Question 1

RexMacDonald, Inc., uses a differentiation strategy that relies on cooperation, communication, and sharing of ideas among employees. In order to foster this behavior, RexMacDonald should emphasize strategic controls over financial controls.

Accepted Answer

Strategic controls are typically focused on monitoring the achievement of long-term goals and objectives, such as developing a cooperative and communicative culture among employees. Financial controls, on the other hand, are more concerned with tracking and managing financial resources. Therefore, emphasizing strategic controls would better support RexMacDonald's differentiation strategy.

Question 2

The three types of organizational controls are strategic, isomorphic, and financial.

Accepted Answer

The three types of organizational controls are actually strategic, operational, and financial. Isomorphic control is a type of environmental control that refers to the pressures from external factors such as regulatory bodies or industry standards.

Question 3

Firms using the differentiation strategy need to respond quickly to environmental opportunities and threats. The functional structure is effective for this strategy because of its centralization of decision-making.

Accepted Answer

The statement is incorrect. The functional structure is not effective for the differentiation strategy because it is more bureaucratic and slow to respond to changes in the environment. The matrix or team-based structure may be more appropriate for this strategy as they allow for more flexibility and collaboration.

Question 4

A simple structure is an organizational form in which the owner-manager makes all major decisions directly and monitors all activities, while the staff merely serves as an extension of the manager's supervisory authority.

Accepted Answer

This is an accurate description of a simple structure.

Question 5

Centralized and formalized procedures allow for greater flexibility, an important factor for firms using a cost strategy.

Accepted Answer

Centralized and formalized procedures often result in rigid structures and limited flexibility, which can hinder the ability of firms to implement cost-saving strategies.

Question 6

A corporate-wide emphasis on sharing leads to a reliance on financial controls.

Accepted Answer

A corporate-wide emphasis on sharing typically leads to a reliance on social and collaborative controls rather than strictly financial controls, as it encourages open communication and teamwork.

Question 7

Decisions about strategy and structure are interrelated.

Accepted Answer

Decisions about strategy often influence the structure of an organization, and the structure of an organization can have an impact on the implementation of its strategy. Therefore, strategy and structure are interdependent and should be considered together when making decisions.

Question 8

There are three primary forms of the multidivisional structure.

Accepted Answer

The three primary forms of the multidivisional structure are product-based, market-based, and geographic-based.

Question 9

Diversification controls guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable.

Accepted Answer

The answer of Diversification controls guide the use of strategy,...

Question 10

Specialization refers to the extent to which authority for decision-making is retained at higher managerial levels.

Accepted Answer

Specialization refers to the degree to which tasks in an organization are divided into separate jobs. Centralization refers to the extent to which authority for decision-making is retained at higher managerial levels.

Question 11

Organizational structures must be both stable and flexible.

Accepted Answer

Organizational structures must be stable to provide consistency and order, but also flexible to adapt to changes and challenges in the environment.

Question 12

Research has consistently shown that there is one best way to structure all organizations, regardless of competitive strategy.

Accepted Answer

Research has shown that the most effective organizational structure can vary based on a company's competitive strategy, industry, culture, size, and other factors. Therefore, there isn't one best way to structure all organizations.

Question 13

As a firm grows, it typically shifts from a simple structure to a functional structure.

Accepted Answer

This is because a simple structure becomes inefficient and ineffective as the firm grows in size and complexity. A functional structure allows for specialized departments and roles to handle specific functions and tasks within the organization.

Question 14

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

Accepted Answer

The answer of Organizational inertia often prompts top management to...

Question 15

Organizations should first change strategy and then determine a compatible structure as it is easy to change existing structure.

Accepted Answer

The statement is false. A company's structure is a foundational element that determines how the organization functions and communicates. If the company's strategy changes, it may require a corresponding change in structure to effectively implement the new strategy. Changing the existing structure can be a challenging and time-consuming process, so it's important to align strategy and structure from the outset.

Question 16

In general, small firms, even if long-established, are best matched with simple structures.

Accepted Answer

Small firms typically have fewer employees and a narrower scope of operations, so a simple structure is often the most effective and efficient way to organize. Complex structures may lead to confusion and inefficiencies in small firms.

Question 17

Over time, large and complex organizations must customize their structure to fit their unique strategic needs.

Accepted Answer

As organizations grow and evolve, they often need to adapt their structure to better align with their strategic goals and objectives. This may involve changes to reporting relationships, departmental structures, and other elements of the organizational framework. However, it should be noted that not all changes will necessarily be large or complex - some organizations may simply need to make minor adjustments to maintain optimal performance.

Question 18

High levels of formalization of procedures are generally found in firms following a cost leadership strategy.

Accepted Answer

Cost leadership strategy aims to minimize costs and increase efficiency, which is often achieved through standardization and formalization of procedures. Therefore, high levels of formalization of procedures are generally found in firms following a cost leadership strategy.

Question 19

The marketing and R&D functions are emphasized in the differentiation strategy's functional structure.

Accepted Answer

In the differentiation strategy, emphasis is placed on product innovation and uniqueness, which is primarily achieved through marketing and research and development (R&D) functions. Therefore, the functional structure of this strategy tends to give more weight to these functions.

Question 20

To properly execute strategic controls in firms using related diversification, the executives must have a deep understanding of each unit's business-level strategy.

Accepted Answer

Strategic controls are put in place to evaluate the success of a firm's strategy and ensure that it is being executed effectively. To do this in a related diversification context, executives need to understand the business-level strategies of each unit within the company to ensure they align with the overall corporate strategy. Without this understanding, it would be difficult to properly evaluate the success of the firm's diversification efforts and make necessary adjustments to achieve strategic goals.

Quiz 11: Organizational Structure and Controls