Deck 9: Implementing Strategy Through Organizational Design

Question 1

Centralization promotes organizational flexibility.

Answer 1

False

Question 2

The basic building blocks of organizational structure are differentiation and integration.

Answer 2

True

Question 3

Authority is centralized when managers at upper levels of the organizational hierarchy retain the authority to make the most important decisions.

Answer 3

True

Question 4

Vertical integration refers to the number of subordinates a manager directly manages.

Question 5

The primary role of organizational structure is to coordinate employees activities to effectively implement strategy and to motivate employees to achieve superior efficiency.

Question 6

The principle of minimum chain of command states that an organization should choose a hierarchy with the minimum number of levels of authority necessary to achieve its strategy.

Question 7

Strategy is implemented through organizational design.

Question 8

Span of control is the means by which a company seeks to coordinate people and functions to accomplish organizational tasks.

Question 9

Product structures arrange and group people on the basis of their common expertise and experience or because they use the same resources.

Question 10

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

Question 11

Organizational structure and control shape the way people behave and determine how they will act in the organizational setting.

Question 12

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 13

Organizational design means selecting the combination of organizational structure and control systems that lets a company pursue its strategy most effectively.

Question 14

Flat organizational structures have few hierarchical levels relative to size.

Question 15

The role 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 16

The degree of horizontal differentiation in the product structure is higher than in the functional structure.

Question 17

The value creation activities of organizational members are meaningless unless some type of structure is used to assign people to tasks and link the activities of different people and functions.

Question 18

As a company grows and diversifies the number of levels in its hierarchy decreases.

Question 19

Effective organizational design can simultaneously allow a company to obtain a competitive advantage and create value.

Question 20

When corporate managers choose how to divide people and tasks into functions and divisions to increase their ability to create value, they are making horizontal differentiation choices.

Question 21

The costs of operating a multi-divisional structure are high compared to the functional structure.

Question 22

The profitability of different business divisions is hard to ascertain in the multi-divisional structure.

Question 23

Corporate managers must carefully control interactions with division managers to ensure that both short- and long-term goals are being met.

Question 24

The multi-divisional structure allows each division to adopt the structure that best suits its needs.

Question 25

Divisional battles may lead to battles over transfer pricing.

Question 26

Organizational control is the process by which managers monitor the ongoing activities of an organization and its members to evaluate whether activities are being performed efficiently and effectively.

Question 27

The implementation issue for managers is to match differentiation with the level of integration to make organizational structure work efficiently.

Question 28

The most common measures managers and other stakeholders use to monitor and evaluate a company's performance are financial controls.

Question 29

Output controls exist when strategic managers establish goals and measures to evaluate efficiency, quality, innovation, and responsiveness to customers.

Question 30

Behavior control is a system of control based on the establishment of a comprehensive system of rules and procedures to direct the actions or behavior of divisions, functions, and individuals.

Question 31

The product-team structure relies on the multi-divisional teams.

Question 32

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

Question 33

Strategic control systems are the formal target-setting, measurement, and feedback systems that enable strategic managers to evaluate whether a company is implementing its strategy successfully.

Question 34

An organization that divides manufacturing and operations be regions uses geographic structure.

Question 35

In a multi-divisional structure corporate managers can compare the performance of one division against another in terms of its cost structure or the profit it generates.

Question 36

One advantage of the multi-divisional structure over a functional structure is that each distinct product line or business unit is placed in its own self-contained unit or division, with all support functions.

Question 37

A complex form of integrating mechanisms is needed when a company's structure is complex.

Question 38

When more than two functions or divisions share a common problem, a task force may be the appropriate integrating mechanism.

Question 39

Competition for resources is one of the advantages of the multi-divisional structure.

Question 40

In the multi-divisional structure day-to-day operations are the responsibility of corporate headquarters.

Question 41

Flat organizational structures are characterized by

A) few levels of management and a relatively narrow span of control.
B) few levels of management and a relatively wide span of control.
C) many levels of management and a relatively narrow span of control.
D) many levels of management and a relatively wide span of control.
E) None of these.

Question 42

Tall organizational structures are characterized by

A) few levels of management and a relatively narrow span of control.
B) few levels of management and a relatively wide span of control.
C) many levels of management and a relatively narrow span of control.
D) many levels of management and a relatively wide span of control.
E) None of these.

Question 43

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

A) Increasing specialization and productivity of workers
B) Sharing of task-specific knowledge
C) Easier for employees to monitor each other
D) Better focus on diverse customer needs
E) Greater ability for managers to exercise control

Question 44

_______________ provides the vehicle through which managers can coordinate the activities of a company's various functions, divisions, and business units to take advantage of their skills and competencies.

A) Organizational structure
B) Decentralization
C) Organizational culture
D) Span of control
E) Strategic control

Question 45

In the ___________ structure activities are grouped by product line.

A) functional
B) product team
C) geographical
D) multi-divisional
E) product

Question 46

Which of the following is not a problem in firms with a tall organizational structure?

A) Motivational problems
B) Wide spans of control
C) Information distortion
D) High managerial costs
E) Coordination problems

Question 47

In a multidivisional structure

A) support functions, such as accounting, are centralized at the top of the organization.
B) corporate headquarters staff have operating responsibility.
C) divisional managers have overall corporate strategic responsibility.
D) corporate headquarters is responsible for overseeing the company's long-term plans and providing guidance to divisional managers.
E) financial controls are necessarily weak.

Question 48

Each organizational function needs to develop a distinctive competency in a value creation activity in order to increase

A) efficiency.
B) quality.
C) customer responsiveness.
D) innovation.
E) all of the above.

Question 49

The "minimum chain of command" principle states that firms should use the __________ levels of hierarchy that are necessary, and often result in organizational structures that are __________.

A) most; taller
B) fewest; taller
C) minimum; ineffective
D) minimum; flatter
E) highest; flat

Question 50

As new, small firms grow and mature, which structure are they likely to choose?

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

Question 51

In the _________________, the manufacturing function is broken down into different product lines based on the similarities and differences among products.

A) The product structure
B) The product team structure
C) The matrix structure
D) The product and product team structures
E) The matrix and product team structures

Question 52

A camera manufacturer that has separate divisions for making personal cameras, movie cameras, and film acquired a small film developer and a car battery supplier. Which of the following structures is most appropriate for this firm?

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

Question 53

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

A) increased motivation and accountability.
B) lower managerial costs from flattened hierarchy.
C) reduced information overload.
D) easier coordination of the organizational activities needed to pursue a company's strategies.
E) All of these are benefits of decentralization.

Question 54

In the ___________ structure activities are grouped by geographic region.

A) geographical
B) product
C) functional
D) multidivisional
E) product team

Question 55

The advantages of a multi-divisional structure do not include

A) enhanced corporate financial controls.
B) enhanced strategic controls.
C) reduced differentiation.
D) enhanced ability to overcome organizational limits to its growth.
E) stronger pursuit of internal efficiency.

Question 56

The two main innovations in a multidivisional structure (over a functional or product structure) are

A) a matrix structure at the divisional level and a flat structure at the corporate level.
B) a product structure at the divisional level and a functional structure at the corporate level.
C) the organization of business units into one or more divisions and the placement of corporate-level positions to oversee the activities and financial control over each division.
D) self-contained divisions with operating responsibility and a group of divisional managers with collective strategic responsibility.
E) a matrix structure at the divisional level and a functional structure at the corporate level.

Question 57

Authority is _________________ when managers at the upper levels of the organizational hierarchy retain the authority to make the most important decisions.

A) decentralized
B) centralized
C) dispersed
D) universally effective
E) differentiated

Question 58

Which of the following structures results in the creation of an office of corporate headquarters staff?

A) Functional
B) Multi-divisional
C) Geographic
D) Matrix
E) Product team

Question 59

To best meet the needs of its customers, a nationwide home supply company, such as Home Depot, should adopt a _______________ structure.

A) geographical
B) product
C) functional
D) multidivisional
E) product team

Question 60

In a multidivisional structure, which form of control is used to compare the relative performances of different divisions?

A) Output control
B) Bureaucratic control
C) Control through culture
D) Financial control
E) Adaptive control

Question 61

Give a real or a hypothetical organizational example of how structure, strategic control systems, and culture interact with each other.

Question 62

Which form of control was transmitted by Walt Disney?

A) Bureaucratic control through rules and procedures
B) Control through norms and values
C) Financial control through accurate financial statements
D) Output control
E) Incentive systems

Question 63

The virtue of shared values is that it

A) replaces the need for formal organizational cultures.
B) creates strong functional cultures.
C) increases integration and improves coordination among organizational members.
D) replaces strategic leadership.
E) controls the way employees think and behave.

Question 64

Strategic control systems

A) enable a company to evaluate whether it is successfully implementing its strategy.
B) help managers determine which generic strategy to pursue.
C) are used only at the business level.
D) allow firms to control the external environment.
E) are most effective for firms pursuing cost leadership.

Question 65

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

Question 66

Control through organizational culture

A) is faster than output control.
B) reduces mutual adjustment.
C) reduces mutual adjustment and includes setting individual goals.
D) includes setting individual goals.
E) involves employees internalizing the norms and values of the organization.

Question 67

Standardization is employed to squeeze out costs in manufacturing. Standardization may be achieved through standardization of

A) inputs.
B) work processes.
C) outputs.
D) both work processes and outputs.
E) inputs, conversion activities, and outputs.

Question 68

The wasteful duplication of functional resources is most likely to arise with a

A) multidivisional structure.
B) product team structure.
C) matrix structure.
D) functional structure.
E) geographic structure.

Question 69

Bill Gates' deliberate cultivation of values that encourage subordinates to perform in innovative and creative ways is an example of

A) organizational culture.
B) output control.
C) integration.
D) behavior control
E) standardization.

Question 70

Which of the following is not a benefit of strategic control systems?

A) They help managers obtain superior organizational structure.
B) They help managers establish ambitious goals and targets.
C) They help managers develop performance measures.
D) They help managers excel in their quest to raise performance.
E) They help managers stay focused on important problems confronting the organization.

Question 71

Which structure uses self-contained divisions to perform all value creation functions to gain competitive advantage?

A) Product team
B) Product
C) Multidivisional
D) Market
E) Functional

Question 72

Which of the following is not one of the company levels where strategic control systems measure performance?

A) Functional
B) Corporate
C) Divisional
D) Board of directors
E) Individual

Question 73

Which of the following is not one of the problems in implementing a multidivisional structure?

A) Establishing the divisional-corporate authority relationship
B) Distortion of information
C) Long-term R&D focus
D) Competition for resources
E) Transfer pricing

Question 74

A national oil company would be most likely to use __________ to control its chain stores.

A) ROIC
B) standardization
C) corporate goals
D) socialization
E) divisional goals

Question 75

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

Question 76

Control through organizational culture is so powerful because

A) it increases the costs of organizational control in a large company.
B) self-control develops through the establishment of an internal system of organizational values.
C) it results in maximum decentralization and the elimination of bureaucracy.
D) it achieves increased performance through the alignment of organizational goals with societal expectations.
E) it achieves external control through motivated co-workers.

Question 77

Which of the following integrating mechanisms consists of one member from each relevant function or division assigned to an ad hoc committee?

A) Direct contact
B) Interdepartmental liaison
C) Temporary task force
D) Permanent team
E) The matrix structure

Question 78

Which of the following is not a type of organizational control system?

A) Output control
B) Span of control
C) Behavioral control
D) Financial control
E) All of these are types of organizational control systems.

Question 79

Standardization is a form of

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

Question 80

Transfer pricing is used most commonly in a

A) multidivisional structure.
B) product team structure.
C) functional structure.
D) matrix structure.
E) geographic structure.