat organizational structures are less flexible and tend to resist change.

Question 34

The purpose of a(n) is to provide managers with incentives for employees as well as feedback on how the company performs.

A)control system
B)adaptive culture
C)organizational design
D)span of control
E)hierarchy of authority

Question 35

An organization with a centralized structure has a potential for creating higher bureaucratic costs.

Question 36

Companies that are innovative and able to deal with environmental change with new strategies and structures probably have:

A)weak cultures.
B)strong functional cultures.
C)adaptive cultures.
D)prescriptive cultures.
E)cost-conscious culture.

Question 37

One of the main differences between a product team and a team in a matrix structure is that a matrix team is more permanent than a team in a product structure.

Question 38

In manufacturing, functional strategy usually centers on improving efficiency and quality.

Question 39

Which form of control would you most likely frnd in a voluntary or charity organization?

A)Bureaucratic control through rules and procedures
B)Control through norms and values
C)Financial control through accurate frnancial statements
D)Output control, since it is the cheapest
E)Incentive systems to motivate employees

Question 40

Organizational culture is:

A)the specific collection of values, norms, beliefs, and attitudes that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization.
B)the means through which a company assigns employees to specific tasks and roles and specifies how these tasks and roles are to be linked together to increase efficiency, quality, innovation, and responsiveness to customers.
C)the process of deciding how a company should create, use, and combine organizational structure, control systems, and culture to pursue a business model successfully.
D)the clear and unambiguous chain of command that defrnes each manager's relative authority from the CEO down through top, middle, to first-line managers.
E)the principle that a company should design its hierarchy with the fewest levels of authority necessary to use organizational resources effectively.

Question 41

A drawback of the functional structure is:

A)that each worker must report to more than one superior.
B)the difficulty in communicating and coordinating across functions.
C)too much decentralization of decision-making authority.
D)its lack of flexibility in decision-making. e.the need to downsize before implementing this structure.

Question 42

To reduce costs, cost leaders prefer to use to closely monitor and evaluate functional performance.

A)output controls
B)personal controls
C)behavioral controls
D)cultural controls
E)input controls

Question 43

Which of the following structures requires centralization of value chain support activities?

A)The product structure
B)The product team structure
C)The matrix structure
D)The functional structure
E)The innovative structure

Question 44

At Silica Dustcloud Inc., rules are published at the cubicle of all employees stating what is expected of them regarding time to arrive, time for lunch, when to take breaks, and when to socialize.Which of the following is this an example of?

A)Output control
B)Personal control
C)Behavior control
D)Conversion activities
E)Strategic competencies

Question 45

Organizations strive to control employees' behavior by linking systems to their control systems.

A)disciplinary
B)disincentive
C)reporting
D)administrative
E)reward

Question 46

At LittleHippo, an online retail company, the work environment is playful.Employees often get their pictures taken wearing silly wigs and masks.This atmosphere is part of the company's:

A)organizational density.
B)organizational structure.
C)organizational culture.
D)strategic control systems.
E)competitive envirornnent.

Question 47

When decision-making responsibilities are decentralized, benefits include all of the following except:

A)increased motivation and accountability.
B)lower bureaucratic costs from flattened hierarchy.
C)reduced information overload.
D)easier coordination of functions.
E)flexibility in decision-making.

Question 48

Flat organizational structures are characterized by:

A)many levels of management compared to the size of the company.
B)slower repose to changes in the competitive environment.
C)a relatively wide span of control.
D)reduced flexibility in decision-making strategies.
E)an increase in bureaucratic costs.

Question 49

The specific collection of values, norms, beliefs, and attitudes shared by people and groups in a company is commonly referred to as:

A)organizational fit.
B)organizational culture.
C)organizational development.
D)organizational positioning.
E)organizational design.

Question 50

An effective organizational design:

A)always follows a centralized structure.
B)keeps the number of employees to a minimum.
C)increases the cost structure.
D)economizes on bureaucratic costs.
E)maintains a tall hierarchical structure.

Question 51

In a successful company, the purpose of a control system is to:

A)provide managers with a set of incentives to motivate employees to work toward company goals.
B)allow the managers to use punishments as a tool to ensure that the employees meet the company targets.
C)collect values, norms, beliefs, and attitudes and share them with people and groups in an organization.
D)decide how a company should create, use, and combine organizational structure and culture.
E)assign employees to specific value creation tasks and roles and specify how these tasks and roles are to work together.

Question 52

If a firm fmds that its functional structure is becoming too complex as the firm grows in size, the firm can tum to:

A)a simple structure.
B)downsizing.
C)reengmeerrng.
D)restructuring. e.outsourcing.

Question 53

Eva Studio, an audio company, manufactures a wide range of sound systems such as noise-canceling headsets, loudspeakers, and amplifiers.Employees in EvaStudio are grouped such that each group works only on one type of sound system.Which of the following structures is EvaStudio is most likely to have employed?

A)Matrix
B)Multidivisional
C)Geographic
D)Functional
E)Product

Question 54

Natalie and Shay are both employees at Silica Dustcloud Inc.Natalie, the marketing manager, often meets with Shay, the production manager, in order to solve specific mutual problems.Which of the following is this an example of?

A)Organizational culture
B)Liaison roles
C)Direct contact
D)Diverging mechanisms
E)Strategic control

Question 55

Essentially, centralization or decentralization are concepts that refer to the:

A)levels where decisions are made in the hierarchy of an organization.
B)number of hierarchical levels existing in an organization.
C)tools that allow an organization to monitor and evaluate if its strategies and structure are working as intended.
D)business models oriented at expanding nationally and managing a wide range of products.
E)strategies implemented by an organization to create, market and distribute its products.

Question 56

Which of the following advantages does a functional organizational structure offer a company?

A)Diversification of activities leading to greater productivity
B)Lesser communication problems
C)Reduction in manufacturing costs and increase in operational flexibility
D)Ease in gauging the contribution of products to overall profitability
E)Faster servicing of customers

Question 57

The term used to describe how people learn an organization's culture and way of behaving in the organization is:

A)organizational structure.
B)organizational development.
C)organizational design.
D)organizational behavior.
E)organizational socialization.

Question 58

Which of the following strategic control systems do managers use to shape and influence the behavior of employees in face-to-face interactions?

A)Personal control
B)Output control
C)Behavior control
D)Input control
E)Process control

Question 59

Companies choose the number of hierarchical levels they need on the basis of their strategies and the functional tasks necessary to:

A)achieve diseconomies of scale.
B)create distinctive competencies.
C)enhance employee productivity.
D)enhance cross-departmental coordination.
E)attract skilled employees

Question 60

In any organization, for-profit or not-for-profit, span of control refers to the:

A)number of managers at the highest levels in the organization.
B)CEO and his or her management team.
C)number of subordinates who report directly to one manager.
D)number of supervisors in a specific segment of a manufacturing activity.
E)number of members elected or appointed to be the board of directors.

Question 61

Which of the following does restructuring involve?

A)Eliminating business units
B)Rethinking business processes
C)Creating more business units
D)Flattening the organizational hierarchy e.Broadening the span of control

Question 62

Which of the following is not one of the advantages of a geographic structure?

A)Promotion of innovation and product development due to intensive cross-functional integration
B)Responsiveness to the needs of regional customers
C)Lower transportation costs
D)More coordination and control than a functional structure e.Centralization of key activities and functions that allow leveraging skills across regions

Question 63

Consider the case of a family-run business that operates one small local retail shop and its subsequent expansion into more locations and more stores.Describe the changes that are likely to take place in that business's organizational structure as it grows in size, geographic dispersion, and complexity.Tell why the changes are beneficial for the business.

Question 64

When a company engages in restructuring, it may be necessary to:

A)increase its basic business operations.
B)increase the number of organizational levels.
C)lay off employees.
D)add to the operating costs.
E)retain the functional processes.

Question 65

Matrix structures:

A)have many hierarchical levels.
B)are appropriate for companies with many low-skilled workers.
C)group activities vertically by function and horizontally by product or project.
D)are appropriate for a firm pursuing a low-cost strategy. e.have several product group hierarchies and two forms of horizontal differentiation.

Question 66

A hospital examines its processes closely and then changes them radically to become more patient-centered.Among the changes are new ways of doing tasks and new groupings of workers.This is an example of:

A)restructuring.
B)reengineering.
C)total quality management.
D)benchmarking.
E)downsizing.

Question 67

Which of the following actions would you expect to see in a company that is undergoing a reengineering?

A)Hiring more managers
B)Hiring more workers
C)Examining activities from a customer's point of view
D)Investing more in product research and development (R&D) e.Centralizing decision-making authority

Question 68

All employees part of a project team within a structure are known as two-boss employees.

A)functional
B)geographic
C)market
D)matrix e.product

Question 69

Describe what is meant by the terms restructuring and reengineering, and discuss when and why they would be used.

Question 70

Describe the roles that organizational structure, strategic control systems, and organizational culture play in strategy implementation.

Question 71

A matrix structure would be the most appropriate for which of the following fmus?

A)A company in which each employee is required to have only one boss
B)A company operating in the maturity stage of the industry life cycle
C)A company which is dependent on rapid mobilization of resources for competitive success
D)A company with a high level of vertical differentiation e.A company in which the speed of product development is not crucial

Question 72

A typical matrix organizational structure:

A)groups employees in two ways simultaneously to maximize the rate at which different kinds of products can be developed.
B)breaks up a company's growing product line into a number of smaller, more manageable subunits.
C)groups people on the basis of their common expertise and experience or because they use the same resources.
D)is a way of grouping employees into separate customer groups so that each group can focus on satisfying the needs of a particular customer group. e.is a way of grouping employees to best satisfy the needs of customers within different regions.

Question 73

Identify and discuss the three building blocks of organizational structure.

Question 74

Restructuring is:

A)a rethinking and radical redesign of a firm's business processes.
B)a radical readjustment of the organization's staffrng and hierarchy.
C)a philosophy that states that mistakes, defects, and poor-quality materials are not acceptable and should be eliminated.
D)the shift that firms make from a functional to a more complex structure as the finn grows in complexity and SIZe.
E)employed when a finn needs help in improving its functional strategies.

Question 75

The organization structure that organizations most commonly adopt to solve control problems that result from producing many different kinds of products for many different market segments is the:

A)functional structure.
B)process structure.
C)matrix structure.
D)product structure. e.differentiated structure.