MGMT 310 Exam 2 (Chapters 5-8)

Matrix Form

*Combines the positive elements from different organizational configurations to:* o Cope with strong environmental pressures o Assist complex internal interrelationships o Facilitate sharing and optimization of resources *To Facilitate optimized performance, uses:* o Technological expertise within functions o Horizontal coordination across the functions *Assigns equal authority to both divisional and functional managers*

Divisional Form

Can be organized around products, geographies, or clients Each division is accountable for its own profit and loss Employees feel more loyal towards their division rather than function Allows greater accountability Promotion is based on management capabilities across divisions rather than functional expertise In conglomerate corporations within each division requires a full set of its own, separate, dedicated set of business functions

Functional Form

Each functional department conducts its own budgeting and planning processes Works well for small businesses and businesses with a limited number of products or services Supports: o Easy flow of communication o Straightforward approach to supervision o Reduced level of redundancy Best suited for competitive situations that require efficiency of production of functional expertise

Stuck in the Middle Strategy

Engaging in numerous strategies without mastering any one particular strategy to achieve sustained competitive advantage Profitable in the short run, but more focused competitors will be more successful in the long run Happens to those firms that pursue revenue for revenue sake, causing them to lose focus and become less efficient

Disadvantages of Vertical Integration

Higher administrative costs for internal coordination Potential for obsolescence in technology or processes Tendency for complacency and lack of efficiency Lack of strategic flexibility - harder to change course

Advantages of Vertical Integration

Potential cost reductions in productions Improved coordination and quality control Protection of proprietary technology or processes Reduction in marketing costs (captive market)

Network Form

Uses cross-functional teams and technology to coordinate the work of geographically dispersed work groups Emphasizes the informal structure of the firm o Informal relationships between clusters of workers and cross-functional teams dominate the action of the firm Allows firms to quickly adapt to changes in the marketplace or respond to a competitor's action

Key questions for a SWOT analysis

What core internal capabilities set us apart from the competition? What is our unique selling proposition or core competitive advantage? In what internal areas are we vulnerable? What capabilities do we need to develop? In what ways is the external context changing? What opportunities or threats do these changes present?

Diversification Test

*1. Attractiveness Test* a. Is the industry profitable or capable of being profitable? b. Use the Porter 5-Forces, SWOT Analysis, Value Chain Analysis *2. Cost of Entry Test* a. How costly is it to enter the new industry? *3. Better-Off Test* a. Will the new industry provide the firm with a competitive advantage?

Threat of Substitutes

- Can be a competitor's product or some other product that satisfies the same consumer need - Limit an industry's profit potential by placing a ceiling on the prices that firms in an industry can charge

Strong Culture

- Can lead to better levels of performance, higher financial metrics, and competitive advantage - Promotes ethical guidelines that define acceptable and unacceptable behavior, helping the organization require less coordination and monitoring - Clarifies roles by being explicit about what is expected in an organization - Discourage disagreement and encourage groupthink

The Basic Value Chain: Support Activities

- Do to enable and support primary activities, achieve its goals Firm infrastructure Human resource management Technological development Procurement

The Basic Value Chain: Primary Activities

- Functions that generate and operate to generate profit/revenue Inbound Logistics Operations Outbound Logistics Marketing and sales Service

Increase in Industry Profitability

- High barriers to entry - Limited competitors - Lack of substitutes - Low buyer and supplier power

Rivalry Among Existing Competitors: Industry rivalry is most intense when...

- Industry products or services lack differentiation or switching costs - Fixed costs are high, and marginal costs are low - There is overcapacity, or capacity must be expanded in large increments - The industry's product is perishable or highly cyclical - Rival competitors are numerous or are roughly equal in size and power - Industry growth is slow - Exit barriers are high

A Leader's Role in Shaping and Culture

- Inspires all managers and employees to do their best - Empower employees and managers to make independent decision and to find ways to improve operations - Reward achievement with pay based on performance, and continue raising the bar - Reward achievement with nonpaid perks such as new assignments and employee recognition - Create a challenging work environment - Establish and abide by a clear set of values

Decrease in Industry Profitability

- Low barriers to entry - Many competitors - Several substitutes - High buyer and supplier power

Barriers to Entry

- Obstacles a firm may face while trying to enter a market or an industry - *Sources:* Supply-side economies of scale Demand-side benefits of scale Customer switching costs Capital requirements due to scale of entry Incumbency advantages independent of size Unequal access to distribution channels Restrictive government policy and regulations

Bargaining Power of Customers: A customer group tends to be powerful when...

- The group is concentrated or has purchases in large volumes relative to the supplier - Supplier industry's products that the customer group is purchasing are undifferentiated - Group faces few switching costs in changing vendors/suppliers - Customer group could potentially integrate backwards to produce the supplier industry's product

Supplier power occurs when:

- There are no substitutes for the supplier's products - The supplier limits production - The supplier does not consider the industry as one of its major customers

Levels of Organizational Culture: Artifacts

- Visible organizational structures, processes, and languages - Example: the way employees communicate, reward system, training - Example: After the 2008 global financial meltdown, Swiss-based banking giant UBS published a 44-page dress code that stipulated, among other things, that women must wear a tailored pantsuit in dark charcoal, dark blue, or black with a white blouse or shirt and black shoes.

Porter's 5-Forces Model

1. Threat of New Entrants 2. Bargaining Power of Customers 3. Threat of Substitutes 4. Bargaining Power of Suppliers 5. Rivalry Among Existing Competitors

Focus

A strategy in which a company "focuses" its sales efforts on a specific geographical region, a specific group of purchasers, or a specific product type

Differentiation

A strategy in which a firm seeks to be unique in its industry along a dimension or a group that are valued by consumers

Cost Leadership

A strategy that aims to provide a product or service at as low a price as possible to a broad audience

How a Firm's Internal Environmental Affects Strategy: Resource-based view of the firm

A theory that a firm can develop a competitive advantage through the collection and harvesting of resources - Tangible resources - Intangible resources - Human resources

Decision Rights: Centralized Organization

An organizational structure characterized by formal structures that control employee behavior by concentrating decisions in a top-down, hierarchical fashion

Decision Rights: Decentralized Organization

An organizational structure where key decisions are made at all levels of the firm, not mandated from the top

Levels of Organizational Culture: Assumptions

Behavior that stemmed from a belief held by a group that is no longer visible, but has become deeply embedded in the organization - Example: Hewlett Packard's "the HP Way" and Southwest Airlines' "LUV" form unconscious, underlying bases for behavior.

Building Organizational Commitment: Internalization

Commitment of the firm based on an alignment between the firm's values and the individual's values

Building Organizational Commitment: Compliance

Commitment to the firm based on a fair exchange, such as pay for services

Building Organizational Commitment: Identification

Commitment to the firm based on a sense of belonging

First-Mover Advantage

Competitive advantage that occurs when a firm is first to offer desirable products or services that secure customer loyalty

Background Integration

Control of inputs to production process

Forward Integration

Control of outputs or distribution channels for main products

Economies of Scale

Cost savings achieved when the volume of a product produced by a firm enables it to reduce per unit costs

Organizational Commitment

Desired end result of socialization whereby employees become committed to the organization and its goals

Capability Development

Employees need the skills—the capability—to better serve customers. These can be technical skills as well as soft skills such as the ability to communicate effectively with employees in different areas of the company. Capability can be developed both through formal training and the informal training that occurs as a person moves from job to job during a career. Giving employees career paths that make use of many different skills develops their abilities and helps them to serve customers more effectively. - Example: It is important for employees to be able to work across multiple product lines and to work effectively with other teams while doing so. You create career paths that allow employees to transfer from department to department within the company. An employee might work for engineering on one product but then work for sales on another.

Cooperation

Involves changing the organization's culture and implementing incentives to help employees focus on customers. Bringing employees together on a regular basis changes the informal structure of the organization. Note that it is important for employees to talk about customers during the happy hour for this initiative to achieve the desired results. - Example: To cultivate your organization's informal structure, you establish a Friday afternoon happy hour, bringing together employees who normally wouldn't communicate with one another to talk about customers.

Clout

Involves delegating decision rights to customer-facing functions and employees, who often have the most information about the customer. The people in sales and marketing have more contact with customers than the people in R&D, so by including them in the decision about what products to develop, the company becomes more customer-centric. - Example: After talking to people throughout the company, you realize that sometimes R&D invests a lot of resources in developing products that customers don't actually want. You establish a policy that before product development proceeds past a certain point, R&D needs to present the concept to sales and marketing and gain that department's approval.

Coordination

Involves setting up an organizational structure that supports links between silos. This allows employees to work together more closely and to serve customers more effectively. Creating a department that gathers information from across the organization and then disseminates that information across the organization is an example of an organizational structure that breaks down silos. Focusing all employees on the customer helps to make sure the company as a whole is more customer-centric. - Example: You are concerned that the company has too many silos. Therefore, you create a new customer communication department that is charged with bringing information about customer desires to every department in the company.

Corporate Advantage

Maximized allocation of resources to build competitive advantage across business units

Organizers

More control is warranted in organizational design to ensure that jobs are performed satisfactorily and efficiently - Typically use a bureaucratic approach

Behaviorists

More open organizational structure where roles and responsibilities are loosely defined - Typically use a clan approach

Threat of New Elements

New entrants increase rivalry and reduce profits

Socialization

Process of understanding how work gets done and how individuals should interact in an organization

Procurement

Procurement is the support activity of purchasing the supplies needed to produce a firm's products. Hot dogs are a big product for Sonic—the company frequently introduces new flavors and styles, so Sonic managers have to know where they are going to buy their supplies. Service is a primary activity of enhancing or maintaining the value of a product. Inbound logistics is actually dealing with supplies once they have been acquired by the organization—note that this activity supports inbound logistics. Outbound logistics involves handling a product once it has been made.

Firm Infrastructure

Refers to activities that support the improvement of a firm's product and the processes used to make it, operations refers to actually making the product, and inbound logistics is the process of handling supplies before they are turned into products. Example: When senior managers do long-range planning, they are participating in firm infrastructure, or the general management activities of the organization.

Connection

Restructuring the organization's boundaries, bringing customers inside the company and sending employees outside the company to interact with customers. By outsourcing computer services, you free your company and employees to focus on serving your exercise equipment customers. This increases the connection between customers and employees, along with your company's competitive advantage. - Example: You realize that servicing the company's computers is not one of your company's competitive strengths. You decide to outsource that task to another company and devote more resources to manufacturing and selling the exercise equipment that is your company's main product.

Clan Approach

Self-supervising teams that are responsible for a set of tasks - Used by Behaviorists

Bargaining Power of Suppliers

Suppliers provide a firm with essential inputs in the manufacturing or production process

Bureaucratic Approach

Systems are highly formalized and are characterized by extensive rules, procedures, policies, and instructions - Used by Organizers

SWOT Analysis: Strategic Flexibility

The capability to identify and react to changes in the external environment and to mobilize internal recourses to deal with those changes

Levels of Organizational Culture: Beliefs and Values

The meanings that members of an organization attach to artifacts - Example: Food manufacturer Mars Inc. states on its website and in many company publications that "the Mars Five Principles of Quality, Responsibility, Mutuality, Efficiency and Freedom are the foundation of our culture and our approach to business."

What is Culture?

The way individuals in an organization uniquely and collectively think, feel, and act o Provides employees with a road map and a set of rules for how work gets done and how people interact in the firm o Responds to humans' basic need for stability, consistency, and meaning o Needs to be externally relevant to ensure that the firm operates successfully as its environment changes

What barriers to entry does our company face when diversifying into this industry? a. Attractiveness test b. Better-off test c. Cost of entry test

a. Attractiveness test Porter recommends examining five forces when determining the attractiveness of an industry: barriers to entry, substitutes for products, intensity of competition, and supplier and buyer pricing power. When all five of these factors are low, the industry is more attractive and more suitable for diversification.

Which of the following is a valid difference between a divisional and a functional organizational structure? a. In divisional structures, core functions are often duplicated in each division. b. Employees in a divisional structure often develop more expertise than those in a purely functional structure. c. There is less potential for competitive behavior between divisions in a functional structure. d. Compared with a functional structure, a divisional structure allows for lesser accountability.

a. In divisional structures, core functions are often duplicated in each division.

Weaknesses of a functional structure include all except which of the following? a. It is optimal for creating economies of scale. b. Employees have a narrow view of the firm's overall goals. c. It is difficult to collaborate with other functional groups. d. There is an inability to deal with changes in the business environment.

a. It is optimal for creating economies of scale.

_________ is the formal systems, levers, and decisions an organization adopts or employs in pursuit of its strategy. a. Organizational design b. Bureaucratic approach c. Organizational structure d. Division of labor

a. Organizational design

Which of the following refers to activities involved with collecting, storing, and physically distributing a final product to customers? a. Outbound logistics b. Operations c. Inbound logistics d. Marketing

a. Outbound logistics

_______ refer(s) to a functional or divisional unit that operates by its own rules and guidelines and does not openly share information with other units. a. Silos b. Decision rights c. Mutual adaptation d. Centralization

a. Silos

_____ are cultures that form around geographic or organizational units in a company. a. Subcultures b. Beliefs and values c. Assumptions d. Artifacts

a. Subcultures

Which of the following would be the most sound rationale for The Walt Disney Company to pursue related diversification? a. To leverage the valuable Disney brand across multiple products and services b. To moderate the effects of the business cycle within a particular industry c. To acquire more creative talent in its film studios d. To operate more theme parks

a. To leverage the valuable Disney brand across multiple products and services

The _______ test asks the question: "Is the industry profitable or capable of being profitable?" a. attractiveness b. better-off c. ownership d. cost of entry

a. attractiveness

All of the following are part of Porter's 5-Forces Model except: a. bargaining power of competitors. b. bargaining power of suppliers. c. threat of substitutes. d. threat of new entrants.

a. bargaining power of competitors.

People who brew craft beer typically do not have to worry that the cost of their supplies will increase. Because there are so many hops growers and bottle manufacturers, the _____________________________ is low. a. bargaining power of suppliers b. rivalry among suppliers c. access to distribution channels d. threat of substitutes

a. bargaining power of suppliers

An organizational structure characterized by formal structures that control employee behavior in a top-down, hierarchical fashion is known as a: a. centralized organizational structure. b. network organizational structure. c. behaviorist organizational structure. d. decentralized organizational structure.

a. centralized organizational structure.

Companies that focus on reducing costs by making large quantities of product are looking for _____________________. a. economies of scale b. first-mover advantages c. differentiation d. strategic flexibility

a. economies of scale

Avis Budget Group, a large car rental company with locations primarily in urban areas, acquired Zipcar in 2013. Zipcar allows people in cities to rent cars for just hours at a time. Avis is using ____________________ to advance its business. a. single-product strategy b. unrelated diversification c. backward integration d. vertical integration

a. single-product strategy

Real estate, inventory, raw materials, and computing systems are considered: a. tangible resources. b. intangible resources. c. a value-chain. d. support activities.

a. tangible resources.

Managers are engaged in ____________________ when they look at what a company does to determine what advantage the company has over its competitors. a. value chain analysis b. support activities c. primary activities

a. value chain analysis

Which of the following is a consequence of having a strong organizational culture? a. It often results in employees being detached and reluctant to take up responsibility for the overall business performance. b. A strong culture can make adapting to change more difficult. c. It results in ambiguity of job roles as the organization's expectations are not explicitly stated. d. An organization with a strong culture tends to experience high levels of employee turnover.

b. A strong culture can make adapting to change more difficult

Will adding this company give us something we couldn't achieve on our own? a. Attractiveness test b. Better-off test c. Cost of entry test

b. Better-off test The better-off test refers to the value a company will get from acquiring another business. Diversification only makes sense if the diversified company improves its overall competitive advantage. You can determine whether a competitive advantage will occur by looking at the value a new company adds and by checking to see that acquiring the company adds more value than some other business arrangement, such as a strategic alliance or joint venture.

Which of the following factors discourages the entry of new players into a market by reducing consumers' preference to purchase from them? a. Supply-side economies of scale b. Demand-side benefits of scale c. Unequal access to distribution channels d. Incumbency advantages

b. Demand-side benefits of scale

_______ refer(s) to cost savings achieved when the volume of a product produced by a firm enables it to reduce per unit costs. a. Cost leadership b. Economies of scale c. Value d. Strategic flexibility

b. Economies of scale

______ exist(s) when the costs of operating two or more businesses or producing two or more products with the same corporate structure is less than the costs of operating the businesses independently or producing each product separately. a. Market power b. Economies of scope c. Unrelated diversification d. Financial economies

b. Economies of scope

_____ involve(s) the cost savings that a firm achieves through the distribution of capital among different business units. a. Economies of scale b. Financial economies c. Backward integration d. Market power

b. Financial economies

Which of the following is true of a differentiation strategy? a. An advantage of differentiation is that customers do not have to pay a premium price for a firm's product, even if that product is truly differentiated in terms of value. b. More than one firm can compete successfully based on differentiation in an industry. c. A firm can achieve and sustain differentiation as long as its price premium is less than the extra costs incurred in being unique. d. Differentiation strategies based on distribution systems are generally unsuccessful.

b. More than one firm can compete successfully based on differentiation in an industry.

Which of the following is true of organizational culture? a. An organization with a strong culture is one where no punishment system exists. b. The power structure of a company can help one decipher its culture. c. Organizational culture and organizational design are independent of each other. d. Organizations with strong cultures emphasize individualism over collectivism.

b. The power structure of a company can help one decipher its culture.

Recently, you began work as an auto mechanic. Your manager, ______________________, has set up your job so that you do very few tasks. You are expected to do those tasks extremely well, according to the rules and regulations established by your manager. a. a decentralization proponent b. an organizer c. a clan approach advocate d. a behaviorist

b. an organizer

If you feel committed to the Brewer's Guild because you feel a sense of belonging with the other members, then you are in the _____________ stage of commitment. a. internalization b. identification c. compliance

b. identification

The artifacts of an organization are: a. the profits that it plans to make in the next three quarters. b. its visible organizational structures, processes, and languages. c. a set of assumptions that point to the underlying essence of why members of the organization act as they do. d. the personal beliefs, values, and opinions held by its employees.

b. its visible organizational structures, processes, and languages.

Organizations hope that the end result of the socialization process will be __________________ on the part of employees. a. increased comradely b. organizational commitment c. increased diversity

b. organizational commitment

The _____________________ is influenced by all of the other competitive forces. a. bargaining power of suppliers b. rivalry among suppliers c. bargaining power of buyers d. potential of new entrants

b. rivalry among competitors

In SWOT analysis, human resource skills would be considered a(n): a. weakness. b. strength. c. threat. d. opportunity.

b. strength

Accountants who are employed by insurance companies such as Allstate and State Farm Insurance to handle corporate finances are engaged in ____________________ for the company. a. value chain analysis b. support activities c. primary activities

b. support activities

Which one of the following people is making a mistake in evaluating the culture of the organization? a. A consultant is hired to evaluate the company's culture. She starts by carefully listening to stories employees tell her about the founder of the organization. b. A new manager reads up on the company values and philosophies before starting his job. c. A new employee comes to work and sees that her coworkers are casually dressed, just as they were at her last job. She concludes that this company's culture is just like that of her old company. d. A senior manager asks five longtime employees to tell him what drives them to come to work every day. He wants to know if the employees are focused primarily on making money, serving customers, or creating great products.

c. A new employee comes to work and sees that her coworkers are casually dressed, just as they were at her last job. She concludes that this company's culture is just like that of her old company.

_____ involves developing relationships with parties outside a firm to increase the value of the firm's offerings. a. Cooperation b. Coordination c. Connection d. Capability development

c. Connection

How much money will we spend to buy the business we want compared to other businesses in the industry? a. Attractiveness test b. Better-off test c. Cost of entry test

c. Cost of entry test Any question that a manager asks related to the money necessary for a diversification is related to the cost of entry test. Managers have to be careful, however, not to enter a diversification just because the cost is low. Low cost may indicate low benefits from owning the company.

Which of the following statements is true of a clan approach to control? a. It involves high levels of supervision and extensive rules. b. It is appropriate for price-competitive and cost-sensitive industries. c. It is ideal for organizations that have constantly changing environments. d. It is ideal for large organizations operating in steady environments.

c. It is ideal for organizations that have constantly changing environments.

________ is the desired end result of socialization whereby employees become committed to the organization and its goals. a. Compliance b. Identification c. Organizational commitment d. Internalization

c. Organizational commitment

Which of the following functions is a support activity of a firm? a. Outbound and inbound logistics b. Operations c. Technological development d. Marketing and sales

c. Technological development

Which of the following most often provides the background for an organization's culture? a. The organization's policy handbook b. The organization's human resource management department c. The organization's founder d. The organization's board of directors

c. The organization's founder

A manager would examine the company's _______________ to learn how employees are likely to respond to problems. a. strategy b. environment c. culture d. structure

c. culture

All of the following are benefits of delegation except: a. drives quicker responses. b. increases employee engagement and motivation. c. fear of blame for subordinates' actions. d. places decisions closest to the actual action.

c. fear of blame for subordinates' actions.

When the Walt Disney company bought the ABC television network, it acquired one of its former customers to control a distribution channel for its content. This is an example of: a. backward integration. b. transaction costs. c. forward integration. d. administrative costs.

c. forward integration.

One advantage of related diversification is: a. it allows a firm to develop superior core competencies. b. it gives the firm improved coordination and quality control. c. it allows for the sharing of resources among business units. d. it can allow a sick or dying company to use capital generated in a profitable division to prop it up for a short period of time.

c. it allows for the sharing of resources among business units.

A leadership approach is most likely to be successful when a leader of a firm: a. refrains from establishing and abiding by a clear set of rules and values. b. keeps a tight rein on his employees to ensure that they follow orders. c. rewards achievement with nonpay perks such as new assignments. d. discourages monetary rewards for achievement.

c. rewards achievement with nonpay perks such as new assignments.

During the 1990s, consumers started to drink bottled water instead of soft drinks. The Coca-Cola Company and PepsiCo decided to change their product lineup to include water products, indicating __________________ on the part of both companies. a. cost leadership b. focus strategies c. strategic flexibility d. internal strengths

c. strategic flexibility

Deelited Inc. is a company that manufactures soft toys for children. The company operates on a very large scale, and this has enabled it to price its toys at competitive rates while still retaining good product quality. Since it is extremely difficult for a new entrant to sell toys at such low prices, few competitors have emerged for Deelited in the past five years. In this case, the low threat that Deelited Inc. faces from new entrants can be attributed to: a. high capital requirements of the industry. b. demand-side benefits of scale. c. supply-side economies of scale. d. incumbency advantages.

c. supply-side economies of scale.

A supplier industry group will be powerful when all of the following occur except: a. industry participants in the buyer industry face switching costs in changing suppliers b. the supplier group does not depend heavily on the industry. c. the supplier industry is less concentrated than the industry it sells to. d. no substitutes exist for what the supplier group provides.

c. the supplier industry is less concentrated than the industry it sells to.

Before an acquisition takes place, managers of acquiring companies must understand: a. their subcultures b. the level of organizational commitment c. their own company's culture d. their artifacts

c. their own company's culture

A company typically pays _____________ costs to buy supplies from another organization. a. administrative b. integration c. transaction d. diversification

c. transaction

______ occurs when a firm maximizes its resources to build a competitive advantage across its various business units. a. Synergy b. A single-product strategy c. Diversification d. A corporate advantage

d. A corporate advantage

_____ is defined as a strategy in which a firm engages in several different businesses that may or may not be related in order to create more value than if the businesses existed as stand-alone entities. a. Outsourcing b. Focus c. Cost leadership d. Diversification

d. Diversification

Which of the following organizational structures is most likely to have the highest levels of accountability? a. Network b. Functional c. Matrix d. Divisional

d. Divisional

Which of the following statements best describes unrelated diversification? a. It utilizes a similar set of tangible and intangible resources for multiple businesses. b. It develops greater core competency, but suffers from more cyclicality. c. It takes advantage of resources to achieve economies of scope. d. It involves managing several businesses with no connection.

d. It involves managing several businesses with no connection.

Which of the following is a disadvantage of vertical integration? a. Lack of access to technology b. Lack of coordination c. Lack of quality control d. Lack of strategic flexibility

d. Lack of strategic flexibility

A __________ _is highly formalized and characterized by extensive rules, procedures, policies, and instructions. a. behaviorist approach b. clan approach c. division of labor d. bureaucratic approach

d. bureaucratic approach

In a ______________ organization, managers make most of the decisions, define their employees' jobs, and establish policies and procedures for their employees. a. decentralized b. functional c. divisional d. centralized

d. centralized

A firm can become more customer-centric by: a. adopting new functional or divisional units to concentrate exclusively on the sales and promotion departments respectively. b. increasing the amount of informal structures within the organization. c. ensuring that employees do not work across multiple products and services while creating connections across the boundaries of the firm. d. developing a cooperative environment in which workers are given incentives for working across silos to deliver customer solutions.

d. developing a cooperative environment in which workers are given incentives for working across silos to deliver customer solutions.

In 2013, Markel, a large U.S. insurance company, completed its acquisition of Alterra Capital Holdings Ltd., a company that sells reinsurance and large-account insurance. Markel managers hope for__________________ because the two companies will share complementary resources. a. synergy b. market power c. financial economies d. economies of scope

d. economies of scope

The diversification test includes all of the following except: a. cost of entry test. b. better-off test. c. attractiveness test. d. economies of scope test.

d. economies of scope test.

If a television channel such as CNN purchased a company that manufactured television sets, it would be engaged in __________________. a. administrative costs b. spot contracts c. backward integration d. forward integration

d. forward integration

The process of cultural socialization can take all of the following forms except: a. stories, legends, and myths. b. formal statements of philosophy, creeds, and values. c. design of the organization. d. shareholder value.

d. shareholder value.

Founders have ways to embed culture into their organization through all of the following except: a. their capacity to make assumptions stick. b. their capacity to absorb the anxiety associated with risk. c. their encouragement of innovation. d. their capacity to put profit first.

d. their capacity to put profit first.

You've just set up a new cleaning company. One of your first tasks will be establishing the company's ___________________, or what jobs each employee will do. You are considering two possibilities: one in which all employees cycle through all jobs in the company and another in which jobs are highly specialized. a. division of labor b. delegation c. decision rights d. organizational design

division of labor

The Bechtel Corporation has a ______________ structure, with employees reporting to both project managers and functional managers. a. network b. functional c. matrix d. divisional

matrix

To maintain its competitive advantage, Google has engaged in _________________________, modifying its management structure and the way individual employees' jobs are defined. a. strategy development b. organizational design

organizational design

As a new member of the Brewer's Guild, you notice that the association has its own way of operating. Last week, the other association members gave a special treat to every club member who brought a can of food to the club meeting. The club works with the local food shelter to feed the homeless, and all club members who bring cans of food get free tickets to club events such as the fall dance. This is an example of _______________ members into the culture of the organization through the use of ______________________. a. inducting b. recruiting c. socializing d. incorporating a. organizational design b. reward systems and norms c. leader reactions to critical incidents d. criteria for selecting club members

socializing; reward systems and norms

Strong cultures are more likely to increase performance in _________________ environments, but one drawback of strong cultures can bean _______________ in groupthink. a. stable b. turbulent c. mixed d. all a. an increase b. a decrease

stable; increase