CH 11

each SBU is evaluated as a standalone, profit-and-loss center.

Strategic business units (SBUs) in a company that uses an unrelated-diversification strategy are in direct competition with each other because

It has no formal chain of command or standard operating procedures.

Which of the following exemplifies the organic nature of W. L. Gore's organizational structure?

Several factors led to a shift in the knowledge landscape from closed innovation to open innovation. They include: The increasing supply and mobility of skilled workers. The exponential growth of venture capital. The increasing availability of external options (such as spinning out new ventures) to commercialize ideas that were previously shelved or insource promising ideas and inventions. The increasing capability of external suppliers globally.

Which of the following factors has led to a shift toward open innovation?

consistent results

Which of the following is a benefit of a high degree of formalization in an organization?

high degree of specialization

Which of the following is a characteristic of a mechanistic organization?

Its implementation is difficult due to significant organizational complexity and increased administrative costs.

Which of the following is a shortcoming of the matrix structure?

managers that achieve a mastery of the firm's current environment

Which of the following is instrumental in creating a tightly coupled system of strategy and structure in an organization?

It competes on costs and economies of scale.

Which of the following scenarios would justify a firm using an organizational structure that supports centralized decision making?

Managers tend to consider strategies that do not change existing organizational structures.

Why do firms' strategies often follow their structures instead of the other way around?

Managers often fail to implement a chosen strategy successfully despite extensive analysis of business environments.

Why is strategy implementation referred to as the "graveyard of strategy"?

He failed to implement necessary strategic changes after Yahoo lost its competitive advantage.

Why was Yahoo's CEO, Jerry Yang, forced out in 2008?

Input controls

_________ seek to define and direct employee behavior through a set of codified rules and standard procedures.

ambidexterity

A firm's ability to address trade-offs not only at one point but also over time. It encourages managers to balance exploitation with exploration.

inertia

A firm's resistance to change the status quo, which can set the stage for the firm's subsequent failure.

open innovation

A framework for R&D that proposes permeable firm boundaries to allow a firm to benefit not only from internal ideas and inventions, but also from external ones. The sharing goes both ways: Some external ideas and inventions are insourced while others are spun out.

organizational structure

A key to determining how the work efforts of individuals and teams are orchestrated and how resources are distributed.

founder imprinting

A process by which the founder defines and shapes an organization's culture, which can persist for decades after his or her departure.

external and internal shifts put pressure on the system.

A tightly coupled system of strategy and structure is prone to break apart when

formalization

An organizational element that captures the extent to which employee behavior is steered by explicit and codified rules and procedures.

specialization

An organizational element that describes the degree to which a task is divided into separate jobs (i.e., the division of labor).

hierarchy

An organizational element that determines the formal, position-based reporting lines and thus stipulates who reports to whom.

centralization

An organizational element that refers to the degree to which decision making is concentrated at the top of the organization.

holacracy

An organizational structure in which decisionmaking authority is distributed through loose collections or circles of self-organizing teams.

exploitation

Applying current knowledge to enhance firm performance in the short term.

simple to functional to multidivisional structures

As discussed in the case and the text, W. L. Gore and Zappos adopted new organizational structures during periods of growth. In general, most firms follow a predictable pattern of structural change. Which of the following best exemplifies this pattern?

It best supports a firm with low organizational complexity.

As discussed in the case, W. L. Gore eventually adopted a cooperative multidivisional organizational structure. Which of the following is not a reason why this type of structure is advantageous for firms like W. L. Gore?

mechanistic organization

Characterized by a high degree of specialization and formalization and by a tall hierarchy that relies on centralized decision making.

organic organization

Characterized by a low degree of specialization and formalization, a flat organizational structure, and decentralized decision making.

A multidivisional firm loses the ability to be flexible.

Concerning strategy and organizational structure, which of the following is false?

artifacts

Elements that allow corporate culture to be expressed, such as via the design and layout of physical space, symbols, vocabulary, what stories are told, what events are celebrated and highlighted, and how they are celebrated.

mechanistic structure

Since W. L. Gore's core competency is innovation, a(n) ________ would most likely be detrimental to its efforts.

functional and mechanistic

In order to implement a cost-leadership strategy effectively, a _________ structure is preferred in a firm.

Icebox, a software development firm, which focuses on building innovative products

In terms of the key features of organic organizations, which of the following firms is most likely to have an organic structure?

cost-leadership strategy

Inkwell is a pen manufacturing company based in Massachusetts. Inkwell's main area of operation is Massachusetts, and it has a stronghold over the market. It employs a robust production system, which helps it sell pens at exceptionally low prices. In this scenario, which of the following strategies is Inkwell most likely using?

strategic control-and-reward systems

Internal-governance mechanisms put in place to align the incentives of principals (shareholders) and agents (employees).

output controls

Mechanisms in a strategic control-and-reward system that seek to guide employee behavior by defining expected results (outputs), but leave the means to those results open to individual employees, groups, or SBUs.

frequently lacks effective communication channels across departments.

One disadvantage of a functional structure is that it

matrix structure

Organizational structure that combines the functional structure with the M-form.

multidivisional structure (M-form)

Organizational structure that consists of several distinct strategic business units (SBUs), each with its own profit-and-loss (P&L) responsibility.

functional structure

Organizational structure that groups employees into distinct functional areas based on domain expertise.

output controls.

Over time, 3M has relied on the results-only-work-environment (ROWE) framework and has morphed into a highly science-driven innovation company. At 3M, employees are encouraged to spend 15 percent of their time on projects of their own choosing. If any of these projects look promising, 3M provides financing through an internal venture-capital fund and other resources to further develop their commercial potential. This real-world scenario best illustrates

founder imprinting.

Sam Walton was responsible for Walmart's cost-leadership strategy that continues to guide the company to this day. His influence on the organization's culture is best described as

exploration

Searching for new knowledge that may enhance a firm's future performance.

a centralized functional structure

Suppose that a small company that makes a standardized product is experiencing an increase in sales even though it has a small geographic footprint. Currently, the founder makes all of the strategic decisions but is beginning to feel overwhelmed. She has decided to pursue a cost-leadership strategy going forward. In order for the firm to achieve its goals, which of the following business-level structures should the firm adopt?

organizational culture

The collectively shared values and norms of an organization's members; a key building block of organizational design.

span of control

The number of employees who directly report to a manager.

Norms

Unwritten rules that define appropriate employee attitudes and behaviors in employees' day-to-day work and interactions.

It prefers face-to-face communication over email and does not have an organizational chart.

Which of the following best indicates that W. L. Gore & Associates has an informal and decentralized organizational structure?

absorptive capacity

a firm's ability to understand external technology developments, evaluate them, and integrate them into current products or create new ones

Objectives and Key Results (OKRs)

a strategic reward and control system that helps a team and its individual members monitor objectives and outcomes, as well as set ambitious stretch goals

ambidextrous organization

an organization able to balance and harness different activities in trade-off situations

input controls

mechanisms in a strategic control-and-reward system that seek to define and direct employee behavior through a set of explicit, codified rules and standard operating procedures that are considered prior to the value-creating activities

simple structure

organizational structure in which the founders tend to make all the important strategic decisions as well as run the day-to-day operations

organizational design

the process of creating, implementing, monitoring, and modifying the structure, processes, and procedures of an organization