Question 1

Why must managers use a mechanistic structure to implement a cost-leadership strategy?
A) A mechanistic structure offers a centralized structure with well-defined lines of authority.
B) A mechanistic structure allows for a lower degree of specialization.
C) A mechanistic structure offers continuous innovation and flexibility as well as creativity.
D) A mechanistic structure allows for the CEO to delegate tasks.

Accepted Answer

To effectively implement a cost-leadership strategy, managers must create a functional structure that contains the organizational elements of a mechanistic structure-one that is centralized, with well-defined lines of authority up and down the hierarchy.

Question 2

Which of the following statements is true about the use of functional structures with various business strategies?
A) The goal of a differentiation strategy is to create competitive parity.
B) The goal of a cost-leadership strategy is to create competitive parity.
C) The goal of a differentiation strategy is to create a competitive advantage by controlling costs.
D) A cost-leadership strategy can be effectively implemented with the help of an organic structure.

Accepted Answer

The goal of a differentiation strategy is to create a competitive advantage by offering products or services at a higher perceived value, while controlling costs.

Question 3

Frappe operates as a strategic business unit (SBU)under More or Less Inc.,a home-furnishings manufacturer.From this information,it may be reasonable to infer that
A) Frappe does not have its own profit and loss responsibility.
B) Frappe is dependent on the other SBUs in More or Less Inc.
C) Frappe has a matrix organizational structure.
D) Frappe is led by its own CEO (or equivalent general manager).

Accepted Answer

From this information, it may be reasonable to infer that Frappe is led by its own CEO (or equivalent general manager). The multidivisional structure (or M-form) consists of several distinct strategic business units (SBUs), each with its own profit-and-loss (P&L) responsibility. Each SBU is operated more or less independently from one another, and each is led by a CEO (or equivalent general manager) who is responsible for the unit's business strategy and its day-to-day operations.

Question 4

When a firm diversifies into different product lines and geographies,a _____ structure is preferred.
A) simple
B) functional
C) multidivisional
D) network

Accepted Answer

Over time, as a firm diversifies into different product lines and geographies, it implements a multidivisional or a matrix structure. The multidivisional structure (or M-form) consists of several distinct strategic business units (SBUs), each with its own profit-and-loss (P&L) responsibility.

Question 5

Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy?
A) It allows the firm to create incentives to foster process innovation in order to drive down cost.
B) It allows the firm to reduce its cost below that of competitors while offering acceptable value.
C) It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing.
D) It allows the firm to nurture and constantly upgrade necessary core competencies in manufacturing and logistics.

Accepted Answer

Using a functional structure with an organic organization allows the differentiator to nurture and constantly upgrade necessary core competencies in R&D, innovation, and marketing. The functional structure should be set up to allow the firm to reap economies of scope from its core competencies, such as by leveraging its brand name across different products or its technology across different devices.

Question 6

Kolt Inc.,a large and successful retail chain on the West Coast,decides to expand its operations across the U.S.Which of the following organizational structures should Kolt Inc.use?
A) basic
B) simple
C) multidivisional
D) functional

Accepted Answer

Kolt Inc. should use a multidivisional organizational structure. Over time, as a firm diversifies into different product lines and geographies, it implements a multidivisional or a matrix structure. The multidivisional structure (or M-form) consists of several distinct strategic business units (SBUs), each with its own profit-and-loss (P&L) responsibility.

Question 7

Why does a functional structure rely on a flat organizational structure?
A) The work in the organization is centrally coordinated by the CEO.
B) It allows for a higher degree of specialization and domain expertise.
C) It allows for efficient bottom-up and top-down communication.
D) It allows for the implementation of a differentiation strategy.

Accepted Answer

A functional structure allows for an efficient top-down and bottom-up communication chain between the CEO and the functional departments, and thus relies on a relatively flat structure.

Question 8

Curve Inc.is a software development firm based in California.It strives to provide highly differentiated software at cheaper prices when compared to its competitors.Which of the following organizational designs should Curve Inc.implement to ensure the maximum success of its business strategies?
A) organic
B) simple
C) ambidextrous
D) mechanistic

Accepted Answer

Curve Inc. should use an ambidextrous design to ensure the maximum success of its business strategies. Managers can implement an integration strategy by building an ambidextrous organization, which attempts to balance and harness different activities in trade-off situations.

Question 9

W.L.Gore has four product divisions: electronic products,industrial products,medical products,and fabrics division.It also has manufacturing facilities in the U.S.,China,Germany,Japan,and Scotland,and business activities in 30 countries across the globe.Based on this information,which of the following statements is most accurate?
A) W. L. Gore is pursuing a cost-leadership strategy.
B) W. L. Gore is using a multidivisional structure.
C) W. L. Gore is using a simple structure.
D) W. L. Gore is pursuing an integration strategy.

Accepted Answer

W. L. Gore uses a multidivisional structure to administer its differentiation and related diversification strategies. It has four product divisions (electronic products, industrial products, medical products, and fabrics division) with manufacturing facilities in the U.S., China, Germany, Japan, and Scotland, and business activities in 30 countries across the globe.

Question 10

Which of the following features helps match a cost-leadership strategy to a functional structure?
A) decentralization
B) process and product innovations
C) flexibility and mutual adjustment
D) focus on economies of scale

Accepted Answer

Focus on economies of scale helps match a cost-leadership strategy to a functional structure. Because a functional structure services the average customer, and thus targets the largest market segment possible, it should focus on leveraging economies of scale to further drive down costs.

Question 11

Which of the following is true of a functional structure?
A) It offers a lower degree of specialization than a simple structure.
B) It relies on a relatively flat organizational structure.
C) It offers decentralized management.
D) It relies on bottom-up communication rather than top-down communication.

Accepted Answer

A functional structure allows for an efficient top-down and bottom-up communication chain between the CEO and the functional departments, and thus relies on a relatively flat structure.

Question 12

Which of the following types of organizations best helps match a differentiation strategy to a functional structure?
A) ambidextrous organization
B) mechanistic organization
C) organic organization
D) rigid organization

Accepted Answer

An organic organization helps match a differentiation strategy to a functional structure. Organic organizations are characterized by a low degree of specialization and formalization, a flat organizational structure, and decentralized decision making.

Question 13

Remote Inc.is a notebook manufacturing company based in Ohio.Remote's main market is Ohio.It aims at providing its products at better prices than its competitors.Which of the following structures is Remote Inc.likely to use if it has functional setup?
A) organic
B) simple
C) matrix
D) mechanistic

Accepted Answer

Remote Inc. is most likely to use a mechanistic structure if it has a functional setup. A functional structure is recommended when a firm has a fairly narrow focus in terms of product/service offerings (i.e., low level of diversification) combined with a small geographic footprint. To effectively implement a cost-leadership strategy, therefore, managers must create a functional structure that contains the organizational elements of a mechanistic structure.

Question 14

Broadview Company integrated certain important functions of Widget.com with Widget,while keeping other functions independent.To support this integration,the president of Widget shifted compensation incentives for both senior teams to accomplish joint goals rather than to focus solely on each business unit's performance.This scenario best exemplifies a(n)
A) multidivisional structure.
B) organic organization.
C) simple structure.
D) ambidextrous organization.

Accepted Answer

Widget used an ambidextrous organizational design to successfully reintegrate its independent online unit. The general manager of Widget.com put in place an ambidextrous organizational structure, keeping the online unit somewhat independent but integrating important functions at the top through joint editorial meetings and senior management teams.

Question 15

Which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy?
A) It allows a cost-leader to upgrade core competencies in manufacturing and logistics.
B) It enables a cost-leader to build products that are different from its competitors' offerings.
C) It enables a cost-leader to increase costs above that of its competitors.
D) It allows a cost-leader to operate in a decentralized organizational structure.

Accepted Answer

To effectively implement a cost-leadership strategy, managers must create a functional structure that contains the organizational elements of a mechanistic structure-one that is centralized, with well-defined lines of authority up and down the hierarchy. Using a functional structure allows the cost-leader to nurture and constantly upgrade necessary core competencies in manufacturing and logistics.

Question 16

Which of the following is a disadvantage of a functional strategy?
A) It frequently lacks the tools required to pursue a cost-leadership strategy.
B) It does not facilitate rich communication between members of the same department.
C) It cannot effectively address a higher level of diversification.
D) It does not allow organizations to be flexible or innovative.

Accepted Answer

One of the drawbacks of the functional structure is that it cannot effectively address a higher level of diversification, which often stems from further growth.

Question 17

To effectively implement a differentiation strategy,managers rely on a functional structure that resembles an organization that is highly
A) formalized.
B) specialized.
C) organic.
D) mechanistic.

Accepted Answer

To effectively implement a differentiation strategy, managers rely on a functional structure that resembles an organic organization.

Question 18

StickOn Inc.is an adhesive manufacturer.After a slight dip in production numbers,it forms a team to find a quick solution to this problem,at least for the shorter term.This scenario best exemplifies
A) exploration.
B) exploitation.
C) co-opetition.
D) competition.

Accepted Answer

This scenario best exemplifies exploitation, which refers to applying current knowledge to enhance firm performance in the short term.

Question 19

A functional structure is recommended when a firm
A) has a broad focus in terms of its product/service offerings.
B) has a low level of diversification.
C) has a low degree of specialization.
D) diversifies into different product lines and geographies.

Accepted Answer

A functional structure is recommended when a firm has a fairly narrow focus in terms of product/service offerings (i.e., low level of diversification) combined with a small geographic footprint.

Question 20

Plow Inc.is a greeting card manufacturing company.Plow's market dominance exists primarily because of the innovative designs of its greeting cards when compared to those of its competitors.In this scenario,Plow Inc.'s managers must ideally rely on a functional structure that resembles a(n)_____ organization.
A) simple
B) organic
C) mechanistic
D) integrated

Accepted Answer

In this scenario, Plow Inc.'s managers must rely on a functional structure that resembles an organic organization. By creating greeting cards with innovative designs, Plow Inc. is using a differentiation strategy. The goal of a differentiation strategy is to create a competitive advantage by offering products or services at a higher perceived value, while controlling costs.

Quiz 11: Organizational Design: Structure, Culture, and Control

Why must managers use a mechanistic structure to implement a cost-leadership strategy?

Which of the following statements is true about the use of functional structures with various business strategies?

Frappe operates as a strategic business unit (SBU) under More or Less Inc.,a home-furnishings manufacturer.From this information,it may be reasonable to infer that

When a firm diversifies into different product lines and geographies,a _____ structure is preferred.

Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy?

Kolt Inc.,a large and successful retail chain on the West Coast,decides to expand its operations across the U.S.Which of the following organizational structures should Kolt Inc.use?

Why does a functional structure rely on a flat organizational structure?

Curve Inc.is a software development firm based in California.It strives to provide highly differentiated software at cheaper prices when compared to its competitors.Which of the following organizational designs should Curve Inc.implement to ensure the maximum success of its business strategies?

Which of the following features helps match a cost-leadership strategy to a functional structure?

Which of the following is true of a functional structure?

Which of the following types of organizations best helps match a differentiation strategy to a functional structure?

Remote Inc.is a notebook manufacturing company based in Ohio.Remote's main market is Ohio.It aims at providing its products at better prices than its competitors.Which of the following structures is Remote Inc.likely to use if it has functional setup?

Which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy?

Which of the following is a disadvantage of a functional strategy?

To effectively implement a differentiation strategy,managers rely on a functional structure that resembles an organization that is highly

StickOn Inc.is an adhesive manufacturer.After a slight dip in production numbers,it forms a team to find a quick solution to this problem,at least for the shorter term.This scenario best exemplifies

A functional structure is recommended when a firm