BUS101 - Chapter 6 Test Bank
Decentralization works best in a complex, rapidly changing environment.
TRUE Decision-making authority is delegated to levels of management at various points below the top; this allows the organization to be more adaptive to change.
The functional organizational structure is the approach to organizational structure used by most small to medium-sized firms.
TRUE Functional organization is used by most small to medium-sized firms.
International organizational structures are an approach to organizational structure developed in response to the need to manufacture, purchase, and sell in global markets.
TRUE International organizational structures developed in response to the need to manufacture, purchase, and sell in global markets.
Job specialization is a natural part of organizational growth.
TRUE Specialized jobs are learned more easily and can be performed more efficiently.
The chain of command is depicted by solid lines on an organization chart.
TRUE These lines represent reporting relationships.
Frequently, the informal organization effectively alters a company's formal structure.
TRUE This level, furthermore, is sometimes just as powerful—if not more powerful—than the formal structure.
Acme Oil Company has three divisions: Exploration, Extraction, and Refining. This is an example of process departmentalization.
TRUE With process departmentalization, the firm is divided according to production processes used to create a good or service.
What kind of organization becomes more responsive to its environment by breaking the company into more manageable units?
decentralized In doing so, the organization can operate more efficiently in complex, rapidly changing environmental conditions.
Which term covers grouping jobs into logical units?
departmentalization Departmentalization is the process of grouping jobs into logical units.
In tall organizations, which feature describes the span of control?
narrow Due to multiple layers of employees, different levels of employee skill levels, job dissimilarities and job difficulties, tall organizations tend to lead to a narrower managerial span of control.
The organization of the health care producer Johnson & Johnson includes consumer health care products, medical devices and diagnostics, and pharmaceuticals. What kind of organizational structure does this company use?
divisions Johnson & Johnson can thus evaluate the performance of each division independently.
Which of the following organizational systems is the part that can be seen and represented in chart form?
formal organization The structure of a company, however, is by no means limited to the organization chart and the formal assignment of authority.
At Ace Products, three vice presidents report to the CEO, including the VP for Finance, the VP for Marketing, and the VP for Operations. What type of structure does Ace Products have?
functional Functional structure is a form of business organization in which authority is determined by the relationships between group functions and activities.
Which form of organization is used by most small to medium-sized firms?
functional Functional structure is a form of organization in which authority is determined by the relationships between group functions and activities; it is based on the use of functional departmentalization at the highest level of the business.
Firms with what structure are structured around departments for each basic business action?
functional structure Benefits of this structure include specialization within functional areas and smoother coordination among them.
What is the sequence of events in the delegation process?
granting authority follows assigning responsibility The steps in the delegation process, in order, include assigning responsibility, granting authority, and creating accountability.
What style of organization relies almost entirely on employees working on a common project, with little or no underlying functional hierarchy?
team People float from project to project as dictated by their skills and the demands of those projects.
After responsibility for a task is assigned, which of the following comes next?
the granting of authority The delegation process involves three steps: assigning responsibility, granting authority, and creating accountability.
Which of the following best describes accountability?
the obligation employees have to their manager for the successful completion of an assigned task Creating accountability is the final step of the delegation process; for the process to work smoothly, authority and responsibility must be equivalent.
What are groups of operating employees called who are empowered to plan and organize their tasks and to perform those tasks with a minimum of supervision?
work teams The organization will usually find it beneficial to grant special authority to work teams so that they may function more effectively.
What do managers do when the "job" of a firm is broken down into smaller jobs?
specialize the job In a sense, all firms have one major job; to perform this one overall job, managers actually break it down, or specialize it, into several smaller jobs.
What authority is based on special expertise and usually involves counseling and advising?
staff authority For example, a corporate attorney may be asked to advise the marketing department as it prepares a new contract with the firm's advertising agency.
What are specialists in law, accounting, and human resource management commonly called?
staff members Staff members help departments in making decisions but do not usually have the authority to make final decisions.
With its many organizational layers, what type of organizational structure does the U.S. Army demonstrate?
tall The U.S. Army has a centralized, and tall, authority system.
Which feature characterizes the organization of centralized firms?
tall The main feature of centralized firms is their tall organizational structure.
In a centralized structure, most decision-making authority is delegated to levels of management at various points below the top.
FALSE In a centralized structure, most decision-making authority is delegated to levels of management at the top.
What are departments called that resemble separate businesses in that they produce and market their own products?
divisions Further, the head of each division may be a corporate vice president or, if the organization is large enough, a divisional president.
What structure does an organization with little or no formal structure and with only a handful of permanent employees use?
virtual structure Typically, a virtual organization has only a handful of permanent employees, a very small staff, and a modest administrative facility.
Describe a learning organization.
A learning organization works to facilitate the lifelong learning and personal development of all of its employees while continually transforming itself to respond to changing demands and needs. Generally a learning organization is characterized by five main features: systems thinking, personal mastery, mental models, shared vision, and team learning.
Why is the structure typically found within a virtual organization different from the structure of a large corporation?
A main feature of a virtual organization is that it has little or no formal structure. A typical virtual organization has only a handful of employees and a modest administrative facility.
Wilson Communication Devices manufactures walkie-talkies for use in a business environment, primarily in the industrial manufacturing industry. The walkie-talkies are small and lightweight and do not interfere with Wi-Fi or radio signals that the companies may use for other purposes. Wilson's walkie-talkies typically are used for communication between workers in high noise environments, such as automobile manufacturing, welding shops, and construction sites. They can be used to talk or text, depending on the noise level, and also contain a feature that allows the worker to input information and store it for later use. Since Wilson sells its walkie-talkies only to businesses, it needs to take into account factors that affect business buying centers, such as organizational influences and individual factors. Two salespeople for Wilson are arguing over which set of factors is more important to consider when making a sale. Bill argues that organizational influences such as company goals and operating environment are more important. Aubrey argues that individual factors of the buyer are more important. Which of the following statements, if true, would support Bill's stand for organizational influences? A) Company V has liquid assets and a firm financial standing, even during the economic downturn. It determines it can afford to buy new equipment like Wilson walkie-talkies in order to upgrade its manufacturing process. B) Kirk, the buyer for Company W, cannot stand Bill, and therefore refuses to buy any Wilson walkie-talkies from him. However, he will order them from Aubrey. C) Carl authorizes purchases for Company X, but he is very concerned about making a large purchase without the input of his CEO. D) The buyer at Company Y is motivated to advance his career as quickly as possible. Therefore, he completes a thorough research project on Wilson walkie-talkies: He compares other available walkie-talkies, researches price comparisons, and analyzes their use in his company. E) Company Z has never purchased Wilson walkie-talkies because the secretary has never passed along the information from any of the sales calls made by Wilson reps.
A) Company V has liquid assets and a firm financial standing, even during the economic downturn. It determines it can afford to buy new equipment like Wilson walkie-talkies in order to upgrade its manufacturing process. Choice A is the only answer that supports Bill's argument for the importance of organizational influences on sales. The finances of the company, along with its goals and operating environment, are all organizational influences. Choices B, C, D, and E are all examples of individual influences on business buying centers, and thus would more accurately support Aubrey's argument. Personality, roles, motivation, level of power, risk, level of involvement, and personal objectives are types of individual influence.
What is the difference between responsibility and authority?
Responsibility is the duty to perform an assigned task, whereas authority is the power to make the decisions necessary to complete the task. Responsibility relates to task assignment; authority relates to task completion.
Explain why retail stores are referred to by a generic name.
Retail stores actually derive their generic name—department stores—from the manner in which they are structured. Large retail stores utilize departmentalization in their organizational structure.
Departmentalization refers to the process of grouping jobs into logical units.
TRUE The practice of grouping jobs into units is called departmentalization.
Which of the following begins when a manager assigns responsibility to a subordinate?
delegation The delegation process involves three steps: assigning responsibility, granting authority, and creating accountability.
What are the four basic forms of organizational structure? Briefly describe each.
The basic forms of organizational structure are functional, divisional, matrix, and international. In a functional organization, authority is determined by the relationships between groups and activities. Functional organizations tend to be structured around basic functions. In a divisional organization, corporate divisions operate as autonomous businesses under the larger corporate umbrella. Organizations with matrix structures form teams, and team members report to two or more managers. International organizational structures have developed in response to the need to manufacture, purchase, and sell in global markets. The basic forms of organizational structure are functional, divisional, matrix, and international.
Samantha has wondered about the informal organization at Ace. Describe how the informal organization may negatively affect the organization.
The informal organization can reinforce office politics that put individuals' interests ahead of those of the firm. Also, information can be distorted when communicated without management input or review.
Which of the following decisions would likely be made by a centralized authority? A) What are the procedures All American Burger should use to ensure food safety? B) If All American Burger wishes to recruit current students for entry-level management positions, which colleges and universities should All American Burger choose? C) How should a regional division spend the money in its advertising budget? D) What special menu items should be offered in order to encourage new customers? E) Should marketing focus on bringing in new customers or taking customers from the competition?
It is always possible to come up with some argument for individual differences, but that argument is hardest to make in the case of things like food safety, Choice A. Everyone needs safe food, and it is hard to argue that the steps required for safety would be different for different places. The other choices involve decisions that might be made at more local levels.
What are three factors that may impact span of control at Ace Products?
Job similarity, job simplicity, employees' skill levels, and other possible factors could affect span of control.
At McDonald's, most advertising is handled at the corporate level, and any local advertising must be approved by a regional manager. What kind of organization is McDonald's demonstrating?
centralized McDonald's practices centralization as a way to maintain standardization.
What is authority given to a special group of employees that play central roles in the firm's daily operations called?
committee and team Committee and team authority is the term given to the authority exercised by a special group of employees.
Thomas Corp. has three basic departments: children's books, games, and toys. What type of structure does the company have?
divisional A divisional structure relies on product departmentalization.
Which of the following structures relies on product departmentalization?
divisional The firm organizes itself around product-based divisions, each of which may then be managed as a separate enterprise.
What is the main organizational characteristic of decentralized firms?
flat Decentralized firms share the characteristic of a flat organizational structure.
With relatively few layers of managers, what do decentralized organizations tend to reflect?
flat organizational structure Delegation and authority are pushed downward in the organizational hierarchy.
What are everyday social interactions among employees that transcend formal jobs and job interrelationships called?
informal organization The informal organization of a company includes the everyday social interactions among employees that go beyond the formal job-related interactions.
Line departments are linked directly to the production and sales of a specific product.
TRUE As the doers and producers, each line department is essential to an organization's ability to sell and deliver finished goods.
How might a divisional structure benefit Ace Products?
Divisional structures are popular among larger organizations and enjoy a number of benefits. Each division usually has its own identity and operates as a relatively autonomous business under the larger corporate umbrella. Divisionalized companies are free to buy, sell, create, and disband divisions without disrupting the rest of their operations. Divisions can maintain healthy competition among themselves by sponsoring separate advertising campaigns and fostering different corporate identities. They can also share certain corporate-level resources.
Samantha Grant has assumed leadership of Ace Products after many years of loyal service. Ace Products is an international manufacturer of copiers, printers, and fax machines. Historically, its customers have fallen into four groups: hospitals, small businesses, airlines, and state and local governments. After talking with her daughter, who has just completed her business degree, Samantha is beginning to wonder if reorganizing would benefit Ace Products. The organization chart shows that there is a Vice President of Manufacturing, Vice President of Accounting and Finance, and a Vice President of Marketing; they all report to the President of Ace Products. Describe the span of control likely to prevail at Ace Products.
In tall organizations, such as Ace, span of control tends to be relatively narrow.
What has Rubbermaid used to create and maintain the innovation and flexibility of a small business environment within the large, bureaucratic structure?
intrapreneuring The firm has one major division, the New Business Group. When a manager or engineer has an idea for a new product or product application, the individual takes it to the New Business Group and "sells" it. The managers in the group then help the innovator develop the idea for testing.
What kind of departmentalization happens when an organization is divided into operations related to different products?
process departmentalization Process departmentalization refers to organizational divisions based on product process.
Explain specialization and departmentalization.
The process of identifying specific jobs and designating people to perform them leads to job specialization. After they are specialized, jobs are grouped into logical units—the process of departmentalization. Departmentalization follows one of five forms: (1) product departmentalization, (2) process departmentalization, (3) functional departmentalization, (4) customer departmentalization, or (5) geographic departmentalization. Larger companies take advantage of different types of departmentalization for various levels.
Job specialization is the process of eliminating unnecessary or undesirable jobs.
FALSE Job specialization is the process of identifying the specific jobs that need to be done and designating the people who will perform them.
List and describe three advantages of a divisional structure.
In a divisional organization, corporate divisions operate as autonomous businesses under the larger corporate umbrella. A divisional structure allows the corporation to evaluate the performance of each division independently. Because the divisions are relatively autonomous, a firm can sell or eliminate a single division with minimal disruption to the remaining business operations. Finally, a divisional structure can create healthy competition. Divisions can share certain corporate-level resources.
Which of the following is a natural part of organizational growth?
job specialization As an organization grows, the need to specialize jobs so that others can perform them also becomes a priority.
Which of the following clarifies structure and shows employees where they fit into a firm's operations?
organization charts An organization chart is a diagram showing the structure and employee placement in terms of operations.
Companies with centralized authority systems typically require multiple layers of management. What type of organizational structures are these companies utilizing?
tall Decisions are made mostly by upper-level managers.
To provide a state-of-the-art classroom and instructional technology, Shell Oil recently purchased an executive conference center north of Houston. What type of organization does this purchase reflect?
learning The facility boasts state-of-the-art classrooms and instructional technology, lodging facilities, a restaurant, and recreational amenities.
What is authority that flows up and down the chain of command called?
line authority Line authority is the term that describes the flow of authority along the chain of command.
What type of departments are linked to the production and sales of specific products?
line departments Line departments are defined as departments linked to the production and sales of specific departments.
Which of the following are the "doers" and producers in a company?
line employees Line employees include those related to goods and services production.
At Chaparral Steel, some employees transport scrap steel while others operate shredding equipment. What does this example demonstrate?
specialization When the overall job of the organization is broken down like this, workers can develop real expertise in their jobs, and employees can better coordinate their work with that done by others.
The delegation process involves three steps: assigning responsibility, granting authority, and creating accountability.
the duty to perform an assigned task In contrast, authority is the power to make the decisions necessary to complete the task.
Which of the following best describes authority?
the power to make the decisions necessary to complete a task In contrast, responsibility is the duty to perform an assigned task.
Because international organizational structures have emerged in response to the need to manufacture, purchase, and sell in global markets, why do some companies adopt a truly global structure?
Some companies adopt a truly global structure in which they acquire resources (including capital), produce goods and services, engage in research and development, and sell products in whatever local market is appropriate, without consideration of national boundaries. Explanation: The advantage of an international organizational structure is that it allows the company to function as one integrated global organization.
The matrix form of organizational structure was pioneered by NASA.
TRUE A matrix structure is organized along two dimensions—a "permanent" structure, along with a temporary structure needed for project completion.
A virtual organization has little or no formal structure.
TRUE A virtual organization has the structure of a handful of employees and a modest administrative facility.
Accountability refers to the liability of subordinates for accomplishing tasks assigned by managers.
TRUE Accountability means that subordinates are responsible for accomplishing tasks assigned by managers.
For the delegation process to work smoothly, responsibility and authority must be equivalent.
TRUE First, responsibility is assigned; then, authority is granted, followed by the creation of accountability.
Employees' abilities and the supervisor's managerial skills help determine whether span of control is wide or narrow.
TRUE Other factors include job similarity and job difficulty
A team organization typically does not utilize functional hierarchy.
TRUE People float from project to project as dictated by their skills and the demands of those projects.
Organizational structure is a function of the organization's mission and strategy.
TRUE Size of the company and aspects of the organization's environment also affect organizational structure.
Briefly explain the steps in the delegation process.
The delegation process begins when responsibility is assigned. Then, authority is granted. Finally, accountability is created. The delegation sequence includes assigning responsibility, granting authority, and instigating accountability processes.
Briefly describe the five basic forms of departmentalization.
The five basic forms of departmentalization are customer, product, process, geographic, and functional. Customer departmentalization occurs when the organization is divided according to the types of customers they serve. An organization with product departmentalization groups people and functions according to the specific products being created. Process departmentalization occurs when the organization is divided according to production processes. Organizations with geographic departmentalization create divisions to serve different geographic areas. Finally, functional departmentalization occurs when departments are created around their function or activity. The five basic forms of departmentalization are customer, product, process, geographic, and functional.
Describe the informal organization and the position of intrapreneuring within this structure.
The formal organization is the part that can be represented in chart form. The informal organization, everyday social interactions among employees that transcend formal jobs and job interrelationships, may alter formal structure. The impact on a firm may be positive, negative, or irrelevant. Because it can be harnessed to improve productivity, some organizations encourage the informal organization. Many firms also support intrapreneuring, creating and maintaining the innovation and flexibility of a small business within the confines of a large, bureaucratic structure.
What is the informal organization and how does it relate to the formal structure?
The informal organization consists of the everyday social interactions among employees that go beyond formal jobs and job interrelationships. It can affect the company's formal structure by changing the way information is sourced and distributed. Explanation: In certain cases the informal organization is sometimes just as powerful, if not more powerful, than the formal structure.
Why are centralization and decentralization, delegation, and authority the key ingredients in establishing the decision-making hierarchy?
After jobs have been specialized and departmentalized, firms establish decision-making hierarchies. One major issue addressed through the creation of the decision-making hierarchy involves whether the firm will be relatively centralized or relatively decentralized. Centralized authority systems typically require multiple layers of management and thus tall organizational structures. Decentralized firms tend to have relatively fewer layers of management, resulting in a flat organizational structure. Delegation is the process through which a manager allocates work to subordinates. In general, the delegation process involves three steps: (1) assigning responsibility; (2) granting authority; and (3) creating accountability. As individuals are delegated responsibility and authority in a firm, a complex web of interactions develops. These interactions may take one of three forms of authority: line, staff, or committee and teams.
What does a divisional structure rely on and why does it rely on this feature?
A division structure relies on product departmentalization. Organizations using this approach are typically structured around several product-based divisions that operate like separate businesses. Divisional structures can resemble separate businesses where each is responsible for the production and marketing of their own products.
Which of the following, if true, would most strongly suggest that TLS should change its organizational structure to a functional-based approach? A) TLS currently maintains separate human resource departments in each of its regions. B) Research suggests that product development failures happened because the product developers were isolated from customers. C) TLS earns large streams of revenue from services it offers to schools. D) In the current regional structure, managers complain about having a limited view of organizational goals. E) Sales techniques that work in one region are often much less effective in other regions.
A) TLS currently maintains separate human resource departments in each of its regions. One disadvantage of the geographic approach is the potential duplication of functions. But the functional approach consolidates functions. So if Choice A is true then the functional approach sounds a little better. Choices B and D would likely be worse under a functional approach. Choice C suggests more an approach based around customer types. Choice E would be better addressed by the current structure.
Executives claim that this division of labor keeps employees focused on the tasks that fit their skills and leads to a better product. Which of the following, if true, would strengthen that claim?
After a product specification is completed, knowledge of the thinking that went into the product specification is not necessary to complete the project effectively. The Design department knows what customers want and come up with a plan. Production executes the plan. But do they need to know what customers want in order to execute the plan? If Choice C is true, then the answer is no, they don't. So Choice C strengthens the argument by supporting the notion that the Production department has what they need to do their job effectively. Choice A undermines the argument by suggesting that discussions need to take place that would be unnecessary if the distinction between the Design department and the Marketing department were eliminated. The fact that these discussions are necessary suggests that splitting these functions is inefficient. Choice B undermines the argument by suggesting that Production keeps spending resources on doomed projects. Choice D doesn't matter because this is a new era, and we don't even know how effective the model was in that older era. Choice E doesn't address the wisdom of the process; it doesn't help us decide if this is a good thing to try to do.
How would you advise Samantha about the best organizational structure for Ace Products? Why?
Answers will vary and will likely include some of the advantages listed in the textbook. In addition, students may mention that coordination may become difficult in a functional organization. In divisional structures, corporate managers may lose touch with daily operations if too much control is delegated to division managers. In addition, competition between divisions can become disruptive, and efforts in one division may be duplicated by those of another.
Which statement about organizational structure is TRUE? A) Decentralized firms tend to have many layers of management. B) As a company gets larger, it tends to adopt a decentralized structure. C) The purpose of centralization is to make a company more responsive to a changing, complex environment. D) In a centralized organization, most decision-making authority is held by lower-level managers. E) Decentralized companies must change to centralized structures in response to unpredictable environments.
B) As a company gets larger, it tends to adopt a decentralized structure. In a decentralized structure, much decision-making authority is delegated to levels of management at various points below the top.
At Appleson Publishing, products are produced by a team representing different functional groups, none of which have supervisory authority over any of the others. Represented departments include Design, Production, and Marketing. Design department members are skilled at identifying customer requirements and creating product specifications. Their success is measured by return on product investment, which takes into account both the money earned by a product and the money spent on that product. Production department members are skilled at project execution. They are responsible for creating products according to the Design department members' specification. The Production department is considered successful when it completes projects according to schedule and project spending does not exceed the project's budget. Marketing department members are responsible for building profitable relationships with target market segments. They are skilled at communicating a product's value and persuading customers to make purchases. Marketing department members' success is measured by the revenue that the products take in. Which of the following questions would most likely lead to a conflict between Design department members and Production department members? A) Should Appleson invest in a new project that requires heavy initial investment but is expected to lead to a large stream of revenue in the long run? B) Should a project be launched later than planned in order to make changes that will make it more attractive to customers? C) Should product management focus on the needs that customers have already expressed or should it try to anticipate unexpressed needs? D) Is the team project process at Appleson more effective than it would be if it followed a more traditional organizational structure? E) When projects do not meet expectations, is the failure likely to be caused by faulty product design or inadequate market development?
B) Should a project be launched later than planned in order to make changes that will make it more attractive to customers? The Design department gets rewarded when projects earn high returns, but schedules don't matter. The Production department gets rewarded when projects are on time, but the money that those projects earn doesn't matter. So the Design department members and Production department members would most likely clash over Choice B. Choices A and C: The Production department would have no special reason to have an opinion on these questions. Choice D: We don't know if anyone thinks the system should be changed. Choice E is likely to be a clash between Design and Marketing.
List and describe the three forms of authority.
The three forms of authority are line authority, staff authority, and committee and team authority. Line authority flows in a direct chain of command from the top of the company to the bottom. Staff authority is based on expertise and usually involves counseling and advising managers. Committee and team authority is granted to committees or work teams involved in a firm's daily operations. The three forms of authority are line authority, staff authority, and committee and team authority.
For the delegation process to work smoothly, responsibility must slightly exceed one's level of authority.
FALSE Responsibility and authority must be equivalent for the delegation process to work smoothly.
An international organization is one in which traditional boundaries and structures are minimized or eliminated altogether.
FALSE Some companies perform operations in global structures without any regard for national boundaries.
Firms with production, marketing, human resource, and finance departments have a process form of organization.
FALSE Such firms have a functional form of departmentalization.
The building blocks of all organizations are specialization and centralization.
FALSE The building blocks of all organizations are specialization and departmentalization.
The informal organization is not as powerful as the formal structure.
FALSE This level of organization is sometimes just as powerful—if not more powerful—than the formal structure.
List three factors that may affect a manager's span of control.
Factors that may affect a manager's span of control include employees' abilities, the similarity and simplicity of tasks, and the extent to which tasks are interrelated. Other factors may include the supervisor's management skills and the synergy between the assigned tasks.
Samantha's daughter has recommended that Ace Products be reorganized into a divisional organization. Including only top layers of management, how might the organization chart differ from what it looks like now?
Under the President, a vice president of various divisions could lead; for example, a Vice President of Hospitals, a Vice President of Airlines, etc. could all report to the President.
Why is company size a critical factor in fostering intrapreneuring?
Historically, most innovations have come from individuals in small businesses. As businesses increase in size, however, innovation and creativity tend to become casualties in the battle for more sales and profits. Intrapreneuring is more commonly encouraged in larger companies.
Based on the organization chart described in the scenario, how is Ace Products organized?
It appears that Ace Products is organized as a functional organization.
Which statement about staff responsibility is TRUE?
It is clearly different from line authority. The separation between line authority and staff responsibility is clearly delineated; staff responsibility is typically carried out by those employees who provide services to managers.
How do the job duties of line employees and staff employees differ?
Line employees are directly involved in the production and/or sales of goods or services produced; staff employees generally provide services to management but are not directly involved in goods and services production. Line employees are involved in core business while staff employees provide support.
Which of the following is an advantage of job specialization?
Workers can develop expertise in their jobs. However, jobs at lower levels of the organization are especially susceptible to overspecialization. If such jobs become too narrowly defined, employees may become bored and careless, derive less satisfaction from their jobs, and lose sight of their roles in the organization.
What is the power to make the decisions necessary to complete a task called?
authority Authority is defined as the power to make decisions that are necessary to ensure the completion of a task.
A snack food firm has one division for the United States, one for Europe, and another for Asia. How is this firm departmentalized?
by geography With geographic departmentalization, an organization is divided according to the areas of the country or the world that they serve.
Which term describes creating and maintaining the innovation and flexibility of a small business environment within the confines of a large, bureaucratic structure?
intrapreneuring Intrapreneuring is the creation and maintenance of the innovation and flexibility of a small business environment within the confines of a large, bureaucratic structure. Page Ref: 156
If the senior manager's prediction is accurate, which of the following is inferable? A) If TLS does not change to either a product approach or a functional approach, then it will not change its organizational approach at all. B) If TLS is not profitable this year and fails to develop any new products, the company will first switch to a functional approach and then to a product approach. C) If TLS is profitable, then it could organize itself by customer groups. D) If TLS does not change to either a product approach or a functional approach, then it could not have been profitable this year. E) If TLS does not change to either a product approach or a functional approach, then it could not have developed any new products.
C) If TLS is profitable, then it could organize itself by customer groups. The senior manager predicts what will happen if the company is not profitable and if it fails to develop new products. However, the senior manager makes no prediction about what would happen if TLS is profitable. So, according to the senior manager, if the company is profitable, anything can happen, and so the scenario suggested in Choice C is possible. Choice A: There may be other ways that TLS could organize itself. Choice B suggests that the company will change twice, but the senior manager doesn't say that. Choices D and E have the same problem. Together, failing to be profitable and failing to develop new products would be enough to force TLS to go to one of those two organizational approaches, but the fact that it doesn't adopt one of those approaches doesn't tell us what failed to happen. For example, if the company is not profitable, then the company might not reorganize regardless of its success in developing new products, so Choice E is not inferable. Similarly, if the company fails to develop any new products, then the company might not reorganize whether or not it is profitable, so Choice D is not inferable.
Which of the following, if true, would most strongly support the conclusion that All American Burger should adopt a decentralized approach? A) The value of a decentralized approach has been a popular topic in academic research. B) A large percentage of All American Burger's revenue comes from a small number of menu items. C) The popularity of All American Burger's special menu items has varied greatly across different regions. D) All American Burger has been growing more quickly than most of its major competitors. E) A well-publicized instance of discrimination at a single All American Burger can alter the public's perception of the entire company.
C) The popularity of All American Burger's special menu items has varied greatly across different regions. The varied reaction to All American Burger's special menu items (Choice C) suggests that local tastes vary, which would argue against a "one size fits all" centralized approach and for a more decentralized approach. Choice A is irrelevant. We don't even know what that academic research says about decentralized approaches. Choice B suggests that consistency in those few items is critical, which supports centralization. Choice D is vague, but if anything it goes the other way. Increased size supports more centralization. Choice E says that a single bad incident could be disastrous, which would weigh against tolerating any differences.
Which of the following, if true, would most strongly suggest that TLS should change its organizational structure to a product-based approach? A) The largest growth area for TLS is governmental contracts, which have buying procedures that are very different from those of other customers. B) TLS currently maintains separate accounting departments in each of its regions. C) To be effective, TLS managers need to be experts in at least one of the products that TLS sells. D) TLS hopes to build sustained relationships with customers, selling the same person academic tutoring, standardized test preparation, and admissions consulting. E) Communication between different marketing departments in different regions has been substandard.
C) To be effective, TLS managers need to be experts in at least one of the products that TLS sells. A product-based approach helps to build the subject-matter expertise of the managers. So if the managers need to know the products, as Choice C indicates, then the product model looks a little better. Choice A favors an approach based on customer type. Choices B and E would be no better in a product-based approach. Consolidation of those departments might help, but the product-based approach would not require consolidation. Choice D would suggest that a product-specific approach wouldn't be the way to go, because it might interfere with a continuous relationship across products.
Which of the following questions would different All American Burger restaurants be most likely to answer differently? A) What color should All American Burger restaurants be? B) What are the core values of All American Burger? C) What price should All American Burger charge for its products? D) What policies should be put in place to prevent sexual harassment in the workplace? E) What ingredients should be used when making the food products that made All American's
C) What price should All American Burger charge for its products? Different areas have different costs of living, and so pricing is likely to vary from restaurant to restaurant. Choices A, B, and E: The restaurants are not likely to change anything essential to the brand, such as core values (Choice B), colors (Choice A), or "signature" items (Choice E). Choice D: Companies need to have a uniform policy on preventing sexual harassment. Having different policies in different places could be evidence that the company does not take the issue seriously.
In the business-to-business buying process, the buyer goes through a variety of steps before making a purchase. Included in these steps are identifying needs and vendors, evaluating vendors, and negotiating terms. Hollis, a salesman for Wilson, understands this process and provides a detailed precontract PowerPoint program for each company that he approaches. Which of the following statements, if true, would he NOT consider putting in his presentation? A) There is a variety of ways that Wilson walkie-talkies can be used to maximize the communications of the business, as well as reduce overhead by eliminating communication errors. B) Next I'll identify competitors' products and detail why Wilson walkie-talkies are superior. C) I'm including here an audit report and licensing credentials for Wilson. D) Shown here are a variety of ways that Wilson walkie-talkies can also be used in a home situation. E) Displayed is a table detailing the cost per unit and how the unit costs decrease with order size.
D) Shown here are a variety of ways that Wilson walkie-talkies can also be used in a home situation. Choice D, demonstrating how the walkie-talkies can be used at home, would not be an appropriate choice when selling business-to-business, as it would not have an application directly related to the business. Choices A, B, C, and E all reflect aspects of a business-to-business buying process which includes identification of business needs (Choice A), identification of competitors (Choice B), vendor evaluation (Choice C), and negotiation of terms (Choice E).
Which of the following types of structure entails a second chain of command? A) divisional B) departmental C) committee D) matrix E) team
D) matrix A matrix structure is often referred to as a "combination" structure.
What is delegation? Identify four reasons that managers have trouble delegating.
Delegation is the process by which managers allocate work to employees. Experts pinpoint several reasons why managers may have trouble delegating effectively. Some managers may be concerned that employees are less able to perform a job. Managers may also be concerned that the employee will "show them up" in front of others by doing a superior job. Managers may be hesitant to delegate because of a desire to keep as much control as possible over operations. Finally, managers may lack the ability to effectively delegate. Explanation: The four reasons that managers have trouble with delegation include perception of employee ability to complete a task, concern about appearing inadequate, desire to exert control, and lack of effective delegation skills.
Discuss the difference between delegation and accountability.
Delegation is the process through which managers allocate work to subordinates. Accountability, one of the steps in the delegation process, is the obligation employees have to their managers for completion of the assigned task. Delegation is the overall process whereas accountability is a step in the process.
Which of the following, if true, would weaken the claim that this division of labor keeps employees focused on the tasks that fit their skills and leads to a better product? A) Some employees who work in the Marketing department used to work in the Design department. B) Projects often fail to meet their revenue goals because the Design department develops products for market segments that the Marketing department cannot reach. C) Projects are often late because of product distribution problems that occur after the project is completed. D) The number of projects that fail because they do not meet their revenue goals is lower than the number of projects that fail because they go too far over budget. E) Projects often are unprofitable because of changes in the external environment that could not have been predicted before the project started.
Does this structure make sense? If Choice B is true, then Design is working in a way that will not allow Marketing to do its job. Choice B suggests that a top-down approach would be more effective in keeping everyone on the same page. Choices A and D are not problems in and of themselves. So they aren't evidence of a structural problem. Choices C and E are problems, but not ones that are related to the structural decisions here.
All American Burger is a nationwide fast food chain that competes with McDonald's, Burger King, and Wendy's. Management at All American Burger is debating whether to have a more centralized or a more decentralized organizational structure. Which of the following, if true, would most strongly support the conclusion that All American Burger should operate in a highly centralized manner? A) All American Burger restaurants are spread over a large geographic area. B) A greater number of managers have expressed an interest in making policy. C) Entry-level workers at All American Burger are likely to be part-time or flex-time employees. D) The organizations that choose more centralized operations are likely to be organizations in crisis. E) Customers choose All American Burger in large part because of the consistency of the dining experience.
E) Customers choose All American Burger in large part because of the consistency of the dining experience. Centralized operations make more sense when consistency is the goal. If Choice E is true, then consistency is a critical success factor, and therefore strengthens the conclusion. Choice A supports a decentralized approach. Choice B: The ambitions of the managers aren't pivotal to this question, but if anything, their ambitions suggest that they would prefer a decentralized approach. Choice C is irrelevant. Entry-level employees at a fast food chain aren't managers, and the policy for handling them could just as easily be centralized or decentralized. Choice D says nothing about All American Burger.
Why is it important for organizations to create and communicate their organizational structure?
Each organization must develop an appropriate organizational structure: the specification of the jobs to be done and the ways in which those jobs relate to one another. Most organizations change structures almost continuously. Firms prepare organization charts to clarify structure and to show employees where they fit into a firm's operations. Each box represents a job, and solid lines define the chain of command, or reporting relationships. The charts of large firms are complex and include individuals at many levels. Because size prevents them from charting every manager, they may create single organization charts for overall corporate structure and separate charts for divisions.
Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.
Most firms rely on one of four basic forms of organizational structure: (1) functional, (2) divisional, (3) matrix, or (4) international. Functional structure is a form of business organization in which authority is determined by the relationships between group functions and activities. A divisional structure relies on product departmentalization. A so-called matrix structure is organized along two dimensions, instead of just one, by combining, for example, a functional and a divisional structure. International organizational structures are developed in response to the need to manufacture, purchase, and sell in global markets. As global competition becomes more complex, companies may experiment with ways to respond. Some adopt truly global structures, acquiring resources and producing and selling products in local markets without consideration of national boundaries. Organizations also continue to seek new forms of organization that permit them to compete effectively. The most popular new forms include (1) team organization; (2) virtual organization; and (3) learning organization.
Tarnopol Learning Services (TLS) offers tutoring to high school students, college students, and adults returning to school. TLS also bids on government-sponsored contracts. TLS's major product offerings include academic tutoring, standardized test preparation, and admissions consulting. Its operations spread over many geographic regions. Currently, the company is deciding whether it should change from its current approach of organizing by geographical area. A senior manager has predicted that if TLS is not profitable this year and fails to develop any new products, the company will switch to either a functional approach or a product approach. 141) Which of the following, if true, would strengthen the argument that TLS should change its organizational structure? A) TLS values corporate social responsibility as well as profitability. B) New product offerings have been neglected as divisions have focused on traditional revenue sources. C) TLS division managers have focused on short-term revenue at the expense of developing profitable relationships with long-term customers. D) The markets TLS serves have different requirements in different geographic areas. E) The expected revenue of some of the regional divisions is higher than that of some of the other divisions.
New product offerings have been neglected as divisions have focused on traditional revenue sources. A geographic organization has advantages, but it is not the best for focusing attention on new products. If Choice B is true, then smaller products are not getting the attention they deserve. Choices A and C: None of the choices available to TLS affects its ability to be responsible (Choice A) or think long-term (Choice C). Choice D would support keeping the current approach. Choice E says that some of the divisions are bigger than others, but that doesn't suggest that the current approach isn't working.
Why do most businesses use organization charts?
Organization charts clarify structure and show employees where they fit into a firm's operations. The solid lines define the chain of command, or reporting relationship, within the company. An organization chart is a graphical representation and therefore is able succinctly to convey information about departmental and reporting structures.
What is an employee's duty to perform an assigned task?
responsibility Within an organization, the duty to perform an assigned task is called responsibility.
Which feature will a committee have?
some decision-making responsibility A committee will likely be comprised of top managers from several major areas; the entire committee may be granted decision-making power.
Which statement about line departments is TRUE? A) They include those with special counseling and advising expertise. B) They include those directly linked to the sales of products. C) They include staff members who provide services to management. D) They have little effect on the production of goods. E) Customer preference has little effect on them.
B) They include those directly linked to the sales of products. Line departments include those employees directly linked to the production and sales of products.
A divisional structure relies on functional departmentalization.
FALSE A divisional structure relies on product departmentalization.
As organizations grow and become larger, jobs tend to become less specialized.
FALSE As organizations grow, jobs tend to become more specialized; job specialization is a natural part of organizational growth.
Firms typically use the same form of departmentalization at upper and lower levels.
FALSE Because different forms of departmentalization have different advantages, larger companies, for example, tend to adopt different types of departmentalization for various levels.
Coordination across functional departments becomes more complicated in smaller firms than in larger firms.
FALSE Coordination becomes more complicated across functional departments within large organizations.
Divisional structure is the relationships between group functions and activities that determine authority.
FALSE Divisional structure relies on product departmentalization.
After an organizational structure has been created, it is set in stone.
FALSE Even after an organizational structure has been created it is rarely set in stone. Most organizations change their structures on an almost continuous basis.
Flat organizational structures are usually associated with centralized decision making.
FALSE Flat organizational structures are usually associated with decentralized decision making.
When several employees perform the same simple task, a narrow span of control is most appropriate.
FALSE Job simplicity typically leads to a wider span of control.
To avoid bureaucracy within the organization, most large organizations tend to adopt the same types of departmentalization for all levels.
FALSE Larger companies tend to adopt different types of departmentalization for various levels of the company.
Line, staff, and committee and team forms of authority are not likely to all be found within the same organization.
FALSE Like departmentalization, all three forms of authority may be found in a given company, especially a large one.
Intrapreneuring attempts to create and maintain the innovation and flexibility found in large, bureaucratic structures.
FALSE Many large firms support the intrapreneuring process to encourage individual employees to innovate and maintain the organizational flexibility of a smaller firm.
Organization charts are graphical representations of employee salary information.
FALSE Organization charts are graphical representations of the structures of an organization and the relationships and relative ranks of its positions.
Geographic departmentalization divides firms according to the areas of the country or the world that they serve.
TRUE Geographic departmentalization divides firms according to the areas of the country or the world that they serve.
What does functional structure foster?
centralization This, in turn, makes accountability more difficult.
In what type of organization do most lower-level decisions need to be approved by upper management before they can be implemented?
centralized In a centralized organization, most decision-making authority is held by upper-level managers.
What do the solid lines on an organization chart show in reporting relationships within a company?
chain of command The chain of command is shown on an organization chart as a solid line.
Silver Designs is a high-end clothing manufacturer. They have three divisions producing clothes for men, women, and teens. What is this an example of?
customer departmentalization Customer departmentalization follows specialization for certain types of customers.
What is dividing a store into a men's department, a women's department, and a luggage department an example of?
customer departmentalization Customer departmentalization is a form of organization in which departments are created to offer products and meet needs for identifiable customer groups.
In what type of organization is decision-making authority delegated to levels of management at various points below the top?
decentralized As a company gets larger, decision making tends to become more decentralized; decentralization is typical in firms that have complex and rapidly changing environmental conditions.
Jack Welch, former CEO of General Electric, stated, "If you don't let managers make their own decisions, you're never going to be anything more than a one-person business." What style of management is Welch proposing?
decentralized management In a decentralized structure, delegation of authority flows downward.
Determining how people performing certain tasks can best be grouped together is called what?
departmentalization Departmentalized companies benefit from this division of activities; control and coordination are narrowed and made easier, and top managers can see more easily how various units are performing.
What is the process of designing specific jobs that need to be done and identifying the people who will perform them called?
job specialization Job specialization is a result of identifying specific roles that need to be undertaken within the organization.
What type of organization seeks to integrate continuous improvements with continuous employee development?
learning A learning organization works to facilitate the learning and personal development of all of its employees while continually transforming itself to respond to changing demands and needs.
Which factor plays a key role in determining an organization's structure?
mission and strategy Many factors determine an organization's optimal structure, including mission, strategy, company size, and the organization's environment.
What is the preferred span of control when jobs are more diversified or prone to change?
narrow Job difficulty and job dissimilarity can lead to a narrower span of control for managers.
Which term refers to the specification of jobs to be done within an organization and the ways in which those jobs relate to one another?
organizational structure Organizational structure refers to the jobs undertaken within an organization and how these jobs are related to one another.
American Wood Products has three divisions. The Lumberjack division is involved in harvesting trees and transporting them to lumber mills. The Milling division transforms cut timber into dimensional lumber for building. The Paper Products division makes paper and cardboard from the remnants of the milling process. What type of departmentalization is this an example of?
process departmentalization With process departmentalization, the organization is divided according to production processes used to create a good or service.
Vlasic has separate departments to transform cucumbers into fresh-packed pickles, pickles cured in brine, and relishes. What is this an example of?
process departmentalization With process departmentalization, the organization is divided according to production processes used to create a good or service.
What type of departmentalization does Kraft Foods use by having separate divisions for different types of foods?
product In addition, a department can be treated as a profit center.
Procter & Gamble has Baby Care, Beauty Care, Health Care, and Home and Fabric Care divisions in its U.S. operations. What is this an example of?
product departmentalization With product departmentalization, the organization is divided according to the specific product or service being created.
