Question 1

Icarus Aviation, Athena Instrumentation, and Hercules Miniaturization are strategic business units of Olympia Industries. One can expect that Icarus, Athena, and Hercules:
A) use integrative mechanisms to share core competencies.
B) compete with one another in Olympia's internal capital markets.
C) are not necessarily related to one another in terms of products or markets.
D) are network member firms while Olympia is the strategic center firm.

Accepted Answer

The answer of Icarus Aviation, Athena Instrumentation, and Hercules Miniaturization...

Question 2

The ______ structure is an organizational structure that combines both functional specialization and business product or project specialization.
A) functional
B) worldwide geographic area
C) network
D) matrix

Accepted Answer

The matrix structure combines both functional specialization and business product or project specialization, where employees report to both a functional manager and a product/project manager.

Question 3

The cooperative multidivisional firm:
A) establishes profit centers based on products or markets.
B) has a flat organizational structure which broadens jobs and empowers workers.
C) has a structure organized around both functional specialization and business projects.
D) has a structure requiring heavy use of horizontal integrative devices.

Accepted Answer

The answer of The cooperative multidivisional firm:
A) establishes profit centers...

Question 4

The BEST multidivisional structure to use:
A) is the competitive form.
B) is the SBU form.
C) is the cooperative form.
D) depends on the degree of diversification.

Accepted Answer

The best multidivisional structure depends on the degree of diversification because different structures are suited to different levels and types of diversification within an organization.

Question 5

Which of the following is a TRUE statement about implementing corporate-level strategies and effective organizational structures?
A) Firms pursuing a related linked strategy should implement a competitive structure with a competitive culture and centralized strategic-planning activities.
B) Firms pursuing an unrelated diversification strategy should use an SBU structure with a small corporate staff, emphasize the R&D function, and integrate divisions to achieve synergies.
C) Firms pursuing a related linked strategy should use an SBU structure, emphasize interdependence among divisions, and manage the strategic planning function from the central office.
D) Firms pursuing a related constrained strategy should implement a cooperative structure, use integrative devices to link divisions, centralize the R&D function, and emphasize sharing.

Accepted Answer

Firms pursuing a related constrained strategy benefit from a cooperative structure that facilitates sharing resources and capabilities across divisions, centralizes R&D to leverage synergies, and uses integrative devices to enhance coordination and sharing.

Question 6

The integrated cost leadership/differentiation strategy is difficult to implement mostly because:
A) different primary and support activities are emphasized when using cost leadership and differentiation strategies.
B) this strategic approach demands more flexibility than most firms can manage.
C) the dual reporting relationships required for this strategy slow organizational decision making.
D) the cost leadership strategy requires less structured job roles than does the differentiation strategy.

Accepted Answer

The integrated cost leadership/differentiation strategy requires a careful balance of cost reduction and product differentiation, which can be difficult to achieve as the different primary and support activities required for each strategy may conflict with one another. For example, in order to reduce costs, a firm may need to streamline its operations and reduce customization options, which could hinder its ability to differentiate itself from competitors. Finding ways to achieve both goals simultaneously requires strategic planning and execution, which can be challenging for many firms.

Question 7

A firm pursuing a related constrained diversification strategy would typically need all of the following EXCEPT:
A) centralization of some organizational functions for the sake of coordination.
B) frequent, direct contact between division managers.
C) division managers' rewards based on division financial performance.
D) temporary teams or task forces formed around specific projects.

Accepted Answer

The answer of A firm pursuing a related constrained diversification...

Question 8

When a corporation pursues a related constrained diversification strategy, financial controls may not add value to strategy implementation efforts because it is difficult to:
A) use them without reducing cooperation among divisional managers.
B) transfer capital between units.
C) maintain an arms-length relationship between headquarters and the divisions.
D) identify which objective criteria to monitor.

Accepted Answer

The answer of When a corporation pursues a related constrained...

Question 9

The ______ structure is the most appropriate structure for implementing the integrated cost leadership/differentiation strategy.
A) simple
B) functional
C) multidivisional
D) strategic business unit

Accepted Answer

The answer of The ______ structure is the most appropriate...

Question 10

Ortiz is a manager of BRS Corp. Ortiz's division did not meet financial targets this year. Ramirez, manager of another division, has indicated that Ortiz's division incurred significant costs which resulted in Ramirez's division setting record profits for the year. As a result, performance for BRS as a whole exceeded projections. Which pairing of organizational structures for BRS and bonus for Ortiz is most plausible?
A) Cooperative structure; no bonus due to failure to meet divisional target
B) Competitive structure; no bonus due to failure to meet divisional target
C) Cooperative structure; a bonus for increasing organizational performance
D) Competitive structure; a bonus for increasing organizational performance

Accepted Answer

In a cooperative structure, the focus is on overall organizational performance rather than individual divisions, so Ortiz may receive a bonus for contributing to the company's success despite not meeting divisional targets.

Question 11

Firms seeking to differentiate particularly need support from the ______ and ______ functions.
A) finance; accounting
B) engineering; operations
C) product R&D; marketing
D) management information; finance

Accepted Answer

Product research and development (R&D) is essential for creating unique and innovative products that can help a firm differentiate and stand out in the market. Marketing is also crucial in promoting and communicating the unique features and benefits of the differentiated products to customers. Finance, accounting, engineering, operations, and management information are all important functions in running a business, but may not be directly related to creating and promoting differentiation.

Question 12

Which of the following is a TRUE statement about organizational structures for implementing business-level strategies?
A) A cost leadership strategy requires a simple structure emphasizing high specialization, centralization, and structured job roles.
B) A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions.
C) An integrated cost leadership/differentiation strategy requires a multidivisional structure using high formalization, decentralized decision making, and vertical coordination.
D) A focused strategy requires a functional structure featuring high levels of both specialization and formalization.

Accepted Answer

A differentiation strategy requires a flexible and adaptive functional structure with cross-functional teams, limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions. A cost leadership strategy may require a simple structure with centralization and structured job roles. An integrated cost leadership/differentiation strategy may require a multidivisional structure with high formalization, decentralized decision making, and vertical coordination. A focused strategy may require a functional structure with high levels of both specialization and formalization, but this is not always the case.

Question 13

The heavy use of integrative mechanisms in the ______ multidivisional organizational structure is intended to achieve _______.
A) cooperative; economies of scope
B) competitive; cost efficiencies
C) functional; sensitivity to cultural diversity
D) SBU; quick response to local customer needs

Accepted Answer

The use of integrative mechanisms such as communication, coordination, and cooperation in the multidivisional organizational structure is intended to achieve economies of scope, which refers to the ability to share resources and capabilities across business units to reduce costs and increase efficiency. Choice B is incorrect because cost efficiencies are typically achieved through a focus on standardization and centralization, which are not emphasized in the multidivisional structure. Choice C is also incorrect because sensitivity to cultural diversity is not a primary goal of the multidivisional structure, which is more focused on decentralization and autonomy of business units. Choice D is partly correct in that the multidivisional structure does allow for some degree of quick response to local customer needs, but this is more of a secondary benefit rather than the primary goal.

Question 14

The ______ structure is best for implementing the related-constrained diversification strategy.
A) functional
B) competitive form of the multidivisional
C) SBU form of the multidivisional
D) cooperative form of the multidivisional

Accepted Answer

The answer of The ______ structure is best for implementing...

Question 15

Which of the following is NOT a variation of the multidivisional structure?
A) Competitive form
B) Regional form
C) Cooperative form
D) Strategic business unit form

Accepted Answer

The answer of Which of the following is NOT a...

Question 16

Successful implementation of the differentiation strategy requires a structure that:
A) has specialized jobs.
B) decentralizes decision making.
C) focuses on the finance function.
D) is dominated by the operations function.

Accepted Answer

The answer of Successful implementation of the differentiation strategy requires...

Question 17

Which organizational structure will emphasize financial controls for headquarters' evaluation of operating units while the operating units will emphasize strategic controls within their units' performance?
A) Functional
B) Cooperative M-Form
C) SBU form
D) Competitive M-Form

Accepted Answer

The SBU (Strategic Business Unit) form is a structure that allows for decentralized decision-making, with each operating unit having its own set of strategic objectives and financial goals. This allows for both strategic and financial controls to exist within the operating units and for headquarters to evaluate their performance based on financial controls. This structure also allows for greater flexibility and responsiveness to market changes, as each operating unit is able to adapt to its specific environment. The other options (functional, cooperative M-form, and competitive M-form) do not prioritize both financial and strategic controls in the same way as the SBU form.

Question 18

A private university is made up of various "schools," such as the School of Journalism, the School of Business, the School of Law, the School of Arts and Sciences, and so forth. The university is experiencing some financial problems, so the administration has decided to have each school of the university become a profit center. This scheme is somewhat parallel to the ______ organizational structure.
A) network
B) strategic business unit multidivisional
C) functional
D) matrix

Accepted Answer

The idea of each school becoming a profit center is similar to the concept of strategic business unit (SBU) in a multidivisional structure, where each SBU operates as a self-contained business with its own profit and loss responsibility.

Question 19

In an SBU structure, ______ is/are evaluated using strategic controls, whereas ______ is/are evaluated using financial controls.
A) each SBU; divisions within the SBUs
B) divisions within the SBUs; each SBU
C) managers of the SBUs; headquarters staff
D) headquarters staff; managers of the SBUs

Accepted Answer

The answer of In an SBU structure, ______ is/are evaluated...

Question 20

Typically, a successful firm pursuing a differentiation strategy will:
A) have a very hierarchical structure.
B) require a structure that is very formal.
C) use cross-functional development teams.
D) develop free-standing business units.

Accepted Answer

A differentiation strategy requires a firm to offer unique and superior products or services to its customers, and this often involves cross-functional development teams to bring together different areas of expertise and create innovative and distinctive offerings. A hierarchical or formal structure might hinder creativity and idea generation, and free-standing business units may not be necessary unless the differentiation strategy involves targeting multiple distinct markets.

Quiz 11: Organizational Structure and Controls

Icarus Aviation, Athena Instrumentation, and Hercules Miniaturization are strategic business units of Olympia Industries. One can expect that Icarus, Athena, and Hercules:

The ______ structure is an organizational structure that combines both functional specialization and business product or project specialization.

The cooperative multidivisional firm:

The BEST multidivisional structure to use:

Which of the following is a TRUE statement about implementing corporate-level strategies and effective organizational structures?

The integrated cost leadership/differentiation strategy is difficult to implement mostly because:

A firm pursuing a related constrained diversification strategy would typically need all of the following EXCEPT:

When a corporation pursues a related constrained diversification strategy, financial controls may not add value to strategy implementation efforts because it is difficult to:

The ______ structure is the most appropriate structure for implementing the integrated cost leadership/differentiation strategy.

Firms seeking to differentiate particularly need support from the and functions.

Which of the following is a TRUE statement about organizational structures for implementing business-level strategies?

The heavy use of integrative mechanisms in the multidivisional organizational structure is intended to achieve _.

The ______ structure is best for implementing the related-constrained diversification strategy.

Which of the following is NOT a variation of the multidivisional structure?

Successful implementation of the differentiation strategy requires a structure that:

Which organizational structure will emphasize financial controls for headquarters' evaluation of operating units while the operating units will emphasize strategic controls within their units' performance?

In an SBU structure, is/are evaluated using strategic controls, whereas is/are evaluated using financial controls.

Typically, a successful firm pursuing a differentiation strategy will: