MGMT 493 Chapter 11 - Berns

McDonald's uses detailed standard operating procedures throughout the world to ensure product quality. This implies that McDonald's has a high degree of A. formalization. B. specialization. C. decentralization. D. hierarchy.

A. formalization. (McDonald's uses highly articulated procedures for its standardized operation process and therefore a high degree of formalization. Formalization captures the extent to which employee behavior is controlled by explicit and codified rules and procedures.)

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.

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

McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's A. is organic in nature. B. is mechanistic in nature. C. has an informal structure. D. has a decentralized structure.

B. is mechanistic in nature. (Mechanistic organizations are characterized by a high degree of specialization and formalization, and a tall hierarchy that relies on centralized decision making. To ensure standardized operating procedures and consistent food quality throughout the world, McDonald's operates Hamburger University, a state-of-the-art teaching facility in a Chicago suburb, where 50 full-time instructors teach courses in chemistry, food preparation, and marketing.)

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

B. organic (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.)

Nick just graduated from law school and wants to start his own law firm. It is best for Nick to use a _____ organizational structure. A. functional B. simple C. mechanistic D. matrix

B. simple (Simple structures exhibit low formalization and specialization, which is suitable for new start-ups and small professional firms. In such firms, the founders tend to make all the important strategic decisions and run the day-to-day operations.)

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.

C. It cannot effectively address a higher level of diversification. (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.)

What was one of the reasons for Jerry Yang's failure at Yahoo? A. Jerry made many necessary changes to the company's organizational structure. B. Jerry established a successful organizational structure and culture, but could not assert control. C. Jerry's preference for obtaining consensus among his managers led to bickering and infighting. D. Jerry focused most strategic changes on improving user experience and increasing advertising revenues.

C. Jerry's preference for obtaining consensus among his managers led to bickering and infighting. (Mr. Yang was described as someone who preferred consensus among his managers to make tough strategic decisions needed to change Yahoo's structure. That preference, though, led to bickering and infighting. Jerry Yang's failure to make the necessary changes to the Internet firm's organizational structure not only led to a destruction of billions in shareholder value and thousands of layoffs, but also cost him his job.)

_____ organizations are characterized by a high degree of specialization and formalization, and tall hierarchies that rely on centralized decision making. A. Organic B. Virtual C. Mechanistic D. Flat

C. Mechanistic (Mechanistic organizations are characterized by a high degree of specialization and formalization, and tall hierarchies that rely on centralized decision making.)

_____ organizations have a low degree of specialization and formalization as well as a flat organizational structure. A. Mechanistic B. Centralized C. Organic D. Top-down

C. Organic (Organic organizations have a low degree of specialization and formalization, a flat organizational structure, and decentralized decision making. Organic structures tend to be correlated with the following: a fluid and flexible information flow among employees in both horizontal and vertical directions; faster decision making; and higher employee motivation, retention, satisfaction, and creativity.)

Which of the following real-world scenarios best exemplifies the use of organizational culture to build competitive advantage? A. W. L. Gore & Associates organizes its employees into project-based teams. B. Apple develops high-tech products that are preferred by consumers across the world. C. Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time. D. GM offers compensation if its products do not meet a consumer's expectations.

C. Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time. (Southwest Airline's (SWA's) business strategy—being a cost-leader in point-to-point air travel—is fairly simple, and that SWA's competitive advantage actually comes from its unique culture. Friendly and highly energized employees work across functional and hierarchical levels. Even Southwest's pilots pitch in to help load baggage quickly when needed. As a result, SWA's turn time between flights is only 15 minutes, whereas competitors frequently take two to three times as long.)

Black Mouse Inc., a web development firm, is headed by Rob Dennis, the CEO. Each functional department of the company—marketing, finance, and HR—has a president who reports to the CEO directly. Each department has various managers who manage teams. The managers report to the presidents, and the team leads report to the managers. Finally, the employees at the lowest level report to their team leads. It is rare for a lower-level employee to interact with the CEO of the company. In this scenario, Black Mouse Inc. can be said to have a(n) A. organic organizational structure. B. decentralized organizational structure. C. tall hierarchical structure. D. flat hierarchical structure.

C. tall hierarchical structure. (In this scenario, Black Mouse Inc. can be said to have a tall hierarchical structure. Hierarchy determines the formal, position-based reporting lines and thus stipulates who reports to whom. If many levels of hierarchy exist between the front-line employee and the CEO in a firm, it has a tall structure.)

_____ refers to the degree to which decision making is concentrated at the top of the organization. A. Specialization B. Formalization C. Naturalization D. Centralization

D. Centralization (Centralization refers to the degree to which decision making is concentrated at the top of the organization. Centralized decision making often correlates with slow response time and reduced customer satisfaction.)

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).

D. Frappe is led by its own CEO (or equivalent general manager). (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.)

Which of the following statements is true of strategy in an organization? A. Strategy implementation is considered unsuccessful if it requires changes within an organization. B. To implement a strategy successfully, an organization's structure must be rigid. C. Strategy implementation does not affect resource allocation and power distribution within an organization. D. Organizational structure must follow strategy in order for firms to achieve superior performance.

D. Organizational structure must follow strategy in order for firms to achieve superior performance. (Organizational structure must follow strategy in order for firms to achieve superior performance. This tenet implies that to implement a strategy successfully, organizational design must be flexible enough to accommodate the formulated strategy and future growth and expansion.)

What is most likely to happen if a firm relies too long on a competency without honing, refining, and upgrading as the firm and the environment change? A. The firm's original core competency can turn from a liability into an asset. B. The firm's organizational inertia can turn into its core rigidity. C. The firm's competitive parity can turn into its competitive advantage. D. The firm's culture can turn from a core competency into a core rigidity.

D. The firm's culture can turn from a core competency into a core rigidity. (An organization's culture can be one of its strongest assets, but also its greatest liability. An organization's culture can turn from a core competency into a core rigidity if a firm relies too long on the competency without honing, refining, and upgrading as the firm and the environment change.)

Which of the following accurately describes an organic organization? A. an inflexible organization that fosters slow decision making and high employee motivation B. an inflexible organization that fosters fast decision making and high employee motivation C. a flexible organization that fosters slow decision making and high employee motivation D. a flexible organization that fosters fast decision making and high employee motivation

D. a flexible organization that fosters fast decision making and high employee motivation (Organic organizations often are flexible and foster fast decision making and high employee motivation.)

A typical college of business (or school of management) has several areas such as management, marketing, finance, accounting, MIS, and so on. This is an example of a(n) _____ structure. A. simple B. M-form C. matrix D. functional

D. functional (A college of business uses a functional structure to represent its diverse expertise. A functional structure is a structure that groups employees into distinct functional areas based on domain expertise.)

GreenValue Inc. started a chain of organic supermarkets that had initial success. The managers achieved a mastery of the firm's current environment, thereby filling a need in the market. However, GreenValue defined and measured it success by financial metrics, with a focus on short-term performance. As a result, the firm put in place metrics and systems to accommodate and manage increasing firm size due to continued success. As a result of this tightly coupled system, GreenValue developed a A. resistance to change. B. innovative approach. C. significant value gap. D. holacratic system.

A. resistance to change. (Success in the current environment can lead to a firm's downfall in the future, when the tightly coupled system of strategy and structure experiences internal or external shifts. First, the managers achieve a mastery of the firm's current environment. Second, the firm often defines and measures success by financial metrics, with a focus on short-term performance. Third, the firm puts in place metrics and systems to accommodate and manage increasing firm size due to continued success. Finally, as a result of a tightly coupled system, organizational inertia sets in—and with it, resistance to change.)

While working a night job at a call center, Carlos creates an app called DineSmart, which can be used to place orders at restaurants, rate the restaurants, and make reservations. Because he receives good responses for his app, he quits his current job to focus his efforts on DineSmart. He creates a start-up called TYOP and hires three people to help him improve DineSmart and maintain the servers that run it. In this scenario, TYOP most likely has a _____ structure. A. simple B. matrix C. mechanistic D. functional

A. simple (In this scenario, TYOP most likely has a simple structure. A simple structure generally is used by small firms with low organizational complexity. In such firms, the founders tend to make all the important strategic decisions and run the day-to-day operations.)

Which of the following real-world scenarios best exemplifies formalization? A. Zappos' focus on allowing its customer service employees to use their own approach rather than depend on scripts B. McDonald's use of standard operating procedures across the world C. W. L. Gore's associates organizing themselves in project-based teams that are led by sponsors, not bosses D. Yahoo's decision to fire its CEO after incurring huge losses

B. McDonald's use of standard operating procedures across the world (McDonald's use of standard operating procedures across the world best exemplifies formalization. Formalization captures the extent to which employee behavior is controlled by explicit and codified rules and procedures.)

Walmart is an example of a(n) _____ organization. A. organic B. mechanistic C. decentralized D. informal

B. mechanistic (Walmart is an example of a mechanistic organization. Mechanistic organizations are characterized by a high degree of specialization and formalization, and a tall hierarchy that relies on centralized decision making.)

An organization is characterized as having a flexible division of labor, distributed decision making, and generalized knowledge of how to accomplish strategic goals valued. This organization is most likely _____ in nature. A. specialized B. organic C. mechanistic D. formalized

B. organic (This organization is most likely an organic organization. Such organizations have a flexible division of labor, distributed decision making, and generalized knowledge of how to accomplish strategic goals valued.)

A high degree of formalization in an organization is most likely to A. improve customer service. B. slow down decision making. C. produce inconsistent results. D. increase creativity and innovation.

B. slow down decision making. (The drawbacks of formalization are that it might hinder a firm's innovation and customer service, and its ability to make a quick decision. It can also reduce creativity and innovation.)

Strong organizational cultures that are strategically relevant align employees' behaviors more fully with the organization's A. hierarchical rigidity. B. strategic goals. C. hierarchical structure. D. strategic flexibility.

B. strategic goals. (Strong organizational cultures that are strategically relevant align employees' behaviors more fully with the organization's strategic goals. In doing so, they better coordinate work efforts, and they make cooperation more effective.)

Cynthia works as a front-line employee for a nationwide retail store. She reports to a floor manager, who reports to a departmental manager, who reports to a regional supervisor, who reports to a vice president, who reports to the CEO. Which of the following best describes this retail store? A. flat structure B. tall structure C. centralized structure D. decentralize structure

B. tall structure (Cynthia works for a retail store that has a tall structure. If many levels of hierarchy exist between the front-line employee and the CEO, the firm has a tall structure.)

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.

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

Successful _____ requires managers to design and shape structure, culture, and control mechanisms. A. strategy innovation B. strategy formulation C. strategy implementation D. strategy diversification

C. strategy implementation (Successful strategy implementation requires managers to design and shape structure, culture, and control mechanisms. In doing so, they execute a firm's strategy as they put its accompanying business model into action.)

Which of the following terms or phrases best characterizes Zappos' organizational structure? A. centralized B. mechanistic C. extremely tall D. extremely flat

D. extremely flat (As mentioned in Chapter Case 11, Zappos' organizational structure is extremely flat. Once an employee has mastered a job, he or she is rotated to a different job, often horizontally.)

Larry's Auto Repair is a small business in which the founder, Larry, makes most of the important strategic decisions as well as runs the day-to-day operations. He has three mechanics and a financial secretary working for him. Based on this scenario, Larry's Auto Repair has a(n) _____ structure. A. ambidextrous B. organic C. functional D. simple

D. simple (Larry's Auto Repair has a simple structure. With a simple organizational structure, the founders of an organization tend to make all the important strategic decisions as well as run the day-to-day operations.)

Which of the following best exemplifies the use of input controls? A. McDonald's use of standard operating procedures B. GM's use of the multidivisional strategy C. Zappos' use of monitoring-free customer service calls D. Southwest Airline's use of employee friendliness

A. McDonald's use of standard operating procedures (Standard operating procedures, or policies and rules, are a frequently used mechanism when relying on input controls. McDonald's relies on detailed operating procedures to ensure consistent quality and service worldwide.)

The relationship between strategy and structure that directly impacts a firm's performance is A. dynamic. B. independent. C. static. D. unpredictable.

A. dynamic. (The important and interdependent relationship between strategy and structure directly impacts a firm's performance. Moreover, the relationship is dynamic—changing over time in a predictable pattern as the firm grows in size and complexity.)

The key components of organizational design are A. structure, culture, and control. B. structure, efficiency, and control. C. innovation, efficiency, and culture. D. innovation, culture, and control.

A. structure, culture, and control. (The key components of organizational design are structure, culture, and control.)

_____ refers to a firm's resistance to change the status quo that can set the stage for the firm's subsequent failure. A. PESTEL factors B. Formalization C. Organizational inertia D. Centralization

C. Organizational inertia (Organizational inertia refers to a firm's resistance to change the status quo that can set the stage for the firm's subsequent failure.)

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

C. ambidextrous (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.)

Maurice sent in a complaint about a rude salesperson he dealt with at FirstElectronics Inc. He didn't get a response for about three months. Also, when the response finally came, it was just a formal, cursory letter. Based on this scenario, FirstElectronics most likely has an extremely _____ organizational structure. A. specialized B. formalized C. centralized D. hierarchical

C. centralized (FirstElectronics most likely has an extremely centralized organizational structure. Centralization refers to the degree to which decision making is concentrated at the top of the organization. Centralized decision making often correlates with slow response time and reduced customer satisfaction.)

In which of the following ways does Zappos achieve organizational control? A. It continually changes the organizational values that guide its employees. B. It refrains from monitoring its employees' calls. C. It encourages employees to be creative and innovate and to go the extra mile to deliver a wonderful customer experience. D. It enforces that each group member's compensation depends in part on the group's overall productivity.

D. It enforces that each group member's compensation depends in part on the group's overall productivity. (Norms, informal and tacit in nature, act as a social control mechanism. Zappos, for example, achieves organizational control partly through an employee's peer group: Each group member's compensation, including the supervisor's, depends in part on the group's overall productivity.)

_____ define appropriate employee attitudes and behaviors. A. Values B. Artifacts C. Appraisals D. Norms

D. Norms (Organizational culture describes the collectively shared values and norms of an organization's members. Values define what is considered important. Norms define appropriate employee attitudes and behaviors.)

_____ describes the degree to which a task is divided into separate jobs. A. Hierarchy B. Formalization C. Centralization D. Specialization

D. Specialization (Specialization describes the degree to which a task is divided into separate jobs—that is, the division of labor. Larger firms, such as Fortune 100 companies, tend to have a high degree of specialization; smaller entrepreneurial ventures tend to have a low degree of specialization.)

Which of the following is a feature of an organic organization? A. high degree of specialization B. rigid division of labor C. clear lines of authority D. high span of control

D. high span of control (Organic organizations have a high span of control. The number of levels of hierarchy determines a managers' span of control—how many employees directly report to a manager. In tall organizational structures, the span of control is narrow. In flat structures, the span of control is wide.)

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.

A. A mechanistic structure offers a centralized structure with well-defined lines of authority. (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.)

Which of the following provides an example of a common drawback of a functional strategy? A. Bert had a difficult time communicating efficiently with the manager of another department. B. Marietta was surprised about the inflexibility of her firm when it rejected her marketing plan. C. Juan's manager dismissed his idea because it was too innovative. D. Mary did not accept the position with the firm because it has an ineffective cost-leadership strategy.

A. Bert had a difficult time communicating efficiently with the manager of another department. (Although the functional strategy facilitates rich and extensive communication between members of the same department, it frequently lacks effective communication channels across departments.)

Why should managers using the M-form organizational structure to support a related-diversification strategy ideally concentrate decision making at the top of the organization? A. It allows a high level of integration. B. It helps contain the core competencies within a strategic business unit (SBU). C. It leads to competition between SBUs. D. It helps evaluate each SBU as a stand-alone profit-and-loss center.

A. It allows a high level of integration. (Managers using the M-form organizational structure to support a related-diversification strategy should ideally concentrate decision making at the top of the organization. Doing so allows a high level of integration. It also helps corporate headquarters leverage and transfer across different SBUs the core competencies that form the basis for a related-diversification.)

Why is the optimal organizational structure a multidivisional structure? A. Its focus is on driving down costs. B. Its focus is on producing differentiated products. C. Its focus is on retaining activities within a single geographic area. D. Its focus is on establishing a flat hierarchy operated in a decentralized fashion.

A. Its focus is on driving down costs. (The optimal organizational structure match is a multidivisional structure. Rather than focusing on geographic differences as in the multidomestic strategy, the focus is on driving down costs due to consolidation of activities across different geographic areas.)

Opal, a recent fashion design school graduate, has received praise for her clothing designs from her peers and friends on social networking sites; this has inspired her to set up a store where she can design and sell apparel. After experiencing some success with sales, she recruits two employees to handle customers at the store. However, she handles other day-to-day affairs herself, while continuing to design clothes. Which of the following is likely to be a pitfall of this organizational structure established by Opal? A. Once the firm starts growing and attracting more customers she is likely to feel overloaded. B. Hiring more employees will result in loss of intellectual property. C. People are highly unlikely to buy clothes from a store run by a fashion design student. D. The online admiration of her designs will not translate into sales.

A. Once the firm starts growing and attracting more customers she is likely to feel overloaded. (A likely pitfall of this organizational structure established by Opal is that once the firm starts growing and attracting more customers she is likely to feel overloaded. A simple structure generally is used by small firms with low organizational complexity. In such firms, the founders tend to make all the important strategic decisions and run the day-to-day operations. Typically, neither professional managers nor sophisticated systems are in place, which often leads to an overload for the founder and/or CEO when the firms experience growth.)

Why is it difficult to imitate the organizational culture of firms like Southwest Airlines and Zappos? A. Their culture reflects complex relationships with their employees, customers, and suppliers. B. They produce products that cannot be copied easily because of their complex designs. C. The employees in the organization themselves are unaware of the factors contributing to their organizational culture. D. It is not commercially viable for other companies to implement the same culture.

A. Their culture reflects complex relationships with their employees, customers, and suppliers. (Once it becomes clear that a firm's culture is a source of competitive advantage, some competitors will attempt to imitate that culture. Therefore, only a culture that cannot be easily copied can provide a competitive advantage. However, it can be difficult, at best, to imitate the cultures of successful firms, for two reasons: causal ambiguity and social complexity.)

W. L. Gore & Associates is the inventor of path-breaking new products such as breathable GORE-TEX fabrics, Glide dental floss, and Elixir guitar strings. Which of the following would be most likely to hinder its intention of fostering employee satisfaction, retention, and creativity? A. an extremely formalized organizational structure B. a highly organic organizational structure C. a low degree of centralization D. a flat organization structure

A. an extremely formalized organizational structure (An extremely formalized organizational structure would be most likely to hinder its intention of fostering employee satisfaction, retention, and creativity. As mentioned in Strategy Highlight 11.1, Gore's freewheeling and informal culture has been linked to greater employee satisfaction and retention, higher personal initiative and creativity, and innovation at the firm level.)

Output controls can sometimes discourage collaboration among different strategic business units. However, more and more work requires creativity and innovation, especially in highly-developed economies. One way firms are grappling with this issue is by A. introducing results-only-work-environments to tap intrinsic motivations. B. refining the budgeting process to encourage more department collaboration. C. updating standard operating procedures to allow more process flexibility. D. using output controls only when the goal is to ensure a predictable outcome.

A. introducing results-only-work-environments to tap intrinsic motivations. (Results-only-work-environments (ROWEs) have attracted significant attention. ROWEs are output controls that attempt to tap intrinsic (rather than extrinsic) employee motivation.)

Organizational design is A. the process of creating, implementing, and modifying the structure of an organization. B. primarily focused on replacing a firm's competitive advantage with competitive parity. C. a process that always functions independently of strategy formulation. D. primarily focused on formulating effective strategies, not implementing them.

A. the process of creating, implementing, and modifying the structure of an organization. (Organizational design is the process of creating, implementing, monitoring, and modifying the structure, processes, and procedures of an organization. The key components of organizational design are structure, culture, and control.)

Zappos established its unique organizational culture A. through explicitly stated values that are connected to its reward system. B. through input control systems that mandated adherence to organizational values. C. by closely monitoring employees calls with customers. D. by giving employees gift cards to shop at Zappos and Amazon.

A. through explicitly stated values that are connected to its reward system. (In addition to founder imprinting, a firm's culture also flows from its values, especially when they are linked to the company's reward system. For example, Zappos established its unique organizational culture through explicitly stated values that are connected to its reward system.)

The most important yet least visible element of organizational culture is A. values. B. norms. C. laws. D. artifacts.

A. values. (The most important yet least visible element—values—is in the center of any diagram depicting organizational culture.)

Flight Stream Inc., a toy manufacturing company, encourages its employees to enjoy their work by taking on additional responsibilities or switching jobs with each other. It allows its employees immense flexibility in charting their own career path within the organization. Chris has worked at Flight Stream for eight years, but has never had a boss or supervised an employee. Which of the following is most likely true in this scenario? A. Flight Stream Inc. is a mechanistic organization. B. Flight Stream Inc. has a flat organizational structure. C. Flight Stream Inc. has a high degree of centralization. D. Flight Stream's organizational culture is governed by codified rules.

B. Flight Stream Inc. has a flat organizational structure. (The statement that is most likely true in this scenario is that Flight Stream Inc. has a flat organizational structure. Hierarchy determines the formal, position-based reporting lines and thus stipulates who reports to whom. If many levels of hierarchy exist between the front-line employee and the CEO in a firm, it has a tall structure. In contrast, if there are few levels of hierarchy in a firm, it has a flat structure.)

Which of the following statements is true of organizational culture? A. Changes in culture are too frequent to have any impact on strategic implementation. B. It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages. C. It is always better to focus on output control and performance than on organizational culture. D. According to research, more than 50 percent of firms change culture successfully.

B. It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages. (It is best to develop a strong and strategically relevant culture in the first few years of a firm's existence. It has been documented that the initial structure, culture, and control mechanisms established in a new firm can be a significant predictor of later success.)

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.

B. It relies on a relatively flat organizational structure. (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.)

Why does strategy implementation often require changes within an organization? A. Strategy implementation is less important than strategy formulation. B. Strategy implementation transforms strategy into actions and business models. C. Strategy always follows structure. D. Strategy implementation does not affect resource allocation and power distribution within an organization.

B. Strategy implementation transforms strategy into actions and business models. (Because strategy implementation transforms strategy into actions and business models, it often requires changes within the organization. However, strategy implementation often fails because managers are unable to make the necessary changes due to its effects on resource allocation and power distribution within an organization.)

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.

B. W. L. Gore is using a multidivisional structure. (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.)

Which of the following types of groups is most susceptible to groupthink? A. a diverse group B. a cohesive group C. a heterogeneous group D. a decentralized group

B. a cohesive group (Cohesive, non-diverse groups are highly susceptible to groupthink, which in turn can lead to flawed decision making with potentially disastrous consequences.)

A(n) _____ organization always attempts to balance and harness different activities in trade-off situations. A. centralized B. ambidextrous C. mechanistic D. formalized

B. ambidextrous (An ambidextrous organization attempts to balance and harness different activities in trade-off situations. One example is the attempt to balance exploitation—applying current knowledge to enhance firm performance in the short term—with exploration—searching for new knowledge that may enhance future performance.)

Grey Designs Inc., a graphic design firm, has offices in New York, Texas, California, New Mexico, and New Jersey. Each of these offices is headed by a president who reports directly to Charles Grey, the CEO. The heads of the centralized HR, Finance, and Marketing teams report to Charles Grey as well. Managers in the various offices also report to the CEO directly. Based on this information, which of the following statements is most likely to be true? A. Charles Grey has a wide span of control. B. Grey Designs Inc. has a tall hierarchical structure. C. Charles Grey is underworked. D. Grey Designs Inc. is a mechanistic organization.

A. Charles Grey has a wide span of control. (Based on this information, the statement that is most likely to be true is that Charles Grey has a wide span of control. Hierarchy determines the formal, position-based reporting lines and thus stipulates who reports to whom. The number of levels of hierarchy, in turn, determines the managers' span of control—how many employees directly report to a manager. In tall organizational structures, the span of control is narrow. In flat structures, the span of control is wide, meaning one manager supervises many employees.)

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.

A. It allows a cost-leader to upgrade core competencies in manufacturing and logistics. (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.)

What most likely happens when a firm optimizes its organizational structure to its current situation? A. It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur. B. It achieves superior performance. C. It makes it difficult for managers to make the necessary changes due to its effects on resource allocation and power distribution. D. It transforms strategy into actions and business models.

A. It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur. (Inertia, a firm's resistance to changing the status quo, can set the stage for the firm's subsequent failure. Successful firms often plant the seed of subsequent failure: They optimize their organizational structure to the current situation. That tightly coupled system can break apart when internal or external pressures occur.)

Which of the following did management at Zappos do to reduce the level of formalization in their organization? A. They avoided asking their customer service reps in call centers to follow a detailed script. B. They increased their reliance on drop-shipment orders. C. They established top-down management as their primary strategy. D. They put an end to the practice that enabled employees to horizontally rotate to different jobs once they had mastered a particular job.

A. They avoided asking their customer service reps in call centers to follow a detailed script. (A high degree of formalization can slow decision making, reduce creativity and innovation, and hinder customer service. Most customer service reps in call centers, for example, follow a detailed script. This is especially true when call centers are outsourced to overseas locations. Zappos deliberately avoided this approach when it made customer service its core competency.)

Which of the following is true of the process of organizing for competitive advantage? A. To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes. B. Strategy formulation and strategy implementation are independent activities. C. Organizing for competitive advantage is a static and not a dynamic process. D. Formulating an effective strategy is a necessary and sufficient condition for gaining and sustaining competitive advantage.

A. To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes. (Organizing for competitive advantage is a dynamic and not a static process. As seen in the Zappos example, to maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes.)

A firm that uses a structure that is organized along different business functions such as HR, R&D, Sales, and Marketing and also along different geographical areas such as different countries of the world is most likely using a _____ structure. A. global matrix B. multidivisional C. functional D. simple

A. global matrix (A matrix structure combines both the M-form and the functional structure. For example, a firm can be organized according to SBUs (along a horizontal axis, like in the M-form), and also have a second dimension of organizational structure (along a vertical axis). In this case, the second dimension could consist of different geographic areas, each of which generally would house a full set of functional activities. This exemplifies a global matrix structure.)

To maintain its core competency of providing a superior customer experience in the face of explosive growth, Zappos split the organization into 10 standalone units. Which of the following does this scenario best illustrate? A. how an organization accommodates strategy implementation through a flexible organizational structure B. how strategy implementation has an effect on resource allocation and power distribution C. how an organization demonstrates organizational inertia, and therefore sets the stage for the firm's subsequent failure D. how an organization optimizes its organizational structure to the current situation

A. how an organization accommodates strategy implementation through a flexible organizational structure (Zappos provides an example of a company with flexible organizational structure. To maintain its core competency of providing a superior customer experience in the face of explosive growth, Zappos split the organization into 10 stand-alone units.)

Organizational culture can be the basis of a firm's competitive advantage if A. it is valuable, rare, and difficult to imitate. B. it is trademarked and copyright protected. C. it converts the organization's core competency into its core rigidity. D. it changes the organization's inertia into its core rigidity.

A. it is valuable, rare, and difficult to imitate. (Organizational culture can become an important asset if it is valuable, rare, difficult to imitate, and organized to capture value (VRIO). It must have all these features if it is to capture the value created.)

If a firm pursues only a differentiation strategy, it is most likely a(n) _____ organization. A. organic B. mechanistic C. integrated D. centralized

A. organic (Organic structures usually implement differentiation strategies while mechanistic organizations implement cost-leadership strategies. Organic structures tend to be correlated with the following: a fluid and flexible information flow among employees in both horizontal and vertical directions; faster decision making; and higher employee motivation, retention, satisfaction, and creativity.)

Employees learn about an organization's culture through the process of A. socialization. B. exploitation. C. co-opetition. D. acculturation.

A. socialization. (Employees learn about an organization's culture through socialization, a process whereby employees internalize an organization's values and norms through immersion in its day-to-day operations. Successful socialization, in turn, allows employees to function productively and to take on specific roles within the organization.)

Which of the following statements about an organization's culture is not true? A. A positive culture motivates employees by appealing to high ideals. B. A strong monitoring and supervision mechanism is needed to enforce the culture. C. A positive culture encourages employees to make decisions not only with their heads, but also with their hearts. D. Employees feel that they are part of a larger community by internalizing the firm's values and norms.

B. A strong monitoring and supervision mechanism is needed to enforce the culture. (A positive culture motivates and energizes employees by appealing to their higher ideals. Internalizing the firm's values and norms, employees feel that they are part of a larger, meaningful community attempting to accomplish important things. When employees are intrinsically motivated this way, the firm can rely on fewer levels of hierarchy; thus close monitoring and supervision are not needed as much.)

Which of the following is true of W. L. Gore & Associates, which has a lattice organizational form? A. It has a high degree of centralization. B. All employees are empowered to speak to all other employees in the organization. C. Its culture has been linked to lower employee satisfaction and retention. D. The degree to which a task is divided into separate jobs is high.

B. All employees are empowered to speak to all other employees in the organization. (As mentioned in Strategy Highlight 11.1, W. L. Gore & Associates is organized in an informal and decentralized manner. There is no organizational chart. In what is called a lattice or boundaryless organizational form, everyone is empowered and encouraged to speak to anyone else in the organization.)

W. L. Gore & Associates is organized in such a way that it has no formal job titles, job descriptions, or chains of command. This implies that it has A. a formalized structure. B. a decentralized structure. C. organizational inertia. D. a top-down management style.

B. a decentralized structure. (As mentioned in Strategy Highlight 11.1, W. L. Gore & Associates is organized in an informal and decentralized manner: It has no formal job titles, job descriptions, chains of command, formal communication channels, and written rules or standard operating procedures.)

FTZ Inc. is an electronic appliances manufacturer that has many strategic business units (SBUs), among which, television and computers share a close relationship. These SBUs have to fight each other for R&D funding because there is a combined amount set aside for these two units. However, they share technological findings with each other and work together to ensure that their combined output is better that of the other SBUs. Such a relationship between SBUs in a business is referred to as A. competition. B. co-opetition. C. exploitation. D. exploration.

B. co-opetition. (Such relationships between SBUs that are competitive, yet cooperative, are termed as co-opetition. Co-opetition among SBUs is both inevitable and necessary. They compete with one another for resources like capital and managerial talent, but they also need to cooperate to share competencies.)

Monica's Cosmetics Inc. has a functional structure that is flexible enough to allow it to leverage its brand name across different products. By doing this, Monica's is reaping ____ from its core competencies. A. economies of scale B. economies of scope C. diversification D. centralization

B. economies of scope (Monica's functional structure has been set up to allow the firm to reap economies of scope from its core competencies by leveraging its brand name across different products.)

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.

B. has a low level of diversification. (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.)

Coda Inc. is an apparel manufacturer. The management at Coda prefers moderate control over the operations of the different departments such as R&D, design, marketing, and sales. It allocates a budget to each function at the beginning of each quarter. This is an example of implementing control through A. output controls. B. input controls. C. multidivisional strategy. D. centralization.

B. input controls. (This is an example of implementing control through input controls. Input controls seek to define and direct employee behavior through a set of explicit, codified rules and standard operating procedures. Firms use input controls when the goal is to define the ways and means to reach a strategic goal and to ensure a predictable outcome. The use of budgets is a key to input controls.)

The _____ structure consists of several distinct strategic business units (SBUs), each with its own profit-and-loss responsibility. A. ambidextrous B. multidivisional C. functional D. organic

B. multidivisional (The multidivisional structure consists of several distinct strategic business units (SBUs), each with its own profit-and-loss responsibility.)

Which of the following global strategies best matches with a multidivisional structure? A. international B. multidomestic C. global-standardization D. transnational

B. multidomestic (The multidomestic strategy matches with a multidivisional 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.)

Organizational culture can help a firm gain and sustain competitive advantage only if the culture makes a positive contribution to the firm's economic value creation and A. eventually gives way to core rigidity. B. obeys the VRIO principles. C. does not demonstrate causal ambiguity. D. displays an absence of social complexity.

B. obeys the VRIO principles. (Organizational culture can help a firm gain and sustain competitive advantage if the culture makes a positive contribution to the firm's economic value creation and obeys the VRIO principles. Organizational culture is an especially effective lever for new ventures due to its malleability.)

Since an organic structure helps a firm build core competencies in areas such as R&D and marketing, this structure is employed by firms that A. have a tall hierarchical structure. B. pursue a differentiation strategy at the business level. C. have a high degree of specialization and centralization. D. focus on standardizing operating procedures.

B. pursue a differentiation strategy at the business level. (Organic organizations typically exhibit a higher rate of entrepreneurial behaviors and innovation. Organic structures allow firms to foster R&D and/or marketing, for example, as a core competency. Thus, firms that pursue a differentiation strategy at the business level frequently employ an organic structure.)

Why did W. L. Gore reorganize itself into a functional structure from a simple structure? A. A simple structure was too formalized, specialized, and centralized to really facilitate any kind of productivity. B. A functional structure is more decentralized. C. A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth. D. A functional structure has a tall hierarchical structure that relies on bottom-up communication.

C. A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth. (W. L. Gore reorganized itself into a functional structure because a simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth.)

Hank's Hot Dogs is a nationwide fast-food chain. Decision power resides at the top of the organization. Each job is documented in minute detail. The firm has many levels of supervision, including vice presidents and regional managers. Hank's headquarters provides detailed instructions to each of its franchisees so that they provide comparable quality and service across the board. Based on this scenario, which of the following is an accurate statement about Hank's? A. Hank's has a low degree of specialization and formalization, a high degree of centralization, and relies on a flat hierarchy. B. Hank's has a high degree of specialization and formalization, a low degree of centralization, and relies on a tall hierarchy. C. Hank's has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy. D. Hank's has a low degree of specialization, formalization, and centralization and relies on a flat hierarchy.

C. Hank's has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy. (Hank's has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy.)

Which of the following is an advantage offered by a functional structure? A. It allows for an efficient top-down communication chain and thus relies on a relatively tall structure. B. It facilitates a lower division of labor, which is linked to higher productivity. C. It allows for a higher degree of specialization and deeper domain expertise. D. It facilitates a lower level of specialization.

C. It allows for a higher degree of specialization and deeper domain expertise. (A functional structure allows for a higher degree of specialization and deeper domain expertise than a simple structure. Higher specialization also allows for a greater division of labor, which is linked to higher productivity.)

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.

C. It allows for efficient bottom-up and top-down communication. (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.)

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.

C. It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing. (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.)

Why does Zappos offer its new recruits $2,000 to quit at the end of the first week of their job? A. It is confident that employees will be impressed with the company's creativity and will stay on for a longer term. B. It does not believe that a firm's culture can flow from its values when they are linked to the company's reward system. C. It believes that individuals who choose to stay on will fit in with the Zappos culture. D. It is certain that a firm's culture flows only from founder imprinting.

C. It believes that individuals who choose to stay on will fit in with the Zappos culture. (Zappos offers any new hire $2,000 to quit (plus pay for the time already worked). This offer stands until the end of the fourth week, when the training program is completed. Individuals who choose to stay on despite the enticing offer tend to fit well with and strengthen Zappos' distinct culture.)

_____ describes the collectively shared values and norms of an organization's members. A. Competitive advantage B. Organizational structure C. Organizational culture D. Core competency

C. Organizational culture (Just as people have distinctive personalities, organizations also have unique cultures that capture "how things get done around here." Organizational culture describes the collectively shared values and norms of an organization's members.)

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.

C. The goal of a differentiation strategy is to create a competitive advantage by controlling costs. (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.)

Why are controls like budgets and operating procedures that McDonald's implements known as input controls? A. They are independent of an organization's culture. B. They are implemented by corporate headquarters. C. They are considered before employees make any decisions. D. They are ad hoc and not codified.

C. They are considered before employees make any decisions. (Firms use input controls when the goal is to define the ways and means to reach a strategic goal and to ensure a predictable outcome. They are called input controls because management designs these mechanisms so they are considered before employees make any business decisions.)

Veronica sets up a business consulting firm in which the employees are motivated because they find their work interesting and creative. She carefully hires workers who fit well with their assigned tasks. Also, she clearly defines the results expected of each worker, but allows the workers to determine the means to these results. Which of the following best describes Veronica's business? A. a firm that relies on high input controls to tap into intrinsic motivation B. a firm that relies on high input controls to tap into extrinsic motivation C. a firm that relies on high output controls to tap into intrinsic motivation D. a firm that relies on high output controls to tap into extrinsic motivation

C. a firm that relies on high output controls to tap into intrinsic motivation (Veronica has set up a firm that relies on high output controls to tap into intrinsic motivation. Output controls seek to guide employee behavior by defining expected results (outputs) but leave the means to those results open to individual employees. Intrinsic motivation is driven by the employee's interest in and the meaning of the work itself.)

An organization that is organized according to strategic business units (SBUs) and also along organizational structures is most likely using a _____ structure. A. functional B. multidivisional C. matrix D. simple

C. matrix (To reap the benefits of both the M-form and the functional structure, many firms employ a mix of these two organizational forms, called a matrix structure. The idea behind the matrix structure is to combine the benefits of the M-form (domain expertise, economies of scale, and the efficient processing of information), with those of the functional structure (responsiveness and decentralized focus).)

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

C. multidivisional (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.)

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

C. multidivisional (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.)

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

C. organic organization (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.)

Which of the following is an unintended side effect of a high degree of specialization in an organization? A. decreased trade-off between breadth and depth of knowledge B. decreased opportunities for the division of labor C. reduced employee satisfaction due to repetition of tasks D. reduced productivity

C. reduced employee satisfaction due to repetition of tasks (Specialization describes the degree to which a task is divided into separate jobs—that is, the division of labor. While a high degree of the division of labor increases productivity, it can also have unintended side effects such as reduced employee job satisfaction due to repetition of tasks.)

A firm's _____ determines how the work efforts of individuals and teams are orchestrated and how resources are distributed. A. norm B. culture C. structure D. control

C. structure (Some of the key decisions managers must make when designing effective organizations pertain to the firm's organizational structure. That structure determines how the work efforts of individuals and teams are orchestrated and how resources are distributed.)

Which of the following statements best describes groupthink? A. It is a process by which the founder defines and shapes an organization's culture, which can persist for decades after his or her departure. B. It is a situation in which organizations compete with one another for resources, but they also need to cooperate to share competencies. C. It is a process whereby employees internalize an organization's values and norms through immersion in its day-to-day operations. D. It is a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions.

D. It is a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions. (Groupthink is defined as a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions. Cohesive, non-diverse groups are highly susceptible to groupthink, which in turn can lead to flawed decision making with potentially disastrous consequences.)

Which of the following characteristics of McDonald's best supports the fact that it is a mechanistic organization? A. It frequently ranks among the top 500 companies to work for. B. Its communication lines are bottom-up and well-defined. C. Its decision power is spread across the organization. D. Its job descriptions are very descriptive.

D. Its job descriptions are very descriptive. (Mechanistic organizations are characterized by a high degree of specialization and formalization, and a tall hierarchy that relies on centralized decision making. The fast food chain McDonald's fits this description quite well. Each step of every job (such as deep frying fries) is documented in minute detail (e.g., what kind of vat, the quantity of oil, how many fries, what temperature, how long, and so on).)

How does W. L. Gore exemplify founder imprinting? A. Gore consistently ranks among the top 25 of Fortune's "100 Best Companies to Work For" list. B. W. L. Gore & Associates is organized in a formal and centralized manner. C. The compensation of Gore associates is decided through a peer review system. D. The four core values articulated by Bill Gore guide the company and its associates to this day.

D. The four core values articulated by Bill Gore guide the company and its associates to this day. (Often, company founders define and shape an organization's culture, which can persist for many decades after their departure. This phenomenon is called founder imprinting. As described in Strategy Highlight 11.1, when founding W. L. Gore & Associates in 1958, Bill Gore articulated four core values that still guide the company and its associates to this day.)

Which of the following statements about W. L. Gore & Associates best supports the fact that it is organized in an informal and decentralized manner? A. W. L. Gore & Associates' employees are organized by their seniors into teams that are led by sponsors, not bosses. B. W. L. Gore & Associates prefers e-mail communication to face-to-face communication. C. W. L. Gore & Associates is characterized by a vertical organizational form. D. W. L. Gore & Associates refers to its employees as associates rather than employees.

D. W. L. Gore & Associates refers to its employees as associates rather than employees. (As discussed in Strategy Highlight 11.1, W. L. Gore & Associates is organized in an informal and decentralized manner. People who work at Gore are called associates rather than employees, indicating professional expertise and status. Gore associates organize themselves in project-based teams that are led by sponsors, not bosses.)

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.

D. ambidextrous organization. (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.)

GM's insistence on sticking to a bureaucratic culture combined with its M-form structure and its subsequent failure to adapt to changing customer preferences for more fuel-efficient cars, produce higher quality, and create innovative designs best exemplifies A. decentralization. B. founder imprinting. C. groupthink. D. core rigidity.

D. core rigidity. (An organization's culture can be one of its strongest assets, but also its greatest liability. GM's strong culture led to organizational inertia. This resulted in a failure to adapt to changing customer preferences for more fuel-efficient cars, and prevented higher quality and more innovative designs.)

According to Alfred Chandler in his book Strategy and Structure, implementing a successful strategy depends on having an organizational structure that is _____ enough to accommodate the formulated strategy and future growth and expansion. A. insightful B. strong C. complex D. flexible

D. flexible (According to Alfred Chandler in his book Strategy and Structure, implementing a successful strategy depends on having an organizational structure that is flexible enough to accommodate the formulated strategy and future growth and expansion.)

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

D. focus on economies of scale (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.)

Which of the following organizational structures matches best with an international strategy? A. simple B. matrix C. multidivisional D. functional

D. functional (The functional structure matches best with an international strategy. In an international strategy, the company leverages its home-based core competency by moving into foreign markets.)

What element of organizational structure deals with positioned-based reporting lines? A. specialization B. formalization C. centralization D. hierarchy

D. hierarchy (Hierarchy determines the formal, position-based reporting lines of a firm and thus stipulates who reports to whom.)

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

D. mechanistic (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.)

DigiGames Inc. established itself as the foremost producer of computer games. However, as the market for these games moved from laptop computers to cell phones based on cloud applications, DigiGames failed to adapt its games enough to this new environment. As result, the firm soon lost its competitive advantage. Which of the following best describes this scenario? A. movement from core rigidity to core competency B. movement from core rigidity to founder imprinting C. movement from founder imprinting to core competency D. movement from core competency to core rigidity

D. movement from core competency to core rigidity (This scenario shows a movement from core competency to core rigidity. An organization's culture can turn from a core competency into a core rigidity if a firm relies too long on the competency without honing, refining, and upgrading as the firm and the environment change.)

Fast Call Inc. is a pharmaceutical company that has many breakthroughs in medicine to its credit. Unlike many other pharmaceutical companies, Fast Call has a relaxed work environment where employees are free to discuss projects with each other. Employees are encouraged to choose the projects that interest them; communication between team members and their supervisors is open and easy. Because of the company's work culture, its employees feel motivated to work harder and display more entrepreneurial behaviors. In this scenario, Fast Call Inc. is most likely an organization that is A. formalized. B. mechanistic. C. centralized. D. organic.

D. organic. (In this scenario, Fast Call Inc. is most likely an organic organization. Organic structures tend to be correlated with the following: a fluid and flexible information flow among employees in both horizontal and vertical directions; faster decision making; and higher employee motivation, retention, satisfaction, and creativity. Organic organizations also typically exhibit a higher rate of entrepreneurial behaviors and innovation.)

Which of the following shows founder imprinting? A. A company's founder defines and shapes her organization; the founder dies; the influence of the founder on the organization's culture persists for decades. B. A company's founder defines and shapes her organization; the founder dies; the influence of the founder on the organization's culture changes after a few years. C. A company's founder strongly influences her organization; the founder sells the company; the organization's culture changes despite resistance from some employees. D. A company's founder strongly influences her organization; the founder sells the company; the organization's culture changes after it is sold again in five years.

A. A company's founder defines and shapes her organization; the founder dies; the influence of the founder on the organization's culture persists for decades. (Company founders often define and shape an organization's culture, which can persist for many decades after their departure. This phenomenon is called founder imprinting.)

Zappos' 10 core values that define what it means for employees to be working at Zappos also define the _____ of Zappos. A. organizational structure B. organizational culture C. organizational strategy D. organizational controls

B. organizational culture (Organizational culture describes the collectively shared values and norms of an organization's members. Values define what is considered important. Zappos' 10 core values are important to its employees; they define their identity of what it means to be working at Zappos.)

A company that is using extrinsic motivation as an output control mechanism will most likely A. organize training sessions for employees. B. cut budgets during recessions. C. implement a peer review system. D. threaten to lay off employees if they do not achieve targets.

D. threaten to lay off employees if they do not achieve targets. (A company that is using extrinsic motivation as an output control mechanism will most likely threaten to lay off employees if they do not achieve targets. Extrinsic motivation is driven by external factors such as awards and higher compensation, or punishments like demotions and layoffs (the carrot-and-stick approach).)