CH 11
Which of the following shows founder imprinting?
A company's founder defines and shapes her organization; the founder dies; the influence of the founder on the organization's culture persists for decades.
Why must managers use a mechanistic structure to implement a cost-leadership strategy?
A mechanistic structure offers a centralized structure with well-defined lines of authority.
Why did W. L. Gore reorganize itself into a functional structure from a simple structure?
A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth.
Which of the following statements about an organization's culture is not true?
A strong monitoring and supervision mechanism is needed to enforce the culture.
Which of the following provides an example of a common drawback of a functional strategy?
Bert had a difficult time communicating efficiently with the manager of another department.
_____ refers to the degree to which decision making is concentrated at the top of the organization.
Centralization
Grey Designs Inc., a graphic design firm, has offices in New York, Texas, California, New Mexico, and New Jersey. Each of these offices is headed by a president who reports directly to Charles Grey, the CEO. The heads of the centralized HR, Finance, and Marketing teams report to Charles Grey as well. Managers in the various offices also report to the CEO directly. Based on this information, which of the following statements is most likely to be true?
Charles Grey has a wide span of control.
Flight Stream Inc., a toy manufacturing company, encourages its employees to enjoy their work by taking on additional responsibilities or switching jobs with each other. It allows its employees immense flexibility in charting their own career path within the organization. Chris has worked at Flight Stream for eight years, but has never had a boss or supervised an employee. Which of the following is most likely true in this scenario?
Flight Stream Inc. has a flat organizational structure.
Frappe operates as a strategic business unit (SBU) under More or Less Inc., a home-furnishings manufacturer. From this information, it may be reasonable to infer that
Frappe is led by its own CEO (or equivalent general manager).
Hank's Hot Dogs is a nationwide fast-food chain. Decision power resides at the top of the organization. Each job is documented in minute detail. The firm has many levels of supervision, including vice presidents and regional managers. Hank's headquarters provides detailed instructions to each of its franchisees so that they provide comparable quality and service across the board. Based on this scenario, which of the following is an accurate statement about Hank's?
Hank's has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy.
Which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy?
It allows a cost-leader to upgrade core competencies in manufacturing and logistics.
Why should managers using the M-form organizational structure to support a related-diversification strategy ideally concentrate decision making at the top of the organization?
It allows a high level of integration.
Which of the following is an advantage offered by a functional structure?
It allows for a higher degree of specialization and deeper domain expertise.
Why does a functional structure rely on a flat organizational structure?
It allows for efficient bottom-up and top-down communication.
Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy?
It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing.
Why does Zappos offer its new recruits $2,000 to quit at the end of the first week of their job?
It believes that individuals who choose to stay on will fit in with the Zappos culture.
Which of the following is a disadvantage of a functional strategy?
It cannot effectively address a higher level of diversification.
In which of the following ways does Zappos achieve organizational control?
It enforces that each group member's compensation depends in part on the group's overall productivity.
Which of the following statements best describes groupthink?
It is a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions.
Which of the following statements is true of organizational culture?
It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages.
What most likely happens when a firm optimizes its organizational structure to its current situation?
It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur.
Which of the following is true of a functional structure?
It relies on a relatively flat organizational structure.
Why is the optimal organizational structure a multidivisional structure?
Its focus is on driving down costs.
Which of the following characteristics of McDonald's best supports the fact that it is a mechanistic organization?
Its job descriptions are very descriptive.
What was one of the reasons for Jerry Yang's failure at Yahoo?
Jerry's preference for obtaining consensus among his managers led to bickering and infighting.
Which of the following best exemplifies the use of input controls?
McDonald's use of standard operating procedures
Which of the following real-world scenarios best exemplifies formalization?
McDonald's use of standard operating procedures across the world
_____ organizations are characterized by a high degree of specialization and formalization, and tall hierarchies that rely on centralized decision making.
Mechanistic
Opal, a recent fashion design school graduate, has received praise for her clothing designs from her peers and friends on social networking sites; this has inspired her to set up a store where she can design and sell apparel. After experiencing some success with sales, she recruits two employees to handle customers at the store. However, she handles other day-to-day affairs herself, while continuing to design clothes. Which of the following is likely to be a pitfall of this organizational structure established by Opal?
Once the firm starts growing and attracting more customers she is likely to feel overloaded.
_____ organizations have a low degree of specialization and formalization as well as a flat organizational structure.
Organic
_____ describes the collectively shared values and norms of an organization's members.
Organizational culture
Which of the following statements is true of strategy in an organization?
Organizational structure must follow strategy in order for firms to achieve superior performance.
Which of the following real-world scenarios best exemplifies the use of organizational culture to build competitive advantage?
Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time.
Why does strategy implementation often require changes within an organization?
Strategy implementation transforms strategy into actions and business models.
What is most likely to happen if a firm relies too long on a competency without honing, refining, and upgrading as the firm and the environment change?
The firm's culture can turn from a core competency into a core rigidity.
Which of the following statements is true about the use of functional structures with various business strategies?
The goal of a differentiation strategy is to create a competitive advantage by controlling costs.
Why is it difficult to imitate the organizational culture of firms like Southwest Airlines and Zappos?
Their culture reflects complex relationships with their employees, customers, and suppliers.
Why are controls like budgets and operating procedures that McDonald's implements known as input controls?
They are considered before employees make any decisions.
Which of the following did management at Zappos do to reduce the level of formalization in their organization?
They avoided asking their customer service reps in call centers to follow a detailed script.
Which of the following is true of the process of organizing for competitive advantage?
To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes.
W. L. Gore has four product divisions: electronic products, industrial products, medical products, and fabrics division. It also has manufacturing facilities in the U.S., China, Germany, Japan, and Scotland, and business activities in 30 countries across the globe. Based on this information, which of the following statements is most accurate?
W. L. Gore is using a multidivisional structure.
Which of the following types of groups is most susceptible to groupthink?
a cohesive group
Veronica sets up a business consulting firm in which the employees are motivated because they find their work interesting and creative. She carefully hires workers who fit well with their assigned tasks. Also, she clearly defines the results expected of each worker, but allows the workers to determine the means to these results. Which of the following best describes Veronica's business?
a firm that relies on high output controls to tap into intrinsic motivation
Which of the following accurately describes an organic organization?
a flexible organization that fosters fast decision making and high employee motivation
A(n) _____ organization always attempts to balance and harness different activities in trade-off situations.
ambidextrous
Curve Inc. is a software development firm based in California. It strives to provide highly differentiated software at cheaper prices when compared to its competitors. Which of the following organizational designs should Curve Inc. implement to ensure the maximum success of its business strategies?
ambidextrous
Broadview Company integrated certain important functions of Widget.com with Widget, while keeping other functions independent. To support this integration, the president of Widget shifted compensation incentives for both senior teams to accomplish joint goals rather than to focus solely on each business unit's performance. This scenario best exemplifies a(n)
ambidextrous organization.
Maurice sent in a complaint about a rude salesperson he dealt with at FirstElectronics Inc. He didn't get a response for about three months. Also, when the response finally came, it was just a formal, cursory letter. Based on this scenario, FirstElectronics most likely has an extremely _____ organizational structure.
centralized
FTZ Inc. is an electronic appliances manufacturer that has many strategic business units (SBUs), among which, television and computers share a close relationship. These SBUs have to fight each other for R&D funding because there is a combined amount set aside for these two units. However, they share technological findings with each other and work together to ensure that their combined output is better that of the other SBUs. Such a relationship between SBUs in a business is referred to as
co-opetition.
GM's insistence on sticking to a bureaucratic culture combined with its M-form structure and its subsequent failure to adapt to changing customer preferences for more fuel-efficient cars, produce higher quality, and create innovative designs best exemplifies
core rigidity.
The relationship between strategy and structure that directly impacts a firm's performance is
dynamic.
Monica's Cosmetics Inc. has a functional structure that is flexible enough to allow it to leverage its brand name across different products. By doing this, Monica's is reaping ____ from its core competencies.
economies of scope
StickOn Inc. is an adhesive manufacturer. After a slight dip in production numbers, it forms a team to find a quick solution to this problem, at least for the shorter term. This scenario best exemplifies
exploitation.
According to Alfred Chandler in his book Strategy and Structure, implementing a successful strategy depends on having an organizational structure that is _____ enough to accommodate the formulated strategy and future growth and expansion.
flexible
Which of the following features helps match a cost-leadership strategy to a functional structure?
focus on economies of scale
McDonald's uses detailed standard operating procedures throughout the world to ensure product quality. This implies that McDonald's has a high degree of
formalization.
A typical college of business (or school of management) has several areas such as management, marketing, finance, accounting, MIS, and so on. This is an example of a(n) _____ structure.
functional
Which of the following organizational structures matches best with an international strategy?
functional
A firm that uses a structure that is organized along different business functions such as HR, R&D, Sales, and Marketing and also along different geographical areas such as different countries of the world is most likely using a _____ structure.
global matrix
A functional structure is recommended when a firm
has a low level of diversification.
Which of the following is a feature of an organic organization?
high span of control
To maintain its core competency of providing a superior customer experience in the face of explosive growth, Zappos split the organization into 10 standalone units. Which of the following does this scenario best illustrate?
how an organization accommodates strategy implementation through a flexible organizational structure
Coda Inc. is an apparel manufacturer. The management at Coda prefers moderate control over the operations of the different departments such as R&D, design, marketing, and sales. It allocates a budget to each function at the beginning of each quarter. This is an example of implementing control through
input controls.
Output controls can sometimes discourage collaboration among different strategic business units. However, more and more work requires creativity and innovation, especially in highly-developed economies. One way firms are grappling with this issue is by
introducing results-only-work-environments to tap intrinsic motivations.
McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's
is mechanistic in nature.
Organizational culture can be the basis of a firm's competitive advantage if
it is valuable, rare, and difficult to imitate.
An organization that is organized according to strategic business units (SBUs) and also along organizational structures is most likely using a _____ structure.
matrix
Remote Inc. is a notebook manufacturing company based in Ohio. Remote's main market is Ohio. It aims at providing its products at better prices than its competitors. Which of the following structures is Remote Inc. likely to use if it has functional setup?
mechanistic
Walmart is an example of a(n) _____ organization.Walmart is an example of a(n) _____ organization.
mechanistic
DigiGames Inc. established itself as the foremost producer of computer games. However, as the market for these games moved from laptop computers to cell phones based on cloud applications, DigiGames failed to adapt its games enough to this new environment. As result, the firm soon lost its competitive advantage. Which of the following best describes this scenario?
movement from core competency to core rigidity
Kolt Inc., a large and successful retail chain on the West Coast, decides to expand its operations across the U.S. Which of the following organizational structures should Kolt Inc. use?
multidivisional
The _____ structure consists of several distinct strategic business units (SBUs), each with its own profit-and-loss responsibility.
multidivisional
When a firm diversifies into different product lines and geographies, a _____ structure is preferred.
multidivisional
Which of the following global strategies best matches with a multidivisional structure?
multidomestic
Organizational culture can help a firm gain and sustain competitive advantage only if the culture makes a positive contribution to the firm's economic value creation and
obeys the VRIO principles.
An organization is characterized as having a flexible division of labor, distributed decision making, and generalized knowledge of how to accomplish strategic goals valued. This organization is most likely _____ in nature.
organic
If a firm pursues only a differentiation strategy, it is most likely a(n) _____ organization.
organic
Plow Inc. is a greeting card manufacturing company. Plow's market dominance exists primarily because of the innovative designs of its greeting cards when compared to those of its competitors. In this scenario, Plow Inc.'s managers must ideally rely on a functional structure that resembles a(n) _____ organization.
organic
Which of the following types of organizations best helps match a differentiation strategy to a functional structure?
organic organization
Fast Call Inc. is a pharmaceutical company that has many breakthroughs in medicine to its credit. Unlike many other pharmaceutical companies, Fast Call has a relaxed work environment where employees are free to discuss projects with each other. Employees are encouraged to choose the projects that interest them; communication between team members and their supervisors is open and easy. Because of the company's work culture, its employees feel motivated to work harder and display more entrepreneurial behaviors. In this scenario, Fast Call Inc. is most likely an organization that is
organic.
To effectively implement a differentiation strategy, managers rely on a functional structure that resembles an organization that is highly
organic.
Since an organic structure helps a firm build core competencies in areas such as R&D and marketing, this structure is employed by firms that
pursue a differentiation strategy at the business level.
Which of the following is an unintended side effect of a high degree of specialization in an organization?
reduced employee satisfaction due to repetition of tasks
GreenValue Inc. started a chain of organic supermarkets that had initial success. The managers achieved a mastery of the firm's current environment, thereby filling a need in the market. However, GreenValue defined and measured it success by financial metrics, with a focus on short-term performance. As a result, the firm put in place metrics and systems to accommodate and manage increasing firm size due to continued success. As a result of this tightly coupled system, GreenValue developed a
resistance to change.
Larry's Auto Repair is a small business in which the founder, Larry, makes most of the important strategic decisions as well as runs the day-to-day operations. He has three mechanics and a financial secretary working for him. Based on this scenario, Larry's Auto Repair has a(n) _____ structure.
simple
Nick just graduated from law school and wants to start his own law firm. It is best for Nick to use a _____ organizational structure.
simple
While working a night job at a call center, Carlos creates an app called DineSmart, which can be used to place orders at restaurants, rate the restaurants, and make reservations. Because he receives good responses for his app, he quits his current job to focus his efforts on DineSmart. He creates a start-up called TYOP and hires three people to help him improve DineSmart and maintain the servers that run it. In this scenario, TYOP most likely has a _____ structure.
simple
A high degree of formalization in an organization is most likely to
slow down decision making.
Successful _____ requires managers to design and shape structure, culture, and control mechanisms.
strategy implementation
The key components of organizational design are
structure, culture, and control.
Black Mouse Inc., a web development firm, is headed by Rob Dennis, the CEO. Each functional department of the company—marketing, finance, and HR—has a president who reports to the CEO directly. Each department has various managers who manage teams. The managers report to the presidents, and the team leads report to the managers. Finally, the employees at the lowest level report to their team leads. It is rare for a lower-level employee to interact with the CEO of the company. In this scenario, Black Mouse Inc. can be said to have a(n)
tall hierarchical structure.
Cynthia works as a front-line employee for a nationwide retail store. She reports to a floor manager, who reports to a departmental manager, who reports to a regional supervisor, who reports to a vice president, who reports to the CEO. Which of the following best describes this retail store?
tall structure
A company that is using extrinsic motivation as an output control mechanism will most likely
threaten to lay off employees if they do not achieve targets.
Zappos established its unique organizational culture
through explicitly stated values that are connected to its reward system.
The most important yet least visible element of organizational culture is
values
