Deck 11: Organisational Structure and Controls

Question 1

To implement a related constrained strategy, a firm usually needs a cooperative form of multi-divisional strategy.

Answer 1

True

Question 2

Structural stability is more important than structural flexibility.

Answer 2

False

Question 3

Organisational structure is a critical component of effective strategy formulation processes.

Answer 3

False

Question 4

Modifications to a firm's current strategy or decisions on a new strategy call for changes to its organisational structure.

Question 5

A strategic business unit (SBU) structure consists of at least three levels: the corporate headquarters at the top, followed by SBU groups, and then divisions grouped by relatedness within each SBU.

Question 6

Strategic controls are concerned with examining the fit between what a firm might do and what it can do.

Question 7

Organisational structure specifies a firm's formal reporting relationships, procedures, controls, and authority and decision-making processes.

Question 8

Strategic controls are easy to use when a firm diversifies extensively.

Question 9

An organisational structure's effectiveness is determined based on a combination of strategic, operational and financial controls.

Question 10

Because firms need to respond quickly to environmental opportunities and threats, the implementation of the differentiation strategy is positively affected when a firm is centralised and formalised.

Question 11

The primary factors that cause firms to change from a functional structure to an M-form structure are the CEO's increasingly limited ability to set a strategic direction for the firm and the focus of functional managers on local issues.

Question 12

Chandler found that firms tend to grow in somewhat predictable patterns, first by volume, then by geography, next integration and finally through product and business diversification.

Question 13

While strategy and structure have reciprocal relationships, the impact of structure on strategy is often stronger than that of strategy on structure.

Question 14

According to Alfred Chandler, organisations change their structures to increase their ability to innovate.

Question 15

Rapid adaptation to the environment, greater flexibility and openness to innovation are some of the competitive advantages a firm can gain when using a simple structure.

Question 16

The functional structure is most appropriate for larger firms implementing a strategy that includes high levels of diversification.

Question 17

The simple structure, functional structure and multi-divisional structure are three major types of organisational structures that are used to implement strategies.

Question 18

Firms implementing the multi-domestic strategy often attempt to isolate themselves from global competitive forces by establishing the low-cost position in the industry.

Question 19

The multi-divisional structure tends to do better than the simple structure, although it does not necessarily perform better than the functional structure.

Question 20

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

Question 21

The different forms of the functional organisational structure can be accounted for by three dimensions:

A)specialisation, formalisation and divisionalisation
B)divisionalisation, functionalisation and centralisation
C)centralisation, formalisation and specialisation
D)specialisation, functionalisation and differentiation

Question 22

Functional structures work best for firms with:

A)single-business and dominant-business strategies
B)conglomerate strategies
C)diversified products
D)diversified markets

Question 23

Regarding the lack of inherent superiority of one organisational structure over others, Peter Drucker noted that:

A)a firm must select the simplest structure
B)multi-divisional structures address the needs of diversification
C)functional line managers are placed in dominant organisational areas, which improves organisational performance
D)it is important to select the organisation for the particular task and mission at hand

Question 24

Firms implementing a low-cost strategy should use a ________ structure.

A)highly centralised functional
B)highly formalised simple
C)specialised multi-divisional
D)product line

Question 25

Which one of the following is not a characteristic of the simple structure?

A)Close coordination
B)Unsophisticated information systems
C)Few rules
D)Limited task specialisation

Question 26

The ________ structure is the most appropriate structure for implementing the integrated low-cost/differentiation strategy.

A)simple
B)functional
C)multi-divisional
D)strategic business unit

Question 27

The cooperative M-form:

A)seeks to build an organisation in which all people respect one another
B)is common in European countries and seeks to build a flat organisation in which all workers share in all responsibilities
C)is a structure organised around both functional specialisation and business projects
D)is a structure in which horizontal integration is used to bring about interdivisional cooperation

Question 28

Research shows that once in place, ________ often inhibit(s) efforts to change structure, even when a firm's performance suggests that it is time to do so.

A)financial controls
B)organisational inertia
C)resistance to change
D)structural stability

Question 29

The functional structure allows for effective:

A)control of strategic issues by functional managers
B)control of potentially time-consuming activities by the chief executive
C)control of any myopic vision
D)development of professional expertise in functional areas

Question 30

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)evaluate the financial performance of individual business units and their managers
B)transfer capital between units
C)deal with the multiple responsibilities and authorities of division managers
D)identify which objective criteria to monitor

Question 31

Structural change is often induced by the actions of ________ who are no longer willing to tolerate the firm's performance.

A)shareholders
B)stakeholders
C)managers
D)board of directors

Question 32

With related corporate-level strategies, strategic controls are used to verify the sharing of appropriate strategic factors such as ________ across businesses.

A)technologies, human capital and resources
B)knowledge, markets and technologies
C)tangible resources, intangible resources and capabilities
D)capabilities, markets and tangible resources

Question 33

Strategic controls are concerned with examining the fit between:

A)what a firm might do and what it can do
B)what a firm can do and when it should do it
C)what a firm might do and how it could be done
D)what a firm can do and how it will be done

Question 34

Chandler found that firms tended to grow in somewhat predictable patterns in the following order:

A)geography, volume, horizontal integration and vertical integration
B)focusing, product diversification, market diversification and international diversification
C)horizontal integration, vertical integration, product diversification and business diversification
D)volume, geography, integration and product/business diversification

Question 35

Successful implementation of the differentiation strategy requires that:

A)decision making be centralised
B)decision making be decentralised
C)the finance function be the dominant function
D)the accounting function be the dominant function

Question 36

________ provides the capacity a firm requires to consistently and predictably manage its daily work routines.

A)Structural stability
B)Structural flexibility
C)Strategic control
D)Firm's strategy

Question 37

Which one of the following is not a benefit of the M-form structure?

A)It enables corporate officers to more accurately monitor the performance of each business, which simplifies the problem of control.
B)It allows for functional specialisation, thereby facilitating active sharing of knowledge within each functional area.
C)It stimulates managers of poorly performing divisions to look for ways of improving performance.
D)It facilitates comparisons between divisions, improving the resource allocation process.

Question 38

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

A)the strategic and tactical actions required to implement the low-cost and differentiation strategies are not the same
B)this strategic approach demands more flexibility than most firms can manage
C)it is difficult to balance the structural emphasis between the two strategies
D)the low-cost strategy requires less structured job roles than does the differentiation strategy

Question 39

Selecting the organisational structure and controls that effectively implement the chosen strategy is a challenge for managers because:

A)firms in the global economy must be flexible while retaining a degree of stability
B)managers are never able to obtain all the information necessary to make the best selection
C)the structure of a firm should not duplicate the structures of its competitors
D)the environment changes too rapidly for corporations to maintain a consistent corporate structure

Question 40

The worldwide product divisional structure has centralised decision-making authority in the worldwide division headquarters to coordinate and integrate decisions and actions among disparate units.

Question 41

Discuss the organisational structures used to implement different business-level strategies.

Question 42

Define organisational structure.Why is organisational structure a critical component of effective strategy implementation processes?

Question 43

A strategic network is:

A)an alliance between a firm and its suppliers
B)a loose federation of partners who participate in the network's operations
C)a combination of cooperative relationships
D)a combination of worldwide area firm's partners

Question 44

Implementing the multi-domestic strategy requires decentralisation:

A)to emphasise national interests and facilitate a firm's efforts to satisfy local or cultural differences
B)that utilises a common approach in each country to maintain consistency
C)to be avoided at all costs
D)to make the most of R&D spending

Question 45

Discuss the structural characteristics associated with implementing a cost leadership strategy.

Question 46

Describe the four primary tasks of the strategic centre firm in a strategic network.

Question 47

Describe the organisational structures used to implement the three international strategies.

Question 48

A matrix organisation is characterised by:

A)a hierarchy of authority
B)decentralised decision making
C)a dual structure combining both functional specialisation and business product or project specialisation
D)a dual organisation featuring both M-form and simple organisational structures

Question 49

What are some of the implementation issues with a strategic network of vertical relationships?

Question 50

A key disadvantage of the multi-domestic strategy/worldwide geographic area structure is:

A)the inability to foster cooperation across SBUs
B)that it increases complexity of organisational structure
C)the inability to create strong global efficiency
D)the inability to quickly respond to local needs and preferences

Question 51

The transnational strategy seeks to:

A)achieve high-quality managerial decisions
B)provide local responsiveness and achieve global efficiency
C)obtain the best prices for raw materials and develop efficient distribution systems
D)obtain cultural diversity among business units and harmony at headquarters

Question 52

Define organisational controls.Why are organisational controls important?

Question 53

The transnational strategy is best implemented using the ________ structure.

A)matrix
B)global
C)combination
D)multi-divisional

Question 54

The competitive form of the multi-divisional structure facilitates internal competition.Discuss the potential benefits.

Question 55

Discuss the organisational structures used to implement corporate-level strategies.

Question 56

An organisation structure in which controls emphasise competition for corporate capital between separate (usually unrelated) divisions is the definition of the ________ of the multi-divisional structure.

A)competitive form
B)cooperative form
C)strategic business unit form
D)matrix form

Question 57

Describe the dominant path of evolution of a firm's structure.