chapter 11

Which of the following statements about organizational structures for implementing business-level strategies is true? • A cost leadership strategy requires a simple structure emphasizing high specialization, centralization, and structured job roles. • A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions. • An integrated cost leadership/differentiation strategy requires a multidivisional structure using high formalization, decentralized decision making, and vertical coordination • A focused strategy requires a functional structure featuring high levels of both specialization and formalization.

A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions

Which of the following is NOT a preliminary task of the strategic center firm in a strategic network? • Strategic outsourcing • Encouraging friendly rivalry among network members • Allocating internal capital • Supporting development of new core competencies

Allocating internal capital

Which of the following statements about implementing corporate-level strategies and effective organizational structures is true? • Firms pursuing a related linked strategy should implement a competitive structure with a competitive culture and centralized strategic planning activities. • Firms pursuing an unrelated diversification strategy should use an SBU structure with a small corporate staff, emphasize the R&D function, and integrate divisions to achieve synergies. • Firms pursuing a related linked strategy should use an SBU structure, emphasize interdependence among divisions, and manage the strategic planning function from the central office. • Firms pursuing a related constrained strategy should implement a cooperative structure, use integrative devices to link divisions, centralize the R&D function, and emphasize sharing.

Firms pursuing a related constrained strategy should implement a cooperative structure, use integrative devices to link divisions, centralize the R&D function, and emphasize sharing

_______ is the degree to which rules and procedures govern work. • Formalization • Centralization • Specialization • Unification

Formalization

Megaline, Inc., with five divisions, follows the competitive form of the multidivisional structure. One division has not met the rate-of-return goals for the past year. Another division has exceeded the rate-of-return goals. The other three divisions met the rate-of-return goals. The headquarters office must decide where to allocate capital in the next year. Which of the following scenarios is the MOST likely? • The poorest-performing division will get the highest capital allocation so that it can fix its problems and achieve the rate-of-return goal next year. • The highest-performing division will get the highest capital allocation because it has the best prospects for creating more wealth for the shareholders next year. • The average-performing divisions that met the rate-of-return goals will receive the highest allocation because their performance exactlv matched corporate requirements

The highest-performing division will get the highest capital allocation because it has the best prospects for creating more wealth for the shareholders next year

One disadvantage of the functional structure is that: • career paths and professional development are limited. • dual reporting relationships blur lines of authority. • the CEO cannot coordinate and control the efforts of functional-level emplovees. • communication and coordination are difficult among organizational functions.

communication and coordination are difficult among organizational functions

Firms such as Textron Inc. that frequently acquire and divest other firms are MOST likely to use the _______ structure. • matrix • competitive multidivisional • hybrid combination • horizontal complementary strategic alliance

competitive multidivisional

The fewest integrative devices are used in the ________ structure. • simple • competitive multidivisional • SBU • network

competitive multidivisional

The BEST multidivisional structure to use: • is the competitive form. • is the SBU form. • is the cooperative form. • depends on the degree of diversification.

depends on the degree of diversification

A firm pursuing a related constrained diversification strategy would typically need all of the following EXCEPT: • centralization of some organizational functions for the sake of coordination. • frequent, direct contact between division managers. • division managers' rewards based on division financial performance. • temporary teams or task forces formed around specific projects.

division managers' rewards based on division financial performance

Selecting the organizational structure and controls that effectively implement the chosen strategy is a challenge for managers because: • firms must be flexible while retaining a degree of stability. • managers are never able to obtain all the information necessary to make the best selection. • the structure of a firm should not duplicate the structures of its competitors. • the environment changes too rapidly for corporations to maintain a consistent corporate structure.

firms must be flexible while retaining a degree of stability

The cooperative multidivisional firm: • establishes profit centers based on products or markets. • has a flat organizational structure that broadens jobs and empowers workers. • has a structure organized around both functional specialization and business projects. • has a structure requiring heavy use of horizontal integrative devices.

has a structure requiring heavy use of horizontal integrative devices

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that: • it is difficult to achieve economies of scale. • the firm must develop centers to offer after-sales service to customers. • it is difficult to respond effectively to local market needs and preferences. achieving economies of scale with this strategy/structure combination is nearly impossible.

it is difficult to respond effectively to local market needs and preferences

Airlines have forged a number of complementary strategic alliances, in part because many airlines are not profitable. Some airlines participate in several alliances simultaneously. This tends to: • make the partners' true loyalties and intentions unclear. • make the role of the strategic center firms more critical to alliance success. • distribute the alliances along several segments of the airline industry value chain. • be most effective when the alliances are with airlines headquartered in different nations.

make the partners' true loyalties and intentions unclear.

Galatea Foods was founded in Greece by Galatea Chronos in 1978, and the company spread rapidly through Western Europe. Ms. Chronos retains the office of CEO. The Spanish division is headed by her oldest son. The North European division is headed by her only daughter, and the French-Italian division is headed by Ms. Chronos' brother. This company probably uses the strategy. • network • multidomestic • global • transnational

multidomestic

Firms seeking to differentiate particularly need support from the functions. • finance; accounting • engineering; operations • product R&D; marketing • management information; finance

product R&D; marketing

Functional structures work best for firms for all of the following EXCEPT: • cost leadership strategy. • differentiation strategy. • related constrained diversification strategy. • single or dominant business corporate strategy.

related constrained diversification strategy

Andermeyer Jewelers, which specializes in high-end jewelry, has been in existence since the 1870s and has served generations of wealthy families. Owned and managed by the Andermeyer family since its founding, it has never had more than 20 designers and jewelers in its shop. Andermeyer Jewelers should use the structure. • simple • functional • matrix • network

simple

In most cases, the focus strategy is best managed using a __________ structure. • simple • functional • multidivisional • vertical

simple

A private university is made up of various "schools," such as the School of Journalism, the School of Business, the School of Law, the School of Arts and Sciences, and so forth. The university is experiencing some financial problems, so the administration has decided to have each school of the university become a profit center. This scheme is somewhat parallel to the organizational • structure. • network • strategic business unit multidivisional • functional

strategic business unit multidivisional