Deck 12: Implementing Strategy Through Organization

Question 1

In a related multidivisional structure, the concept of corporate culture is meaningless.

Answer 1

False

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

Control systems at higher levels of management should provide the basis for lower-level managers to design their control systems.

Question 6

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 7

Organization architecture is the interaction of structure, controls & incentives, people, processes, and culture within the organization.

Question 8

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

Question 9

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 10

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

Question 11

Organizational structure is at the core of an organizations architecture.

Question 12

Competition for resources is one of the drawbacks of the multidivisional structure.

Question 13

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

Question 14

In a multidivisional structure, corporate managers can compare the performance of one division to another in terms of its cost structure or the profit it generates.

Question 15

In a firm with a multidivisional structure, corporate managers oversee the actions of divisional managers.

Question 16

In the multidivisional structure, each division typically contains only a partial set of value chain activities.

Question 17

Control systems can help managers evaluate how efficiently a company is producing goods and providing services.

Question 18

The organizational hierarchy is flatter in a multidivisional structure than in a product or functional structure.

Question 19

Different divisions in a firm with a multidivisional structure are not given authority to adopt their own organizational structures.

Question 20

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

Question 21

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

Question 22

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

Question 23

The purpose of a(n) _____ is to provide managers with incentives for motivating 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 24

Organizational culture is:

A) the norms and value systems that are shared among the employees of an 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 defines 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 25

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 26

Organizational structure can be defined as:

A) the combination of the location of decision-making responsibilities, the formal division of the organization into subunits, and the establishment of integrating mechanisms to coordinate the activities of the subunits.
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 27

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

Question 28

Control through organizational culture is so powerful because:

A) it eliminates the need for managers in large companies.
B) ?it enables employees to 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 29

The totality of a firm's organizational arrangements including its formal organizational structure, control systems, incentive systems, organizational culture, organization processes, and human capital is referred to as:

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

Question 30

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 31

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 32

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

Question 33

To build capabilities in organizational design that would allow a company to develop a competitive advantage, strategic managers must start at the functional level.

Question 34

PeopleFinder, a start-up social media network, is a decentralized organization. This means that the organization promotes flexibility and reduces bureaucratic costs; lower-level managers are authorized to make on-the-spot decisions.

Question 35

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

Question 36

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 37

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

Question 38

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

Question 39

An organization with a centralized structure has a potential for creating high bureaucracy.

Question 40

Which of the following is not an element of organizational architecture?

A) Location
B) ?Culture
C) Processes
D) Structure
E) People

Question 41

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 42

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 43

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

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 that 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 44

Natalie and Shay are both employees at RightTool, Inc., the marketing manager, often meets with Shay, the production manager, in order to solve specific mutual problems. This is an example of:

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

Question 45

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

A) disciplinary
B) ?disincentive
C) reporting
D) administrative
E) incentive

Question 46

If a firm's leaders are using a functional structure but feel it is becoming too complex as the company grows in size, the leaders can turn to:

A) a simple structure.
B) ?downsizing.
C) reengineering.
D) restructuring.
E) a multidivisional structure.

Question 47

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 48

At FastFries, a fast food restaurant, rules are published in all employee areas, explaining expectations regarding arrival time, lunch breaks, when to take shorter breaks, and when to socialize. This is an example of:

A) Output control.
B) ?Personal control.
C) Bureaucratic control.
D) Conversion activities.
E) Strategic competencies.

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

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 environment.

Question 51

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) organizational processes.
D) maximization of effort.
E) behavioral control.

Question 52

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 53

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 should work together.

Question 54

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

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

Question 55

To reduce costs, companies pursuing a cost leadership strategy 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 56

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 57

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 58

All employees participate in a project team within a _____ structure. They are known as two-boss employees.

A) functional
B) ?geographic
C) market
D) matrix
E) product

Question 59

Which of the following does delayering 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 60

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 61

Delayering is:

A) a rethinking and radical redesign of a firm's business processes.
B) ?a radical readjustment of the organization's staffing 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 firm grows in complexity and size.
E) employed when a firm needs help in improving its functional strategies.

Question 62

Identify and discuss the three building blocks of organizational structure.

Question 63

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 64

Explain the benefits of the multidivisional structure for managing a firm that competes in several industries.

Question 65

What would be the result if a company were to successfully align its organizational structure with its business-level strategy?

A) Performance will decline
B) ?Performance will improve
C) Flexibility will improve
D) Stability will decline
E) Improvements in bureaucratic controls

Question 66

When a company engages in delayering, 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 67

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 68

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

Question 69

Flat organizational structures are characterized by:

A) many levels of management compared to the size of the company.
B) ?slower response 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 70

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 whether or not its strategies and structure are working as intended.
D) business models designed to help a company expand nationally and manage a wide range of products.
E) strategies implemented by an organization to create, market and distribute its products.

Question 71

Which is an example where a low integration control system would work best?

A) A high-tech firm that needs to change to meet customer demands
B) ?A chemical company looking to diversify its existing product line with products that are similar
C) A construction company looking to diversify its existing service line with services that are unrelated
D) An apparel company pursuing a differentiation strategy 
E) A manufacturing company looking to expand into other markets