Question 1

As shown in the chapter Opening Case, Cisco's three semiautonomous lines of business each containing a self-contained organization with separate marketing and operational groups was appropriate for its rapid growth market.

Accepted Answer

The opening case of the chapter highlights how Cisco's three semiautonomous lines of business contributed to its rapid growth in the market by allowing each business unit to have its separate marketing and operational groups.

Question 2

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 focus on building and maintaining the company's overall strategy and culture, which is important for promoting cooperation, communication, and idea sharing among employees. Financial controls focus on monitoring and managing financial performance, which may not directly contribute to promoting these behaviors. Therefore, RexMacDonald should prioritize strategic controls over financial controls to support its differentiation strategy.

Question 3

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

Accepted Answer

False

Question 4

Strategic controls are largely subjective criteria intended to verify that the firm is using appropriate strategies for the conditions in the external environment and the company's competitive advantages.

Accepted Answer

Strategic controls are subjective because they involve the evaluation of factors that are difficult to measure objectively, such as the effectiveness of a company's strategy in relation to the external environment and the company's resources and capabilities. The purpose of strategic controls is to ensure that the company remains aligned with its strategic goals and objectives, and that its strategy is adaptive to changes in the external environment.

Question 5

Decisions about strategy and structure are interrelated.

Accepted Answer

Decisions about strategy and structure are closely linked. The strategy of an organization will guide decision-making about the structure of the organization, and the structure will impact the implementation of the strategy. Therefore, strategy and structure are interdependent and interrelated.

Question 6

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 optimal organizational structure may vary depending on the competitive strategy of the organization. For example, a company pursuing a differentiation strategy may benefit from a more flexible and decentralized structure, while a company pursuing a cost leadership strategy may benefit from a more centralized and standardized structure. Therefore, there is not one best way to structure all organizations.

Question 7

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

Accepted Answer

Small firms may not have the resources and complexity to support a more elaborate organizational structure. A simple structure allows for flexibility and faster decision-making, which can be beneficial for these types of businesses.

Question 8

Organizational 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

Organizational controls are put in place to guide the use of strategy, facilitate the comparison of actual results with expected results, and direct corrective action in case of discrepancies.

Question 9

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

Accepted Answer

As organizations grow and face new challenges, their structure must evolve to meet their specific needs and goals. A one-size-fits-all approach to organizational structure is not effective in the long-term. Therefore, it is true that large and complex organizations must customize their structure to fit their unique strategic needs.

Question 10

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

Accepted Answer

As firms grow, they tend to adopt more complex structures to manage their operations efficiently. The functional structure is one of the most common structures used by large organizations to manage their activities, which involves grouping employees based on their specialized skills and functions such as finance, marketing, production, etc.

Question 11

Research shows that structure has a more important influence on strategy than the reverse and hence the emphasis of the chapter on the subject of structure.

Accepted Answer

The answer of Research shows that structure has a more...

Question 12

In the chapter Opening Case, the reorganization of Cisco's structure was necessary given the dramatic drop in growth. The new structure, however, caused costs to rise as many more groups or divisions were created.

Accepted Answer

The answer of In the chapter Opening Case, the reorganization...

Question 13

According to the chapter Opening Case, to manage its expansion, Cisco will likely change its structure to a corporate M-form.

Accepted Answer

The chapter's opening case mentions that Cisco is expected to adopt a corporate M-form structure as part of its expansion strategy. This structure will enable the company to function as a holding company with multiple semi-autonomous business units that can focus on specific markets or product lines.

Question 14

According to Michael Dell, an overemphasis on financial controls to produce attractive short-term results contributed to performance difficulties at Dell, Inc. This point emphasizes the importance of properly balancing the use of strategic and financial controls.

Accepted Answer

The statement accurately reflects Michael Dell's comments on the issue of balancing strategic and financial controls.

Question 15

Companies and business units of large diversified firms using the cost leadership strategy should use strategic controls.

Accepted Answer

The answer of Companies and business units of large diversified...

Question 16

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

Proper execution of strategic controls in related diversification requires a thorough understanding of each unit's business-level strategy.

Question 17

Companies and business units using the differentiation strategy should emphasize strategic controls (such as subjective measures of the effectiveness of product development teams).

Accepted Answer

The answer of Companies and business units using the differentiation...

Question 18

With a related diversification corporate-level strategy, financial controls are used by corporate leaders to verify the sharing of appropriate strategic factors such as knowledge, markets, and technologies across businesses.

Accepted Answer

The answer of With a related diversification corporate-level strategy, financial...

Question 19

Organizational structures must be both stable and flexible.

Accepted Answer

Organizational structures need to be stable in order to provide a sense of consistency and reliability to employees, but they also need to be flexible enough to adapt to changes in the environment and market conditions.

Question 20

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

A simple structure is characterized by a centralized decision-making authority, typically held by the owner-manager, with little or no specialization of tasks among employees.

Quiz 11: Organizational Structure and Controls