Question 1

When management structures the organization, it makes decisions about which products and services it will offer and how it is going to finance the company.

Accepted Answer

Structuring the organization involves deciding on a centralization versus decentralization decision-making policy; it involves decisions with regard to span of control, meaning how many employees will report to one manager; and it involves how to departmentalize.

Question 2

A flat organization is less likely to respond quickly to customer needs.

Accepted Answer

Flat organizations have wider spans of control. A wider span of control lends itself to empowering lower-level employees to respond more quickly to customer needs, without the need to get permission from managers.

Question 3

Management at Leaves of Green, a nationwide vegetarian restaurant chain, believes that its customers value a predictable and consistent level of service and quality. When customers stop at one of its restaurants anywhere in the U.S., they should know what to expect in terms of menu, price and quality. In order to maintain this consistency, Leaves of Green should adopt a decentralized organization.

Accepted Answer

By giving individual managers and employees more flexibility, a decentralized organization would result in less standardization and uniformity.

Question 4

The Cairo Company is organized into departments such as finance, production, marketing, data processing, and accounting. Cairo has chosen to departmentalize by function.

Accepted Answer

Departmentalization by function means to group workers into departments based on similar skills, expertise, and resource use.

Question 5

Greener Grass, a business specializing outdoor sprinkler systems, serves several commercial customers, as well as residential customers. As the business expands, Greener Grass's management may want to consider departmentalizing by customer group and then by process.

Accepted Answer

Companies that serve customers with varying needs may be able to respond quicker if their employees specialize in one customer group. Beyond that, a company like the one in this example that goes through several steps in serving each customer may specialize by process.

Question 6

After a report identified low employee morale, managers for Night and Day Inn, Inc. were concerned. Employee responses showed frustration with their inability to deal directly with customers' concerns and complaints. Employees feel that if they were empowered with the authority to make decisions, customer satisfaction would dramatically increase. This illustrates one of the disadvantages of decentralized authority.

Accepted Answer

This organization is an example of centralized authority with decision-making authority maintained at the top level of management at the company's headquarters. This usually results in less responsiveness to customers, the cause of the poor employee morale.

Question 7

Although a firm may experience better cost controls through departmentalization, it may not increase its responsiveness to customer needs.

Accepted Answer

An advantage of departmentalization is economies of scale. A disadvantage is less responsiveness to customers.

Question 8

In the Rock Solid manufacturing plant of the Stone Works Granite Company, a foreman closely supervises her workers. She reports to the shift supervisor who reports to the head of the production department, who then reports to the assistant plant manager, who reports to the plant manager. The plant manager, in turn, reports to a district manager, who then reports to a product group manager, who reports to an assistant vice president of operations, who keeps in close touch with an executive vice president. The layers of management indicate that Stone Works Granite Company is a tall organization.

Accepted Answer

A tall organization is characterized by many layers of management.

Question 9

When management structures the organization, it clarifies who gets to make decisions, how many people report to one manager, and how many different departments the company needs in order to operate effectively.

Accepted Answer

Structuring the organization involves deciding on a centralization versus decentralization decision-making policy; it involves decisions with regard to span of control, meaning how many employees will report to one manager; and it involves how to departmentalize.

Question 10

Sage is an experienced manager with excellent communications skills. The workers in her team are highly skilled and capable of doing their work with very little direct supervision. Sage's span of control is likely to be quite broad.

Accepted Answer

The less direct supervision required by workers, the broader the span of control.

Question 11

Departmentalizing by customer group has proven ineffective.

Accepted Answer

Departmentalizing by customer group can be very effective as it allows organizations to tailor their products, services, and marketing strategies to meet the specific needs and preferences of different customer segments, leading to increased customer satisfaction and loyalty.

Question 12

As the span of control widens, there is usually a reduction of middle management and an emphasis on empowerment.

Accepted Answer

A wider span of control lends itself to empowering lower-level employees to make customer decisions.

Question 13

Some companies have created hybrid versions of departmentalization, where they combine two or more traditional ways of departmentalizing.

Accepted Answer

This statement is true. It is possible for companies to combine different ways of departmentalizing, such as matrix departmentalization, which combines functional and product departmentalization.

Question 14

Yolklore Breakfast Cafes is a nationwide chain with locations all around the United States. Top management at Yolklore believes that customers in different regions have different tastes and that its cafes may face more intense competition in some regions than in others. Therefore, Yolklore's top management gives local managers the freedom to offer local flavors in addition to its traditional entrees, and the ability to decide on a reasonable pricing strategy for its meals. Yolklore typifies a decentralized organization.

Accepted Answer

A decentralized organization gives decision-making authority to managers at lower levels of the hierarchy.

Question 15

Years ago, Johnny created a successful sportswear company that continues to provide uniforms for clients in the Midwest. As his business started to grow, Johnny added functional departments including a marketing department and an accounting department. But now, he sees that employees who specialized in these areas no longer share knowledge with each other in the same way they did when the business was smaller. As one of Johnny's consultants, you explain that as the company grows taller, it cannot avoid this pitfall, and he should focus on continued functional departmentalization, especially if he supports innovation and learning.

Accepted Answer

A disadvantage of functional departmentalization is a lack of communication between and among departments. Employees may identify with their own department's goals, as opposed to the goals of the company.

Question 16

If there are several steps in getting the product to its final state, the company may choose to departmentalize by process.

Accepted Answer

If a company has several steps in getting the product to its final state, then departmentalizing by process would be an effective way to organize the workflow. This would involve creating specialized departments for each step in the production process, such as manufacturing, quality control, packaging, and shipping. By departmentalizing in this way, the company can ensure that each step is handled efficiently and effectively, with employees who are skilled and experienced in that particular aspect of the process.

Question 17

Top management at Upper Limits, Inc. looks to encourage communication between different departments to stop employees from becoming narrow specialists. The best way to reach these goals is to departmentalize Upper Limit's organization by function.

Accepted Answer

Two disadvantages of functional departmentalization are that it tends to reduce communication among departments, and employees often end up becoming narrow specialists.

Question 18

Because top managers supervise the firm's most talented workers, they generally have a broader span of control than middle or first-line managers.

Accepted Answer

At higher levels of management, the work becomes less standardized and there is a greater need for face-to-face communication. These factors tend to result in a narrow span of control for top managers.

Question 19

Businesses seldom create separate departments to serve customers with different needs.

Accepted Answer

Some organizations departmentalize by customer group.

Question 20

To avoid losing that small-company-feel, fast growing companies try to maintain a flat organization structure.

Accepted Answer

Large companies use flat structures to try to match the friendliness of small companies.

Quiz 8: Structuring Organizations for Todays Challenges