Question 1

Why would an ambidextrous organizational structure be difficult for traditional hierarchical managers to organize?

Accepted Answer

An ambidextrous organizational structure refers to a company's ability to balance two different types of business processes: exploitation, which involves refining and improving existing products and services, and exploration, which focuses on innovation and developing new products or markets. This structure often requires a flexible and adaptable approach to management, which can be challenging for managers accustomed to traditional hierarchical structures. Here are several reasons why:

1. **Resistance to Change**: Managers in traditional hierarchical organizations may be resistant to the changes required to implement an ambidextrous structure. They are often used to a clear chain of command and well-defined responsibilities, and the fluidity of roles and responsibilities in an ambidextrous organization can be unsettling.

2. **Loss of Control**: In a hierarchical structure, managers have clear authority over subordinates, and decision-making is often centralized. An ambidextrous organization, by contrast, may require a more decentralized approach, with decision-making power distributed across different units or teams. This can make traditional managers feel like they are losing control over the organization.

3. **Complex Coordination**: Ambidextrous organizations often require a high level of coordination between the exploitation and exploration units. This can be difficult for managers who are used to operating in silos, as they must now ensure that both units are aligned and that resources are allocated efficiently between them.

4. **Cultural Challenges**: The culture of a traditional hierarchical organization is typically risk-averse and focused on efficiency and stability. An ambidextrous organization, however, must also foster a culture of innovation and flexibility. Bridging these cultural differences can be a significant challenge for managers.

5. **Resource Allocation**: In a traditional hierarchy, resources are allocated in a top-down manner, often based on historical performance or projected needs. An ambidextrous structure requires a more dynamic approach to resource allocation, with the ability to quickly shift resources from exploitation to exploration activities as opportunities or challenges arise.

6. **Performance Evaluation**: Traditional performance metrics may not be suitable for an ambidextrous organization. Managers must develop new metrics that value both short-term efficiency and long-term innovation. This can be a complex task that requires a deep understanding of both operational excellence and innovative processes.

7. **Leadership Skills**: The leadership skills required in an ambidextrous organization are different from those in a traditional hierarchy. Managers must be able to inspire and lead teams that are working on very different types of tasks, often with different rhythms and success factors. They must also be able to tolerate ambiguity and uncertainty, which can be uncomfortable for those used to the predictability of a hierarchical structure.

8. **Communication Challenges**: Effective communication is critical in an ambidextrous organization, as information must flow seamlessly between the exploitation and exploration units. Traditional managers may struggle with the open and collaborative communication style that is often necessary in such a structure.

In summary, an ambidextrous organizational structure can be difficult for traditional hierarchical managers to organize because it requires a fundamental shift in management style, from one that values control and stability to one that values flexibility and adaptability. It challenges long-held beliefs about authority, control, and the "right" way to manage an organization, and it requires the development of new skills and the adoption of a new mindset.

Question 2

List four conditions under which a multidivisional functional structure is well suited for a firm.

Accepted Answer

A multidivisional functional structure, also known as a "M-form" organization, is well suited for a firm under the following four conditions:

1. Diversification of Products or Services: When a firm has expanded its operations to include a diverse range of products or services, a multidivisional structure allows each division to focus on its specific market segment. This specialization enables the firm to cater to the unique needs of different customer bases and to manage the complexities associated with a diverse product line more effectively.

2. Geographical Expansion: Firms that operate in multiple geographic regions can benefit from a multidivisional structure. Each division can be responsible for operations in a specific region, allowing for localized decision-making that takes into account regional differences in consumer preferences, regulations, and market conditions. This structure helps in tailoring strategies to fit local needs while maintaining overall corporate coherence.

3. Large Size and Complexity: As firms grow in size and complexity, managing operations under a single functional structure can become unwieldy. A multidivisional structure allows for the decentralization of decision-making, with each division operating as a semi-autonomous entity. This can lead to more efficient management, as divisional managers have a clearer focus and can respond more quickly to changes in their specific areas of responsibility.

4. Need for Strategic Control and Operational Efficiency: A multidivisional structure facilitates strategic control at the corporate level while allowing for operational efficiency within individual divisions. The corporate headquarters can focus on long-term strategic planning, capital allocation, and overall performance monitoring, while divisional managers can concentrate on day-to-day operations and tactical issues. This separation of strategic and operational responsibilities can lead to better-informed decisions and a more agile organization.

In summary, a multidivisional functional structure is well suited for firms that have diversified operations, span multiple geographic regions, are large and complex, and require a balance between strategic control and operational efficiency. This organizational design helps firms manage different products and markets effectively while maintaining an overall strategic direction.

Question 3

List three advantages of the multidivisional structure for large, diversified firms.

Accepted Answer

The multidivisional structure, also known as the M-form, is a type of organizational structure commonly used by large, diversified firms. This structure segments the organization into semi-autonomous divisions, each focused on a particular product line, market segment, or geographic area. Here are three advantages of the multidivisional structure for such firms:

1. Enhanced Focus and Specialization: By dividing the organization into distinct divisions, each unit can specialize in its specific area of operation. This allows division managers and their teams to become experts in their particular markets or products, leading to more effective and efficient operations. Specialization can also lead to innovation, as teams are more attuned to the unique needs and opportunities within their specific domain.

2. Improved Accountability and Performance Measurement: The multidivisional structure facilitates better performance tracking and accountability. Each division operates as its own entity with its own profit and loss responsibility. This clear delineation of financial performance makes it easier to assess the success of each division independently. Managers can be held accountable for their division's results, leading to a greater emphasis on achieving targets and optimizing performance.

3. Greater Flexibility and Agility: Large, diversified firms with a multidivisional structure can be more agile and responsive to changes in the market. Since each division functions semi-autonomously, they can make decisions quickly without having to navigate through layers of corporate bureaucracy. This allows them to respond to competitive threats, shifts in consumer preferences, or other market dynamics in a timely manner. Additionally, the firm can more easily expand or contract by adding or divesting divisions as strategic needs change.

Overall, the multidivisional structure can provide large, diversified firms with the focus, accountability, and flexibility needed to manage complex operations effectively and to compete successfully in a variety of markets.

Question 4

List five conditions under which a functional structure is well suited for a firm.

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Question 5

What is the benefit of the division of labor to an organization?

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Question 6

An emphasis on _______________ goals can do much to reduce conflict among employees, departments, and business units.
A) Departmental
B) Group
C) Personal
D) Superordinate
E) None of these

Accepted Answer

Superordinate goals are overarching goals that are beyond the interests of any single department or individual, but are instead aligned with the overall mission of the organization. When employees, departments, and business units focus on achieving superordinate goals, they are more likely to work together and avoid conflicts that arise from pursuing conflicting goals.

Question 7

_______________ integrated firms require a high degree of centralization.
A) Backwardly
B) Forwardly
C) Horizontally
D) Vertically
E) None of these

Accepted Answer

Vertically integrated firms require a high degree of centralization because they have control over multiple stages in the supply chain, from raw materials to distribution, and need to coordinate and manage these activities efficiently. Centralization allows for better coordination and decision-making, which is necessary for vertical integration to work successfully.

Question 8

________________ strategies rely heavily on centralization.
A) Cost leadership
B) Differentiation
C) Focus
D) Related diversification
E) Unrelated diversification

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A) Cost...

Question 9

___________ is the tendency for cross-functional team members to believe that every decision needs to be made as a group.
A) Consensus seeking
B) Group concordance
C) Groupitis
D) Groupthink
E) Siloed thinking

Accepted Answer

Groupitis is the term used to describe the tendency for members of cross-functional teams to believe that every decision needs to be made as a group, often leading to inefficiencies and delays in decision-making.

Question 10

A manager asking his superior to approve the department's weekly production report is an example of which of the following?
A) Culture
B) Hierarchical reporting relationships
C) Information systems and flows of information moving through organizations
D) Policies, standard operating procedures, and control systems
E) None of these

Accepted Answer

This is an example of hierarchical reporting relationships, where a manager is seeking approval from their superior, indicating that there is a chain of command and reporting within the organization.

Question 11

Discuss the limitations associated with the adoption of a multidivisional structure by a firm.

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Question 12

Discuss how the transfer pricing dilemma affects the supplying and buying divisions within a multidivisional firm.

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Question 13

List three arguments for outsourcing as a value chain restructuring alternative for firms.

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Question 14

Discuss why structuring an organization for specialization can be detrimental to the management of knowledge workers.

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Question 15

Explain what is meant by the statement that "almost all organizational structures tend to produce false images in the decision maker."

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Question 16

Why do organizations rarely have more than eight hierarchical levels?

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Question 17

Why is a decentralization of decision making in organizations likely to lead to better decisions?

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Question 18

How can a strong organizational culture become a competitive disadvantage to a firm?

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Question 19

Discuss how a strong organizational culture can substitute for supervisory activity.

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Question 20

List three drawbacks to adopting a matrix or cross-functional structure.

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Quiz 11: Organizational Structure and the Implementation of Strategy